Selecting a law firm…

August 18, 2006

To catch up on the law firm search process, check out the initial post at Searching for a Law Firm…

So it’s been a few weeks since we started our search for a law firm. I’ve spoken with 5 firms and received a ton of useful information (and glossy promo materials). In the end, there were two big differences in the firms (1) location and (2) billing practices. The first thing I noticed was that 4 out of 5 were based in California and the remaining firm was based out of D.C. I was not that excited about working with a firm three hours behind but realized that it was not the end of the world. All the firms I spoke with were reputable and had a division that was exclusively focused on “emerging companies” (i.e. start-ups). Moreover, I thought it would be good to branch out from the east coast and begin building recognition for our business on the West coast, since those law firms have their own relationships with West coast investors and potential partners.

The second observation was that the law firms in CA offer a pretty appealing billing structure, where they are willing to defer all legal costs associated with raising money (shareholder documents, stock certificates etc.) until we raise substantial funds to cover those costs. I really liked that, but then again, who wouldn’t? For a start-up looking to conserve cash, postponing payments means available funds to grow the business. In general, I found that this was a CA thing, maybe a dot-com phenomenon that has carried over to present day. Maybe it’s just a cultural difference between CA and NY/D.C. Either way, we made our decision based on the two factors mentioned above and the simple fact that we just felt that there was more of a “fit” with the lawyer who would be handling our account at this firm.

Bottom Line: If you’re choosing a law firm for your start-up, speak to a minimum of 3 and look for a full-service firm that can do all sorts of legal work for your venture as the business grows. Make sure you pick a firm with an “emerging companies” practice because that means that they work with start-ups and will be better suited to understand your legal needs at this early stage. As important, pick a firm with a flexible payment structure and don’t worry about hiring a firm in CA. That’s probably the only place you’ll find such a firm. Also, don’t forget about personality fit. You should make sure you like the attorney you will be working with and feel comfortable that he/she will be responsive to your needs. Once you get the information you need to satisfy these key points, make a decision quickly so you can move onto growing your business…

JT

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