Early Stage Startup Series
A question I’ve gotten a lot from early stage startup founders is: when do I need an attorney? The answer is, it really depends. I already walked through common scenarios where it makes sense to work with an attorney on incorporation. Here, I’ll provide a few more examples of when an attorney experienced in certain areas will be an ally in certain parts of your company lifecycle.
I wrote a post here about when a corporate attorney, and sometimes employment or even immigration attorney, can help startup founders time their incorporation, set up the entity properly, and ensure there aren’t any conflicts with prior employers.
Corporate attorneys are often the first attorney you’ll need when getting a company off the ground, primarily because of their help in incorporation, setting up your equity plan, and setting up bylaws and your initial board consents. They can also be helpful when you’re doing very early stage fundraising through SAFE notes, and corporate paralegals can provide support on cap table updates and management.
When you’re ready to start signing contracts, such as sending out NDAs or LOIs to prospective customers, you’ll need to have these agreements as templates handy. Sometimes, a corporate attorney has an NDA template you can use, but often, an attorney specializing in these commercial contracts, called a transactions, commercial, or contracts attorney, can prepare these for you. In certain cases, the LOI should be tailored to the specific scenario and a general template won’t work. A commercial attorney can also help you with redlines to the extent you have any, create a customer sales contract template when you’re ready to sell B2B, or a Terms of Service and Privacy Policy if you’re looking to sell online to businesses or consumers. A great transactions attorney can also help you structure your sales contracts to minimize friction and back and forth on negotiations, getting you to signature and revenue faster.
When you’re ready to hire your first employees, it’s helpful to get some basic HR guardrails in place, such as preparing an employee handbook that specifies PTO, sick leave, benefits, performance reviews, probation period, and termination. Employment requirements also change as the company grows, with one inflection point at 5 employees domestically. While some employment attorneys specializing in advising companies on policies and best practices can help you get this in place, if you’re a bit more cost-sensitive, it may make more sense to engage in an HR consulting agency. These agencies have experienced HR personnel who can walk you through the basics of good HR practices, and will know when to escalate matters to an employment attorney when you’re faced with a sticky situation. They’re often more cost effective than working with an employment attorney right off the bat, and some agencies specialize in supporting startups in specific industries. Just know that these agencies are not attorneys, and that you should vet agencies you’re considering with your network to understand their qualifications.
When hiring employees who need a visa, you should work with an immigration attorney to get their visa set up properly.
These are some of the common areas where an early stage company will need an attorney to get everything set up and running smoothly. There may be other areas where you might need support though, such as a tax attorney for cross-border entity formation, or a real estate attorney if you’re looking into leasing real estate for manufacturing or office space.
