When to Involve your Lawyer

One of the biggest challenges I’ve seen working with new entrepreneurs and startup companies is balancing the need for getting good legal advice with the cost of good legal service. In a prior post “When to Involve Your Lawyer: Part 1, I wrote about the types of agreements when a startup should nearly always have their lawyer review. In this post, we’ll examine how to ‘Pre-Review’ a contract or agreement before getting your attorney involved.

The Pre-Review

Truth is, lawyers usually bill by the hour. Therefore, whether your lawyer is negotiating your Series A financing terms or washing your car, it is costing you the same. (For the record, I usually give a discount for my car washing services.)

One of the issues that startups struggle with is when to involve their attorney in negotiating or entering into a contract. Your startup is like a paper-generation machine. You’ll be looking at more contracts than you ever thought possible. And the problem is, if you had your lawyer “review” or “negotiate” every one of them, you may hit the poorhouse.

That’s where the concept of a pre-review can help focus your lawyer on areas where you really need his or her assistance. The concept of a pre-review can help you to better understand the contract itself, identify the easy issues you can handle and address with the other party to the agreement, and then get the insight and experience from your lawyer to address items above your pay grade.

This saves you money and gets legal review where it is needed. That, in a nutshell, is the pre-review.

Being an Informed Consumer of Legal Services

So what should you do? Be an informed CONSUMER of legal services. Not every contract will rise to the level needing attorney review. But, and this is a big but, remember that you should ALWAYS have your attorney review certain types of contracts or agreements as noted in the previous post. Don’t scrimp on those contracts as you’ll probably wind up paying for it sometime down the road (having your attorney FIX the problem you didn’t see playing part-time lawyer).

So, don’t blindly send a contract to your attorney. Pre-review it and handle what you can with the other side. Then, get your attorney focused like a laser on areas you aren’t equipped to handle. Anyways, before you send any contract to your attorney, here’s a suggested approach:

1. When you get any contract, read through it before you do anything. Print it out, and write notes where you disagree, have questions or don’t get it.

2. In those places where you have questions or you don’t understand, ‘Google’ it and look it up on Wikipedia. Hopefully that will help you understand better.

3. After you’ve read through it and used the Internet to educate yourself, have someone else in your company also read through it (if you are the only one in the company, then get your spouse, significant other, mother/father, neighbor, etc. to read it).

4. Talk through your comments, questions and concerns and come up with a list of issues.

5. Then, get on the phone with the other side and talk about those issues, questions and concerns. Don’t agree to something that you aren’t sure of, but try and get a rationale as to why the other side put something in the contract.

6. NOW, you can finally involve your attorney. You’ve focused the issues down and can get the lawyer to provide the value-add service (rather than car washing services).