Da Facto: On selecting a corporate lawyer

Wednesday, March 18, 2015

On selecting a corporate lawyer

I feel very good about all aspects of our progress and state of the business, as it were, except for one thing. Our corporate legal representation. Lawyers are a bit like doctors. They have different specialties and what is common knowledge for one specialty might be totally foreign for another.

The first type of lawyer you will need is a corporate attorney. They will help you set up the company and get things like NDA's and employment agreements together. It is important to get this stuff right. I had figured that this early stage stuff is commodity kind of work and does not need some high powered, big priced attorney. I figured that this is an area where we could just select a competent local lawyer who has some tech experience and move on with our lives. I was wrong.

Upon further review, my advice for a technology start-up is to go with an experienced corporate lawyer who specializes in technology. There are terms that any experienced investor is going to expect to see in the founding documents. A lawyer who does not have the relevant experience will not include them in the documents and that could be detrimental later.

A some of red flags that we saw, but did not realize until later.

If they have never heard of a SAFE.
If there is no kind of vesting schedule or termination provisions for the founders in the shareholder agreement.
If they have you create the company in any state but DE (or maybe CA or NY, if your are based in either of those states.)

We are changing out our corporate representation. Both of the firms we are looking at are not cheap. But some things are worth paying retail.

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