How Not to Hire an Attorney

Lots of people will give you advice about how to hire an attorney -- particularly if you're trying to run a growing business. A lot of that advice will be wrong. 

How would I know? Well, I’ve spent nearly all of my 30+ year legal career working in technology companies, large and small. I've also spent a good part of that in non-legal roles where I was directly answerable for business results. And, of course, I’ve hired and worked with A LOT of attorneys.

I also spent over 10 years as Chief Legal Officer of Avvo -- a company whose entire mission was to make it easier for people to choose the right lawyer.

So yeah: I know a thing or two about choosing counsel for a business.

Let's dig into the three big areas of wrong-headed advice, and how you can make better choices.

Bad Advice #1 - Just Hire a Big Firm to Handle Everything

While this seems like sensible, efficient advice, it rarely works out. You will get great help in 1-2 areas, and middling-to-poor help everywhere else. And you'll overpay for the privilege.

I will explain further, but first let's break down the broad categories of legal need that startups will typically encounter:



1. Corporate Formation
2. Financing
3. Regulatory
4. Customer Contracts
5. Day-to-Day Legal

Some companies will also have issues around intellectual property, litigation and M&A, even in the early days. But these five are the predictable areas that nearly every technology startup will contend with. And you're probably going to need at least three different attorneys to help you cover them.

Formation and Financing. If you aren't planning on taking outside investment, you can go with the cheapest, easiest formation option available. You can even use a service like LegalZoom or just do it yourself. But if you are planning on taking some outside investment -- or simply want to maintain the option to do so -- you should look to hire an attorney who can handle both formation and financing.

What do you want here? Someone who helps companies get set up every day, who has done a ton of seed-stage and VC financing, and who knows the industry. An attorney meeting that description will give you better advice, you’ll probably get a better deal quicker, and it may even cost less -- even if his or her hourly rate is higher than other attorneys. The single biggest factor in choosing a lawyer for this need is deep expertise in startup financing. All other considerations are secondary.

Regulatory. If your business has any regulatory concerns -- and most disruptive businesses do -- you will use a similar approach to hiring an attorney. You want the lawyer equivalent of a LASIK doctor: someone who is immersed in that regulatory work – and ONLY that work – every single day. The single biggest factor in choosing a regulatory lawyer is 100% specialization in the regulatory area at issue. A secondary concern is some level of business orientation.

Customer Contracts. You’ll need a lawyer to draft up your website terms of use and privacy policy, as well as the customer agreements you'll be using (if yours isn't a 100% online consumer-facing business). In this case, you want someone who is very familiar with the industry you operate in. Understanding the latest developments in online contract formation and privacy law are also key. This is also an area where it’s increasingly important that the lawyer have a business orientation and understand your company’s attitude toward risk. 

Risk aversion, by the way, is one of the biggest frustrations entrepreneurs have with lawyers. Attorneys are trained to spot risks and try to eliminate them. Businesspeople, on the other hand, succeed by spotting opportunities and by taking smart risks. The best business attorneys recognize this, and are able to balance risk with opportunity when advising you. When it comes to building your agreements – and providing ongoing legal advice about contracting and working with your customers – having an attorney who understands your business and level of risk aversion is the single most important factor.

Day-to-Day-Legal. Finally, there’s the rest of the legal stuff that every startup encounters – vendor agreements, marketing reviews, employment issues, threatened litigation, etc. While it’s true that you want specialists for many things, you may also want a generalist to quarterback the process. This is a difficult attorney to find and hire, and it’s the challenge every company faces when they make their first internal legal hire. For your company’s general counsel – whether inside or outside, full- or part-time – business orientation and communication/rapport are the most important factors. The ability to work broadly across different legal areas is also important.

Back to where we started: In the technology world -- and particularly in the world of venture-funded startups -- there's a real risk of being dazzled by the first corporate firm you encounter. You will work with smart, driven, responsive lawyers who will usher you through your company formation and early fundraising. But the problems start to arise when you want to use them for . . . everything else. Their people who can ostensibly do the other things you need are not necessarily the best fit for you and your needs. This is the reason savvy corporate GCs say that they "hire lawyers, not law firms."

You can -- and should -- hire individual attorneys, usually at different firms, depending on the specific needs of your business. While this is somewhat more work than simply handing everything over to the corporate partner you first worked with, it will lead to much better results.

Bad Advice #2 - Hire the "Best" Attorney

Some people insist that you should never settle for less than "the best" when it comes to hiring an attorney. This is misguided.

What's "best?" Whether its based on fancy schools attended, results obtained, or peer assessments, this is going to be necessarily subjective. It also may not be a match for your needs. The "best" attorney may insist on always boiling the ocean on every legal problem, when you need a different balance. The "best" attorney is likely to be one of the most expensive. The "best" attorney may be hard to reach.

"

The best" is usually going to be overkill. You'll also spend way more time than is necessary trying to locate this person. For most legal needs, finding an attorney who specializes in the area at issue and is a fit for you on cost, rapport, responsiveness, and approach is far more important than finding “the best.” You really only need to start thinking hard about having an attorney who is objectively among “the best” for a small handful of things, like bet-the-company litigation or strategic M&A.

Bad Advice #3 - Hire Young, Tech-Savvy Attorneys

I understand why many young tech entrepreneurs would be drawn to young attorneys. Besides the commonality in experience, there's the assumption that younger lawyers will be more tech-savvy. And tech-savviness is important in lawyers who work with tech startups!

The problem is, at least as it pertains to lawyers, youth is a very weak proxy for being adept with the latest technological developments. In my work at Avvo, I talked to thousands of attorneys, old and young, about interfacing with the site. And the experience was informative -- there were both Luddites and technophiles at every age level.

Conclusion:

Again, the better advice is this: Understand that the basis for choosing an attorney will differ depending on your legal need. As your business grows, you will undoubtedly need the services of several different attorneys. And when you do hire an attorney to do more than provide guidance on a one-time transaction, think most about finding someone who aligns with your business approach, is responsive, shows good judgment, and understands your level of risk aversion.

Need help choosing a lawyer, or figuring out where to begin? Book an advice session with me.