How To Work With Lawyers

Lawyers are a perfect example how well intentioned perfectly intelligent people can hose a project or deal. They don’t do it out of avarice. They simply operate at a different cadence and with a different risk model than most people working in the startup world. This impedance mismatch causes delays and friction which can ruin the best laid plans without careful supervision.

Accept Risks

Your business has a very large chance of remaining in obscurity forever. You have a good chance of having founder drama, and an even better chance of realizing you’re building the wrong thing at some point. The odds that you will be sued into non-existence are much lower than those threats. The odds that a missing provision in a contract will hose you is orders of magnitude smaller. Like the person who wears a helmet while falling into a meat grinder, it’s often not worth protecting yourself from tiny threats when you happily accept huge ones every day.

Lawyers get paid by the hour. They are also incentivized to never make a mistake and never miss anything. No one pays their lawyer more because they did less work. In this world, they have a simple incentive to triple check everything and to research anything which could possibly be relevant. If you don’t apply a counter pressure, they will consume horrific amounts of time and money averting risks which are nothing compared to the risks your business takes every day. It is your job to tell them no, even when they don’t suggest the option to you. You, sometimes, have to throw a cold bucket of water onto their attempts to dig deeper and force them to accept the balance which is healthiest for your business. Remember it’s your lawyers job to express risks to you, and it’s your job to accept them. If your lawyer doesn’t regularly wince at you, you’re not doing your job.

Go Around Them

Every once in a while your lawyer will tell you the other side is insisting on crazy provisions you don’t want to accept. They will convince you this is not negotiable, and the other side is being intractable. One thing you can trust is the other sides lawyers are saying the same thing to them, that you are being impossible to deal with. If you allow it, this lawyer-lawyer conflict will become hotter and hotter, eventually making the opposing side decide perhaps acquiring your company or doing a deal isn’t worth the trouble.

In these moments, when things just don’t make sense, skip the lawyers. Get on the phone with the opposing side, explain the situation and what you really care about, and sort out a compromise. Send an email together to the legal team defining what you decided and everyone will move on happily.

Speed Things Up

When Facebook acquired Instagram, they skipped all due diligence. For those who don’t know, due diligence is the process by which lawyers confirm that the company their acquiring is ethically, legally, and financially sound. It’s crucial for the same reason having a home inspected before you buy it is crucial, there might be minor issues which should reduce the price, or there might be big issues being hidden from you. Mark Zuckerberg correctly identified that the opportunity was big and that success would be binary, either the acquisition would mark a new future for Facebook (it did), or it would fizzle. Any tiny details weren’t nearly as important as making it happen.

Remember that your company won’t inherently be more successful simply because you are more conservative. More, there will continually be people sending you emails warning you of critical legal matters. Some of those are legitimate, others would perhaps be big issues at a big company, but are minor nuisances at a startup and should be ignored.

Find The Right One

I have worked with fantastic attorneys. In fact, one was so great at understanding how products get built that they are now a product manager! You really really want to find one who has experience with the compromises made at a startup.

When you choose a big firm, remember that most of the work will actually be done by associates with 1-3 years of experience. In essence you are paying their rates to get access to their playbook of contracts which might save you some money in not having to draft them, to get access to their name and brand, and to ensure the work is being supervised by someone experienced. A small firm, on the other hand, offers the ability to build a relationship with someone who’s actually invested in your tiny business.

The Power and the Peril

The law is the ruleset which governs the game of business. If you ignore the rules, you will be a victim of everyone who studies them. It is critical however, that you understand as much of the law as you can. Ultimately your lawyer can also be your greatest educator, teaching you on-the-job what you need to do to make the right decisions for your business. Ultimately though, it is your job to understand their work enough that you can make those decisions, they can never make them for you and they can’t accept responsibility for your companies failure.

Conversely, most startups don’t fail due to a lack of legal leadership. They fail because they don’t build something people want with a business model which can support them. Always be sure you are arranging your time and resources to focus most on ensuring you are not one of them. It can be tempting to invest a limitless amount of time into distractions like legal perfection, don’t do it.