The importance of lawyers in developing (and selling) a startup

3 min reading
Startups / 09 December 2013
The importance of lawyers in developing (and selling) a startup

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One of the most important moments in the life of a startup comes when you need to expand the team. Do we need more programmers to accelerate development? Maybe marketing people to help publicize our project? But beforehand, long before all this, there is a figure that cannot be missing from our company: a lawyer.

Some may consider this to be a superfluous role, especially at the beginning of the venture, but it is essential to have someone skilled in legal matters from the outset. It doesn't need to be a lawyer who works exclusively for the startup in question (especially, as mentioned, at the beginning), but you must have someone to turn to if you want to take the project to the next level.

Ignacio de Miguel, at Loogic, has it clear in his mind: "Get a lawyer in your company". There he recommends that, from the outset, you must include the figure of a lawyer in a company's budget. "This is the legal bodyguard", he claims. Carlos Blanco, known investor, has also stressed in several of his lectures the importance of a good tax accountant and a good lawyer when you decide to start a new business.

What procedures do you need a lawyer for?

 

But why do you need a lawyer in a startup? We would be finished quicker by saying why not, since there are many procedures that require legal advice. For example, once you have decided to found the company, you must decide what type of company is best suited to what is needed, register the trade mark, the product and other vital procedures to prevent future problems. If you plan to create a website, you must also include the legal notice and other provisions. The lawyer can handle all this.

Afterward the shareholders' agreement must also be signed to protect the company from the shareholders and also against third parties. The aim is to establish each person's role in the startup and take a look to the future: what happens if someone leaves the project? What if an investor comes? The best thing in this case is to also put it in writing with legal advice so nothing is left to chance.

Once the establishment of the company has been completed, it is usually necessary to have a legal figure to turn to regarding the day-to-day activities, for example, when drafting contracts with third parties, employment contracts with workers, relationships with other companies, purchases, sales, mergers and many more aspects.

In short: a lawyer is needed to ensure that no laws are broken with the new startup, to protect itself from third parties and also to establish the company's internal organization.

What lawyer should I choose?

Okay, we know that if we want to avoid mistakes and avoid future problems in our startup, we need to hire a lawyer. But who? I'm sure a family member/ friend is a lawyer. Could that be a good option? Unless they are specialized in startups, the answer is probably no.

An excellent article on this has been published in Both sides of the table where an example is given of what we are saying. Would you hire a Javascript developer to design and plan your database? The same goes for lawyers: there are many specializations. If someone is an expert in family law, they won't necessarily be an expert in the Internet or the industry in which your startup is in.

In short, save yourself any problems

Although hiring a lawyer entails initial expenditure for any startup that has just been created, it is a vital step to avoid future problems. "Preventive law" is what it is called. In everyday language: saving yourself any unpleasantness.

 

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