“Not getting a lawyer to help you from the outset is like building a house without a solid foundation — the bricks will begin to crumble at some point. Simply put, the ‘right’ lawyer helps you manage risk.”
Gigio Ninan, Forbes Magazine
Starting a company from scratch is incredibly demanding; from product development and marketing, to scale growth, hiring and finding the right office, there is a lot to consider. On top of all the action, seeking appropriate legal support might seem a complex and daunting process. Often, it falls to the wayside of the founder’s priority list.
Adding to that, traditional legal services are notoriously costly. Lean boot-strapped start-ups often seek to minimise all costs but the revenue attracting essentials, and legal support often bears the brunt of budgetary constraints. But at what risk?
Naturally, there is demand for early legal support which works within a start-ups budget. Most will seek DIY solutions which can bring additional risk, depending on the complexity of the business. However, no longer is a traditional law firm the only source of support. The advent of NewLaw has facilitated more affordable and flexible models for support through alternative products. With this in mind, below are the top 10 legal tips for start-ups to assist their new venture in starting off on solid ground.
- Choose the right legal structure
Which legal structure (sole proprietor vs partnership vs limited company) is most appropriate for your business model? Choose carefully, as each structure has different legal consequences for your start-up and you as a founder.
- Put in place the Founders/Shareholders Agreement
As early as possible, get a founder’s agreement or shareholder’s agreement in place. This will reduce the chances of wasting resources fighting with your co-founder.
- Don’t sit on it, solve it!
As soon as an issue presents itself, get advice and solve it. Procrastinating will only increase costs in the long-run.
- Have key templates ready
Get your key legal templates in place – but beware of ‘free downloads’. Are the agreements appropriate for your business? Do they sufficiently protect your interests? Are they enforceable? A bespoke agreement may be more expensive in the short term, but because it pertains specifically to your business, any room for interpretation or ambiguity is negated. Consider your options.
- Beware of recycling contracts
Be very careful with recycling other’s contracts. You want to ensure that your contract is tailored to your business and covers every important aspect specific to it.
- Do you know what it means?
Make sure you understand your contract. If there are clauses which you don’t understand, seek advice on them. You don’t want to proceed with an agreement when the terms are unclear to you.
- Protect your IP
Copyright vs patents vs trademarks? Ensure your IP is protected in places where you do business. Think global, act local. Local legal nuances should be investigated to facilitate compliance and protection.
- Pick up the books
Research and acquire a basic legal knowledge for your business. Look at your peer group and failed competitors. Where possible, try to learn from their mistakes.
- Think outside the box
Investigate all avenues of legal expertise available to you, not just the expensive lawyer in a suit. Firms are now reaping the rewards of investing in: automation tools which have reduced administrative costs; cloud solutions which have enabled agile working; and AI research tools which have introduced efficiencies and competitive advantages.
- Value for money
Ensure you are getting the best value from lawyers / legal service providers. There are many great options out there within a start-up budget. Shop around and research the options available to you
We work with several companies leveraging time-saving technologies to assist with low-cost legal services to start ups. Think that might be something you’d enjoy? Reach out to us and see how we can help you find your next dream role.
This post was originally published on the Korum Legal Forum.