How does a start-up company seek legal support? Complete tutorials in this

Absrtact: In September this year, Snapchat's two founders, Evan Spiegel and Bobby Murphy, finally settled in secret with Reggie Brown after a lengthy lawsuit, and Brown no longer claimed to be the original proposer of the app. The news has stirred a wave in Silicon Valley to return to

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In September this year, Snapchat's two founders, Evan Spiegel and Bobby Murphy, finally settled secretly with Reggie Brown after a lengthy lawsuit, and Brown no longer claimed to be the original proposer of the app.

The news stirred a wave in Silicon Valley reminiscent of the Zuckerberg between Mark's brother Winklevoss and Facebook co-founder Saverin. In fact, there have been many lawsuits in the technology industry in recent years, but there is not much legal advice specifically aimed at startups to teach them to nip in the bud before the crisis hits.

Once again, the days of millet, Bilibili and other internet companies or websites in China and abroad also have to face prosecutions and lawsuits, they have to deal with these disputes, or early prevention, to some extent, directly affect the brand and user group loyalty. On the road to entrepreneurship, seeking legal support is the course that entrepreneurs need to learn, the sooner they study, the greater their earnings.

This article comes from the Round Review, who prepares articles that tell stories and also provides operational advice to entrepreneurs to help build good companies.

How much a start-up needs a lawyer.

"When should startups consider seeking a lawyer?" I think, yesterday. "Mr. Callander is currently working with a number of start-up companies in Silicon Valley," said Ken Callander, chief advisor for Value Strategies.

Many entrepreneurs underestimate the need for professional lawyers. In fact, they should have sought legal help at the start of the company, and demand has only increased over time, especially when they intend to withdraw later.

"Once you have a new idea, you might want to start protecting intellectual property." It may be a software or a product design, in the beginning you should find a lawyer to provide protection for the company's core competencies, whether it is patents, trademarks or copyrights. Before sharing with others, you need to use the law to protect business details. ”

These details include who you are going to hire and which investor you are in. After you have the ability to protect your own innovation, your immediate priority is to understand the ownership structure of the company: a wholly-owned business structure? The limited partnership or the General partnership system? A legal person or a limited liability system? Which structure to adopt will be a big decision. The answer depends on these factors: the company's main business, tax matters, the number of partners and investors, and possible legal liability issues.

An imprudent choice will bring about a major financial turmoil in the future. "Many people do not want to adopt the corporate system or limited liability system, because it looks expensive and troublesome, but if you as a sole proprietorship to others, when they want to find fault, he can not only pick a fault, but also opportunistic grab your personal assets." ”

So what is there to pay attention to?

Founders: If a company has multiple founders, and a founder agreement drafted by a professional lawyer can help you avoid lawsuits like Facebook and Snapchat, you can start by clarifying important issues with other founders, including how much they share in the company and what matters to whom. Name & Trademark: The company named and design logo also have some attention. "You have to ask your lawyer to do a good investigation to make sure you don't steal other people's trademarks and make sure that all your assets are really yours, even the registered domain name." "At present, more and more startups need to buy domain names from others (sometimes from the people who have already been registered)." Hire an employee: "To hire an employee for example, you need work permit documents such as labor contracts, employee ownership plans, and so on." On this road you will have countless times to deal with intellectual property and confidentiality related issues, such as senior engineer to design a new product, this product is his or the company's? If there is no corresponding intellectual property agreement and legal documents, then this product is likely to even his. "Confidentiality agreement: When you start working with other companies, confidentiality agreements are more important and it protects your interests." Every company wants the terms of the NDA to be tailored to their interests and technologies. "With the participation of a growing number of suppliers, consultants and third party members, the company has to establish a corresponding operating agreement in addition to the distribution agreement, the license agreement and the concession agreement." ”

"Once the company has expanded to a certain size, you may want to start thinking about selling or merging." At this point, the strength of the law team will allow you to achieve a satisfactory deal. All of this--fundraising or IPO--you need more than just a lawyer, but a lawyer who really understands you and your company's immediate interests. ”

How to choose a lawyer

"You don't want to hire a lawyer who only fills in the form and processes documents on time." This person should understand your industry and what you are doing, he should have the ability to guide you over obstacles that he should have experience with. "Callander said.

In general, entrepreneurs have the following options: A wide range of business groups, boutique firms, self-employed lawyers. When you get a few referrals, most entrepreneurs do it by looking for a lawyer they know and Dendi asking: "Which one should I choose?" ”

"However, this is usually not the best solution. ' Because a lawyer who works well with others is not necessarily the best person for your company, ' says Callender.

Instead, Callander advises entrepreneurs to get recommendations from their peers. "Ask peers, who have they worked with before?" Who has a good reputation? Why is word of mouth good? Callander also advises entrepreneurs to ignore the list of lawyers currently published. "Many of these lists are based on peer evaluations, meaning that you recommend me on this list and I recommend you on another list." ”

According to Callender, Chambers is the most reliable and rewarding legal rating service provider at the moment because Chambers rankings are based on visits to customers. Entrepreneurs can go to Chambers's web site to see the various fields and the industry's ranking of lawyers.

How to find the right person

"What you want is someone who can appear in time when you need him." ”

The founder of course hope that from the beginning to the end with an understanding of their own story, understand their own goals, hands and feet diligent, professional lawyers (law firm) cooperation, but really do this is not easy, the founders often want to "the public find him thousands of degrees."
In search of the object, in addition to consider whether this person is good at company law, contracts, intellectual property, taxation and labor law, Callander also want to remind entrepreneurs to pay attention to the following qualities.
The first is to be responsive, especially at a critical juncture.

"If I write to a lawyer and I'm interested in working with him, and he doesn't respond to me that day, I hesitate to hire him," he said. ”

Second, the lawyer's hands have what kind of resources.

What kind of big coffee do they know? If the lawyer is in your industry for years, they are likely and should recognize the important people who can help your company grow in the future. "Designer, technical advisor ... A good lawyer should bring you countless opportunities. ”

At the same time, personality is also a very important point. "Because you want to work closely with him, so this person makes you feel comfortable to get along with the key." ”

Startups need to look for people with similar risk views. "It's important to share risk. How much risk tolerance do you have? Is your lawyer the same as you? If you want to challenge the limits (within the bounds of the law, of course), your lawyer should point out all the potential risks so that you can make informed decisions. If you're a risk-appetite person and your lawyer is overly cautious, that's not a good match. ”

When you are looking for a lawyer, you can listen to the investor's advice and benefit from the experience of others. "VCs are always close to the law, we often hear the VCs say ' we know each other well, I think you should find them, ' but you have to be clear-headed and this is not necessarily the best thing for you." You may not have much say in the first decision, but in the future you should have the right to make a substitution. ”

In short, when hiring (recommended) Lawyers, you have to make sure that two points: first, this person in the battlefield, experience, and secondly, this person is a good match for you and your company.

Set guidelines, chapters

It is important to maintain a good working relationship by being elected a cooperative lawyer and then setting clear guidelines.

Pricing & Billing: "The so-called work policy, first of all to coordinate between the company and the firm on pricing and billing model expectations." Many customers are discovering that the motivation behind the standard hourly billing model in the market is inconsistent with their goals. This model calculates remuneration based on the length of a lawyer's work, and startups always want to minimize the time it takes and make the cost easier to predict. Therefore, lawyers and clients should discuss a way to keep their ultimate goals consistent, such as a different billing method. ”

Another part of the guidelines should specify which costs are acceptable to the company. For example, some client companies may think that long-distance calls, faxes, a small amount of photocopying, mailing, copywriting and other work should be considered as a charge for the conduct of the company's operations, and should not be counted as legal fees.

Team Composition: Entrepreneurs should also agree on the composition of the lawyers ' team and how to pay the fee to the team. If more than one lawyer comes to the conference, you may not want to pay for a junior lawyer, and you may not want to pay for everyone. You need to show what kind of people your company is willing to pay for. In addition, you will want to discuss with each other about the way the team expands and who decides the final form of the law, because you may not be interested in spending more money on new lawyers, even if he claims to be "able to keep up with your business".

Although the work policy document does not have legal effect, they will still be very useful. Mr. Callander advises entrepreneurs to discuss these specific expectations with alternative lawyers beforehand, even as part of the approval process.

Develop a strategy for a rainy day

Just as you make a blueprint for your product and business model, you have to think about when you will need legal support in the future and how much time and money to spend.

"I'm going to say this with a cooperative start-up, and imagine what your company will look like in the next 3-5 years, from the product to the competitor to the location to the number of employees." They should anticipate market prospects and be aware of what needs to be met in order to maintain growth and competitiveness. ”

The legal plan should be established on the above framework and arranged from a time and financial perspective.

"Do you have plans to expand?" Merger？ Will the company relocate or set up offices in other locations? Will it open up new sales channels or adopt franchising? Are you likely to be supervised? ”

After you understand the answers to these questions, identify your legal needs and develop a strategic plan to determine how to meet these needs, whether through internal or external legal counsel. With this information, you can make a preliminary budget.

The most important thing for the implementation of the plan is to develop metrics and reports that can manage the team's work efficiency and change awareness. Your head indicator should be the ratio of legal expenses to total budget. If the money spent on the law goes beyond the total budget, you need to know exactly where the money is spent, why, and how to avoid it in the future. If you are always overspending, you must face up to the problem and solve it as soon as possible.

Another measure is to spend money on "transaction types" (i.e., assigned legal tasks). You want to make sure that the cost of each type of transaction is within expectations and you know the trend of spending. For example, do you spend a lot of money on employment documents? Does that mean your staff is expanding too fast? This kind of question not only helps you to control costs, but also lets you know how your company is heading in the early future.

All in all, be aware of your company's legal needs and find ways to get the maximum value from your lawyer. The sooner the thing is done, the better.