Startups need legal advice and there’s plenty of it about. Throughout the City of London and surrounding areas, law firms are offering events, workshops, mentoring, free documents and discounted advice aimed at startups.
How should you navigate all this and choose the right firm for you – and how should you deal with the solicitors you do choose, to get the best possible results?
Price must be a factor but it should not be the only one. You should consider quality and expertise, price, location and personal rapport, and you should talk to several firms before choosing one.
The best indicators of quality and expertise will be the firm’s presentation and reputation, the testimonies of others who have used it for similar work, and its answers to some searching questions put by you. What experience does the firm have in advising young tech businesses, and who will really be doing your work? Will it be the suavely reassuring partner or will that person quickly fade from view, leaving you in the hands of an inexperienced junior solicitor? It may be the latter approach that enables the firm to offer you surprisingly attractive fee deals.
The temptation for solicitors, particularly junior ones, is to present every aspect of your situation as needing urgent attention. This may result from the cautious legal temperament, the fear of being sued unless every possible risk is dealt with, or the simple fact that more legal work generally means more fees.
However, the reality may be that there are relatively few tasks requiring immediate work. A commercial view is one that measures the real risks against the size of your budget. A good solicitor is one that gives you such a commercial view, and not simply an expensive wish list to ensure that you are 100 per cent watertight on all points, however obscure and unlikely.
Establish the price
You need to agree a realistic scope of work and a price. What is a ‘realistic’ scope? It is one which goes beyond phase one (e.g. a first draft document) and covers the whole of the task (e.g. a signed deal). Also, if the solicitor is charging on a time basis, an estimate may be of limited value – there is usually more work than expected.
It is better to agree a fixed fee based on a scope and some assumptions. Some solicitors may be willing to offer more creative charging arrangements, such as success/failure fees or a percentage of deal value. You need to consider any proposed basis of charging carefully as its effect could be to pit the solicitor’s interests against your own. For instance an estimate and open-ended time based charging may encourage some solicitors to negotiate too hard, i.e. string things out. Very radical success/failure fees (e.g. a wholly ‘no win, no fee’ arrangement) may encourage some solicitors to be too soft, i.e. push the deal through at all costs.
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- The UK Bribery Act one year on
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You need to ensure that your solicitor has a full understanding of the up to date facts at all times – for instance any changes in your needs, developments in the relationship with other parties or deadline expectations. You will also need to ensure that other advisers communicate fully with your solicitor – for instance your accountants if the work involves a financial or tax dimension.
In essence, your solicitor should be a close and trusted friend throughout the project. This will be easier to achieve if you have agreed a charging basis which doesn’t pit your interests against theirs.
Revisit your choice
Your needs may evolve as your business grows, so you should periodically revisit your choice of advisers. For instance, your business may have become more niche or complex, or you may simply be able to afford the ‘Rolls Royce’ service where previously you settled for less. There is nothing to stop you repeating the process of choosing solicitors.