More on Lawyer Relations

I was talking to a friend who is getting his startup off the ground and we started discussing working with law firms in the company formation stages. I think a lot of first-time entrepreneurs shoot from the hip when dealing with selecting and working with a corporate firm early in the lifecycle, so here are a couple simple things I learned along the way that I recommend to people doing startups:

Negotiate up front how much you’ll pay for your incorporation documents. Don’t pay more than $5k for these. These docs should include company formation documents, standard employment documents, consulting templates, and company NDAs. You can ask for a full package - any firm that works with startups (WSGR, Gunderson, Fenwick, etc.) has these on hand.
Do not give a law firm equity. Unless they promise they’ll never send you a bill, there’s zero reason to award them stock.
Don’t talk to too many lawyers/firms early on - it’s a waste of time. If you’re in NYC, Gunderson, WSGR, and Fenwick are fine. Meet a partner or two and make your decision.
You shouldn’t be paying more than $10k for legal docs for your first round of financing. I’ve heard of startups paying up to $50k and that’s insane.
If you plan on raising capital, defer all of your payments until after your first financing.
You can and should go over all of these points when you’re picking your firm.
If a law firm or partner fights back on any of the above, you’re probably working with the wrong person.

Picking a legal partner to work with is important. You want someone you can trust who also has a strong reputation and track record in the startup community. You won’t (and shouldn’t) interact with him/her in the early stages, but you want them by your side, engaged, and fighting for you when you need them most.

*For more information Chris Dixon has written some great posts on the topic, and I recommend you read his blog particularly when it comes to raising capital and startup formation.