By Brandon Deans, a lawyer with Reed Pope.
Many founders treat their lawyer like a fire extinguisher, only reaching out to put out fires. But the best founder-lawyer relationships work differently. They are strategic partnerships where your lawyer helps you avoid fires in the first place.
Founders who use legal counsel strategically move faster, avoid costly mistakes and spend less on legal fees overall. Here is a practical guide for founders on how to work with your lawyer efficiently and effectively.
Give Your Lawyer a Heads Up and Bring Them in Early on Deals
The most expensive legal work is often completed under time pressure, particularly when the time pressure is avoidable. If you reach out to your lawyer with short notice on a project, you may be forcing a rush job that not only costs more but leaves less room for strategic thinking.
This is particularly true for major corporate transactions such as capital raising and M&A deals. Don’t wait until you have signed a term sheet to involve your lawyer. It is challenging for legal counsel to negotiate a deal effectively when they were not involved in considering the transactional structure and foundational terms.
Early involvement does not necessarily result in racking up legal fees, but instead it means your lawyer can plan time efficiently and spot issues before they become problems.
Be Organized and Share Key Documents
Nothing drives up legal costs faster than disorganization. When your lawyer needs to hunt for information or piece together your corporate history, you will be paying for administrative work and not legal advice.
Your lawyer should always have a full set of your key corporate documents handy, such as articles, bylaws and incorporation documents, board and shareholder resolutions, capitalization tables and shareholders’ agreements.
If this is managed properly from the get-go, you can use your lawyer as the central repository for all key corporate documents, and they will have these documents at their fingertips which will allow them to assist you more effectively on matters going forward.
Understand What Needs to Be Documented
Startups move fast and may treat certain matters informally, particularly at the early stages of a company’s lifecycle. But failing to document certain matters properly or involve your lawyer can cause major issues later.
The following matters require the involvement of your lawyer, along with documentation drafted by them:
Every share issuance, financing transaction or stock option grant, no matter how small
The appointment or resignation of directors or officers
Shareholders’ agreements and co-founder arrangements, such as reverse vesting agreements
Key employment agreements and IP assignments
Acquisition offers or business sale discussions
Significant commercial contracts
Many founders think “we can clean this up before the next round,” but later often becomes never and cleanup becomes expensive. Send your lawyer a quick email when these things happen so they can be documented properly, as documents related to these matters will be scrutinized in any financing or exit.
When in doubt, ask. A quick email saying, “do I need you for this?” costs nothing and might save you from future headaches.
Communicate About Goals, Constraints and Fees
A good lawyer can adapt to almost any constraint, but only if they know what it is. Proactively communicate with your lawyer about budget and fee sensitivity, timelines and urgency, risk tolerance and strategic goals.
Legal costs should not be a mystery. Ask how your lawyer charges and what you can expect. Many firms now offer startup-friendly billing, such as fixed fee arrangements. Having this conversation upfront avoids “bill shock” and helps you budget.
Build a Long-Term Relationship
Switching lawyers can cause friction, since each new lawyer must learn your history, review your documents and get up to speed, resulting in unnecessary additional legal fees.
A lawyer who has been with you from the beginning understands your cap table evolution, knows your investors and can spot issues specific to your situation. They become a strategic advisor, not just a document generator.
This doesn’t mean you're locked into your first lawyer forever, but continuity has real value. Treat your lawyer as a long-term partner, not just a service provider you call in emergencies.
The Bottom Line
Strategic legal counsel is not about having your lawyer on speed dial, it's about involving them at the right times, in the right ways and with the right information. Do this, and you'll spend less on legal fees while getting better advice. This results in a founder-lawyer relationship that benefits everyone.
To learn more, get in touch with Brandon Deans, Business Law Group, Reed Pope: [email protected] or 250.419.5097.