How to Cover Your Legal Bases

Not sure where to start or how to develop relationships with attorneys? This Q&A is for you.

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Portrait of Gavin

Posted by Gavin

• 4 min read

Don't be that small business. You know, the one dealing with a costly legal battle because they didn't seek legal counsel before launching. We get it. Starting and running your business is no easy task, so adding a lawyer might seem like an extra hurdle.

“It can be scary to approach the legal side of entrepreneurship, and not everybody knows where to start," says Ailis Burpee, Mailchimp's Vice President of Legal.

In this Q&A, Ailis breaks down the importance of starting a conversation with an attorney early, finding someone who's an expert in your field, and considering the long-term costs and benefits of involving legal counsel from the jump.

Do new businesses and startups need lawyers?

It depends on the nature of the business and the owners’ knowledge of legal requirements, ability to dedicate time to legal needs, appetite for risk, and budget. New businesses in highly regulated industries, such as financial services will benefit from working with an attorney early in order to understand the regulatory landscape of their industry. For entrepreneurs who are venturing into less regulated areas, there are DIY options on the market that can assist with the basics of naming the business, incorporation, registration, and standard contract templates. But keep in mind that these resources tend to be generalized for every small business and simply focus on meeting minimum legal requirements. On the other hand, engaging an attorney will not only help ensure that all legal boxes are checked, but an attorney can also assist with identifying needs unique to the business or needs that the entrepreneur has not yet identified. Working with an attorney will certainly help mitigate future risks. So, making room in the budget to hire an attorney early on may actually turn out to be less expensive than realizing the risk later down the road.

Speaking of the legal boxes that need to be checked, what should entrepreneurs consider when forming a company?

One of the first steps to forming a company is naming the business and the product. Entrepreneurs need to be careful to select names that aren’t currently being used by others and can be defended if others attempt to piggyback off of future success. This is why conducting trademark searches and trademark filings are important. A brand new business may also need to register with the city, state, or country in which they are doing business and file for various business licenses that are required for product or services being offered. These include sales and use permits, health permits, or zoning permits. Entrepreneurs also need to decide whether to incorporate their business and what type of entity best suits their business needs. New businesses also have a variety of contract needs, such as business partner agreements, operating agreements, NDAs, real estate or rental agreements, and employment agreements. Finally, inventors of new technology, products, or services may want to consider ways to protect their intellectual property, such as filing for patents.

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What should a small business or startup look for when seeking legal counsel?

A startup should look for an attorney who specializes in their current legal needs. Just like you wouldn’t see a podiatrist to treat the flu, you don’t want to hire an attorney who specializes in personal injury law when you need help incorporating your business and drafting an operating agreement. There are a lot of great attorneys—both solo practicioners and members of law firms—who specialize in corporate formation and governance. A solo practitioner is likely to be able to assist with specific legal needs within a budget. But full service law firms can be particularly useful for businesses that have a variety of legal needs. When using a full service law firm, you can connect with an attorney who specializes in a particular subject matter area, such as corporate formation, and this attorney can lean on their colleagues to assist with your other needs such as employment, real estate, and intellectual property. Think of a full service law firm as a one-stop shop, a convenience that generally, but not always, comes with a higher price tag.

Of course, there’s also the option to hire an attorney to work as an employee of the business. We call these attorneys “in-house counsel.” But it's rare to see a startup with in-house counsel, usually due to budget restrictions.

Is it crucial to look for someone who specializes in your particular field?

This depends on the industry. Some industries, such as life sciences or healthcare, have unique needs and business owners will benefit from working with attorneys who specializes in their industry. But a startup that is selling a gaming app doesn’t have the same unique needs and can instead focus on finding an attorney who specializes in their current legal needs as opposed to specializing in their industry.

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How important is it to maintain that relationship with a lawyer? Or are lawyers just for getting started or when things get legally dicey?

It’s valuable to maintain a relationship with your lawyer because your legal needs will change and evolve as your business grows. And, maintaining a relationship with a lawyer can save you time and money in the long run because you won’t have to bring a new lawyer up to speed on the status of your business every time you have a new legal need. This doesn’t necessarily mean that one attorney is going to be the right person for all of your needs. But an attorney who understands where your business has come from and where your business is going can help to connect you to the right people.

Any parting thoughts?

My advice for small business owners is: don't be intimidated by your business’s legal needs. There are a lot of smart attorneys out there who can help you fulfill your legal requirements and make sure your business is protected. There's no need for this work to stall the progression of your business. It's just something to do in tandem with the other amazing work you're doing every day.