Lawyers or Insurance Salesmen?
At some point when you have a startup, probably when raising money, you’ll HAVE to get a corporate lawyer. Most are hideously expensive and infuriating. A few tips:
- Don’t just go with the lawyer that the VCs insist upon. These lawyers will work with the VC on a hundred financings and with you on only one. Where do you think their loyalties lie? Get your own lawyer, and don’t budge.
- Watch out for the bait-and-switch – this is when you interview the gregarious, smart senior partner, who then swaps in the less popular, less experienced partner once you’ve signed them up. And the new person might be cheaper, but not much cheaper.
- Put them on fixed-fee per job, especially for closing a financing, and especially for lawyers for the other side (one of the old great VC tricks is that startups pay for the VC’s attorneys in closings! A ridiculous practice justified as being “standard”)
- If you have issues with the bill, resolve before paying. Possession is 9/10ths…
- Make your lawyers do the heavy lifting of drafting the financing docs. The drafting side wins all of the small points, by default
- Finally, good lawyers are advisors who weight pros and cons when giving advice that has a financial impact (which almost all of it does). Bad lawyers are whimpering insurance salesmen – and will encourage you to spend yourself to ruin by covering against every possible risk. Risks can and should be quantified whenever possible.