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Does Your Startup Need a Lawyer?

Does your startup need a lawyer? I can’t legally answer that question, of course. My background is in folklore and literature, so when it comes to lawyers I’m able to quote Shakepeare’s Henry VI or reference Madame Bovary, and that’s about it.

Laugh all you want at my background, but I would wager a lot of first-time entrepreneurs aren’t certain of the answer to whether or not they need a lawyer either. So I called one – Katherine Moyer, an attorney who specializes in startups at Endeavor Law Group


1. Forming a business entity

2. Drawing up employee contracts and documentation (including internship agreements)

3. Addressing compensation with equity

4. Securing trademark and other applicable IP protections

5. Drawing up contracts for strategic relations (vendors, key clients, consultants)

6. Formalizing investor agreements

7. Selling your business

The thought of facing all these legal bills is pretty overwhelming. And that’s part of the reason why you want to find a good attorney, preferably one with knowledge of the intricacies of tech startups (Their advice and expertise might be different, for example, than a lawyer who specializes in setting up family businesses).

In order to stretch your budget for legal fees, Moyer recommends getting quotes and estimates from lawyers. She also encourages you to talk frankly with your lawyer about your needs, and to be able to discuss with them, referring to the list above “whether it’s alright to just do 1 and 6 now.” But cost shouldn’t be the only factor in mind as you select legal counsel, because as the word “counsel” suggests, you do want good want good advice.

Of course, that’s easier said than done. (See Scott Walker‘s “Top 10 Reasons Why Entrepreneurs Hate Lawyers.”)

On Thursday, entrepreneur and professor Steve Blank wrote an explanation of “Why Lawyers Don’t Run Startups.” As with most things you’ll find online about entrepreneurs and attorneys, it’s a cautionary tale, one of a lawyer nearly ruining one of his business deals. Blank offers the following lessons learned:

1. Lawyers provide a service; they are not running your company.

2. If you find a lawyer who talks about solutions not problems, hold on to them.

3. In every company that gives you a contract there’s someone who wants a deal. When you run into contract issues, call them first for advice.

4. Recognize whether you have a legal problem or strategy problem.

5. The web has great blogs by lawyers who get it. Read them.

Blank urges entrepreneurs to get a good lawyer but then “to know how to ask for [a lawyer’s’] advice and when to ignore it.” Thankfully there are a lot of legal resources out there to help you learn to do that.

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