One of the most common phrases lawyers hear is: why do I need a lawyer when I can do that myself? I certainly agree that there are tasks and documents required within a business that most business owners could take care of themselves but I do like to warn clients about the dangers of “DIY law”.
When you’re starting up a business or growing a business, many entrepreneurs and business owners want to handle the legal stuff themselves. The reasons are completely understandable: concerns about cost, effort, difficultly finding someone you can trust etc etc. However, that can often lead to mistakes which may cause huge issues for the business now or at a later date. You are also often extremely short on time, with limited capacity and juggling many different roles. When you’re building a startup, it is worthwhile getting the right help, advice and support in from the start – this will give you the peace of mind and headspace to focus on other key aspects of your business.
I could provide endless examples of when things go wrong (apologies for the doom and gloom!): not allocating shares correctly, not having proper agreements drawn up, not reviewing your suppliers’ contracts, errors in IP ownership, neglecting to put a shareholders’ agreement in place or exposing your business to unlimited risk and liability by having no agreements at all. All of which could be costly mistakes for your new venture. For example, if you are a tech startup and you outsource development work – you want to ensure that you own your valuable IP! In addition, having a well-run business with proper agreements in place is especially important when it comes to raising investment. Investors will want to do due diligence on your business and will expect to see most or all of your legal boxes ticked.
Another important point to note is that law is fundamentally a specialist field. There are many, many areas of law that a startup or growing business will require advice on. I usually advise that entrepreneurs should – for the most part – leave it to the specialists! Never underestimate the value of having a trusted advisor who understands and grows with your business.
Generally speaking, when you’re starting out, you won’t need a lawyer from a top City firm. What you do need is an expert in a particular field who can do the job for a reasonable price. Look for legal consultants or lawyers at small boutique firms who predominantly work with startups and SMEs. Ask other entrepreneurs and startups for their recommendations.
When you contact a lawyer, I recommend defining the scope of work carefully and asking for a fixed fee. Many lawyers still charge by the hour and for every phone call and email – so the fees can rack up really quickly.
Asking for a fixed fee gives you transparency about costs. If an expensive City lawyer is charging you by the hour, even the simplest legal document can be hugely expensive.
I’d also ask a lawyer about their experience in your business sector and what kind of clients they have worked with. I think it’s better to place emphasis on a lawyer’s experience with similar companies focussing on their legal work first and the cost of their fees second.
Vero Law works with a whole host of startups in lots of different sectors. We are specialists in contracts, IP, tech and GDPR. We recognise that startups and SMEs are looking for affordable legal advice that adds value – that’s why we offer fixed fees at cost effective rates! Get in touch at firstname.lastname@example.org to hear more.