M&M Monday

M&M Monday: Selecting the right attorney for your startup/smallbiz

I’ve been getting a lot of questions re. how to pick the right attorney for your startup / smallbiz lately so thought I’d re-post this blog from last year:

I ran across a few articles & posts that reiterate my theme of having a solid support network for your new business — including the need for competent legal counsel (versus taking legal advice from your cousin/nephew/brother who was, is, or is thinking about studying law, is majoring in pre-law (?), or read a book about Apple, Microsoft, Facebook, etc. . . . you get the picture).  See Snapshot CRM’s recent blog “4 Must Haves for Small Businesses,”  HP’s short adverticle (yep, its a real marketing term – google it) “Three Things a Smart Start Up Should Never Skimp On,” and Strive Guide’s “The Importance of Business Attorneys When Starting a Business” (although this last one focuses on California, the list of things to consider is universal).

All well & good . . . but as a start-up, what are you looking for in your legal counsel?  Below are some things to consider:

1) Depth of Business Formation Knowledge:  Lets face it, between both governmental and private online services, you can find basic information on the various business structures and the forms that you need to register your company . . . all without leaving your couch.  Even though you will likely start small, and the formation paperwork seems easy enough to fill out, have you thought about the following:

  • Will the structure you selected grow with you?
  • Do you understand the limitations of the structure you selected?
  • Do you understand the optional or mandatory documents associated with filing formation under the structure you selected?
  • Have you adequately planned and put the appropriate structure in place to ensure business continuity if you are incapacitated due to illness or injury?  (Critical if the business is your only/main source of income.)
  • Do you understand how the structure you selected will interact with estate and succession planning?
  • Have you thought of trademarks, copyrights, tax issues?
  • Do you need to carry any special licenses or operational permits (e.g. inspections, workplace conditions, permits, etc.)?
  • Are you in compliance with any applicable municipal laws?
  • Have you dotted all of your “i’s and t’s” with respect to real estate transactions, capital management (bookkeeping requirements, investor documentations/contract, capital  expenditures), etc.

2) Understanding of Common Startup/Small Business Legal Issues:  As your business grows gaining customers and employees, it is important that your attorney have an understanding of the possible legal challenges you will face.  For example, no matter how careful you are, and even if you are the best manager/owner possible, if you . . .

  • have employees, you’ll eventually have employment issues (e.g. wage disputes, unemployment claims, injuries, FMLA leave, disability accommodation, etc.);
  • keep customer lists, make product claims, or engage in any customer communications (e.g. marketing, advertising, etc.) you’ll need to consider exposure under deceptive trade practices laws (in Texas, the DTPA), compliance with state, federal, and possibly international customer privacy laws, etc.; and
  • have a physical location, you’ll need to make sure that you understand your liabilities, signage requirements, and a myriad of other issues under the ADA, OSHA, etc.

This list could go on and on, but I think you get the picture.  And if you operate across state lines, this list expands exponentially.

You’re not looking for an attorney with world renown expertise in each area, just someone that has a good enough working knowledge to identify when issues or, better yet, potential issues arise.  You want your attorney to be able to provide advice  on avoiding legal issues as well as to be able to react competently and swiftly to minimize the impact of and protect your interests when legal challenges inevitably arise.

Which leads to my next, and what I think is the most important point to consider.

3) Compatibility:  Ultimately, you’ll find a large number of attorneys available, eager,  and competent to represent you but make sure that you select an attorney

  • that you are comfortable working with (don’t underestimate your gut feelings here),
  • that is engaged in your business (they don’t just passively sit around waiting for your call, they take an active interest in what is going on with your business), and
  • whose communication style meshes with your own.

Do not underestimate the last point.  Communication is critical to the proactive avoidance of legal issues.  If you’re not communicating effectively you are not getting all of the value that you can out of the relationship.  After all, if the only time you talk to your attorney is when you call to alert them to a legal issue that is already in play, how will your attorney ever be able provide advice on avoiding/minimizing potential for legal issues or the legal aspects to consider when making business decisions?

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