Guest Author · January 14th, 2010
Thanks to Walker Corporate Law Group, a boutique law firm specializing in the representation of entrepreneurs, for supporting Venture Hacks this month. This post is by Scott Edward Walker, the firm’s founder and CEO. If you like it, check out Scott’s blog and tweets @ScottEdWalker. He’s also writing a new series on VentureBeat: Ask the attorney. – Nivi
Last week I offered 5 New Year’s resolutions for closing deals in 2010. This week, I thought I’d have a little fun and address the issue of entrepreneurs’ frustration with lawyers. A recent tweet from Bram Cohen, the inventor of BitTorrent, captures this frustration well: “Lawyers are like phone companies. Their bread and butter is in tricking you into racking up minutes.”
There’s a time in just about every entrepreneur’s career when he or she has wanted, in the words of Shakespeare, to “kill all the lawyers”. In the spirit of David Letterman, here are my Top 10 reasons entrepreneurs hate lawyers (I should point out that “hate” is too strong a word to describe the feelings of most entrepreneurs, but it makes for a catchier title than “dislike” or “complain about”). Click here for a brief video version of this post.
#10 – “Because they don’t communicate clearly or concisely”
Lawyers love speaking legalese and hearing themselves talk. I learned this first-hand as a corporate associate for nearly eight years at two large New York City firms. The tax lawyers, the employee benefits lawyers, the antitrust lawyers and the rest all spoke their own language. As a corporate associate in charge of quarterbacking transactions, I dealt with the various legal specialists and had to learn their mumbo jumbo. At times, I was as frustrated as the clients.
In the book Garner on Language and Writing, Former U.S. Solicitor General Theodore Olsen wrote, “Legalese is jargon. All professions have it. All professions use it as a substitute for thinking, and they all use it in a way that makes them appear to be superior. Actually, they appear to be buffoons for using it. The legal profession may be the worst of all professions in using jargon. It’s not necessary to communicate that way. You’re really not communicating, and you’re not really thinking.”
#9 – “Because they don’t keep me informed”
Lawyers often keep their clients in the dark. The real estate lawyer I hired to handle the sale of a property came highly recommended and seemed like a good guy. But I never knew what was happening throughout the process. I showed up to the scheduled closing only to learn it was postponed because of some wrinkles, including the buyer’s financing.
Tom Kane, a legal consultant, notes: “[A] failure to communicate often (as in constantly, frequently, persistently, regularly…) is not only foolish from a professional standpoint (as in discipline by the bar, keeping professional insurance premiums reasonable, and so forth), BUT it is just dumb marketing. One could even say it is marketing malpractice.”
#8 – “Because they are constantly over-lawyering”
Corporate lawyers often have a one-size-fits-all approach to deals. I recently represented a software company in a relatively small business sale (about $10 million). The buyer was represented by a large law firm that sent an acquisition agreement with three pages of environmental representations. When I explained that none of the environmental reps (or indemnities) was applicable to the target because it was a software company with one office lease, the corporate counsel got on a soapbox about his client “not assuming any environmental risks.” He even patched in the firm’s environmental lawyer to support his argument.
As John Derrick, a California appeals specialist, points out in his book Boo to Billable Hours, “Just as the cost-plus contractor has no financial incentive to keep the price down once hired for the job, so the lawyer who charges by the hour has little incentive — at least in the short term — to keep down the hours billed. To the contrary, the lawyer’s incentive is to bill as much as possible. The result can be unnecessary lawyering.”
#7 – “Because they have poor listening skills”
While lawyers love hearing themselves talk, they are often not very good at listening. Entrepreneurs want their lawyers to listen carefully to their concerns and address them appropriately; and they don’t want to be interrupted. I feel the same way, particularly when I am negotiating a transaction and trying to close a deal. I have sat in too many conference rooms negotiating with other lawyers as they played with their Blackberries and answered calls on their cell phones. This is not only rude, but it’s also bad lawyering.
From the Wabet Blog: “While great corporate lawyers have several different attributes, one stands apart from the rest: being an exceptional listener. First of all, it’s essential that the corporate lawyer is always ready and able to listen to the client’s description of [his or her] goals and needs. This sounds trite, but involves a set of skills that is more than simply hearing the words spoken or reading the words on the written page. The exceptional corporate lawyer looks beyond the words to delve into the facts, circumstances and other aspects that define the situation… Some of the skill is derived from training, but to a large extent the exceptional corporate lawyer applies his or her experience and the wisdom derived from that experience.”
#6 – “Because inexperienced lawyers are doing most of the work”
This is the dirty little secret at most law firms, particularly large ones. It even has a name: “leverage”. Law firms try to create the highest possible ratio of associates to partners. The higher the ratio, the more money the partners make. For most entrepreneurs, this generally means paying for the training of young associates.
I discuss this issue in my blog post Behind the Big Law-Firm Curtain: The Good, The Bad, The Ugly, “The reality is that the smaller the client — the smaller the transaction — the further down the ladder the work gets pushed at the big law firms. That’s the way these firms work. The entrepreneur may meet the senior partner at the first meeting for his $15 million acquisition or $3 million financing, but that partner then goes back to his office, calls the assigning partner and gets some young associate to start cranking out the work.”
#5 – “Because they spend too much time on insignificant issues”
Lawyers are notorious for failing to prioritize issues. This is especially true in small transactions. Since I moved to Los Angeles from New York City in 2005, I have handled predominately middle-market M&A transactions, financings and restructurings, a departure from the billion-dollar deals I handled in New York. I expected lawyers on these transactions to produce documents relatively quickly and focus on the key issues of a deal, particularly in venture capital transactions that benefit from standardized documents from the National Venture Capital Association. Instead, I found much of what I found in New York: lawyers spending needless time fighting over insignificant issues.
Foundry Group co-founder and managing director Jason Mendelson recently asked, “Why can’t lawyers know when to leave well enough alone and not feel like every piece of paper needs a mark up? Especially given how expensive lawyers are these days, why on earth would the culture of ‘must mark up documents to show value’ persist? (Answer: lawyers make more money). Especially in the world of venture financing, this is very frustrating.”
#4 – “Because they don’t genuinely care about me or my matter”
Too few lawyers are passionate about the practice of law. Before launching my own firm, I worked alongside many big-firm lawyers who didn’t seem to enjoy what they were doing. This translates to indifference toward clients.
This quote from Zappos CEO Tony Hsieh in a recent New York Times interview struck a chord with me: “I just didn’t look forward to going to the office. The passion and excitement were no longer there. That’s kind of a weird feeling for me because this was a company I co-founded, and if I was feeling that way, how must the other employees feel? That’s actually why we ended up selling the company.”
That’s how I felt at the law firms where I worked. There were a number of passionate superstars at each of my previous firms. But many others were burned out and just going through the motions. “Just another fuck’n deal,” one of my former colleagues once complained to me. That’s why I launched my own firm: to create a team of passionate, hard-working corporate lawyers who love what they do and love helping entrepreneurs.
#3 – “Because their fees are through the roof”
As I discuss in the introductory video on the home page of our website, the traditional law firm business model is broken. Legal fees have sky-rocketed over the past decade, with lawyers at some national firms billing more than $1,000 per hour and lawyers at smaller, so-called “regional” firms, billing more than $600 per hour (see “Law Firm Fees Defy Gravity, Annual Survey Shows”). The number one thing driving these outrageous rates: overhead. Traditional law firms simply pass huge overhead costs onto their clients — expensive office space with lavish artwork and dramatic views; large support staffs complete with librarians, and receptionists; and, of course, high-paid associates.
As a result of the recession and this broken business model, large law firms have recently shed associates in large numbers. LawShucks reports, “2009 will go down as the worst year ever for law-firm layoffs. More people were laid off by more firms than had been reported for all previous years combined.” But as Dan Slater argues in his recent New York Times DealBook post, Another View: In Praise of Law Firm Layoffs, “These layoffs — which in many cases have been paired with salary freezes or cuts and significant reductions in law school recruiting – are the best thing to happen to the legal industry in years. Call it a blessing amid recession. Start with the benefit to cost-conscious corporate counsel, who for too long have been bilked by a law firm compensation model that leads lawyers to prioritize their ‘hourly quotas,’ which determine year-end bonuses, over quality service.”
#2 – “Because they are unresponsive”
We’re all busy, but that’s not a viable excuse for failing to promptly return a client’s phone call or email. Clients may have differing definitions of “promptly,” but one business day is a good starting point. I experienced unresponsive lawyers as a client in personal matters, and I experience it as a corporate lawyer trying to close deals on behalf of my clients. Entrepreneurs crave immediacy (and so do I).
A recent deal I was on ran days late, requiring an all-hands conference call to finalize a few key issues in the acquisition agreement. I distributed an updated version the same day with instructions to the lawyer on the other side to call me for an update before he left for the weekend. The weekend passed. I heard back from the lawyer on Monday afternoon, over email — and he had sent a new blacklined version with all new issues raised.
#1 – “Because they are deal-killers”
Lawyers are often viewed as deal-killers because of their failure to set a positive tone and their annoying habit of raising all sorts of reasons why a particular deal won’t close or why a particular idea won’t work. One of the better lawyers I worked with at a firm often said: “Good lawyers are able to identify significant potential legal problems; great lawyers provide solutions to those problems.”
As James Freund, a professor and retired partner at Skadden Arps in New York, points out, “In a transactional practice, nothing comes easy. There are invariably two opposing points of view on significant issues, and the parties will even clash… over a circumstance that may never come to pass. Every disputed issue has to be resolved in order for the deal to take place. And the business lawyers bear the primary responsibility for getting it done. Viewed in its broader context, this activity falls under the rubric of problem solving. Unless you’re a problem solver, you’re unlikely to be an effective business lawyer. And the problems that stand in your way aren’t limited to transactional matters… they can involve dealings with regulatory agencies, tax planning, strategizing about how to protect intellectual property, and on and on.”
Conclusion
While much of this list includes criticisms of my industry, I hope it helps initiate dialogue among entrepreneurs and the lawyers who represent them, to improve the value of the services we offer. And, please remember, I put this list together in the spirit of having a little fun. What experiences have you had with lawyers? Feel free to share in the comments section.
If you like this post, check out Scott’s blog and tweets @ScottEdWalker. He’s also writing a new series on VentureBeat: Ask the attorney. If you want an intro to Scott, send me an email. I’ll put you in touch if there’s a fit. Finally, contact me if you’re interested in supporting Venture Hacks. Thanks. – Nivi
Topics Entrepreneurs · Lawyers · Sponsor
Normally, I don’t write comments to praise, I try to contribute something. But this time I just have to say thanks. I knew some of this, but the manner in which you nail it is so right. Communication and listening is so key with anyone, but lawyers are so used to people asking their opinion that they think they automatically have to give it and give it all.
I coach lawyers and am going to pass this along to all my clients.
Thanks, I learned something today.
Thanks Lorin.
Great post – #8 and #5 are big problems for many a corporate lawyer. We need less hand-wringing and more actionable advice and counsel.
Thanks Josh.
This is a great article. It should be required reading for lawyers that work with startups. Law school does not adequately prepare attorneys for the reality of practicing law.
Thanks Yokum – I’m a big fan of your blog (best legal-related one I’ve seen). Cheers.
Bravo! Our client who gave us the tagline “Lawyers You Can Love” sent us your blog post. As Colorado high tech lawyers, we’ve built our practice from the client perspective–responsiveness, realistic ROI based legal solutions, integrity and relationships are critical to us. It’s why we love practicing law and we have great clients.
We’ve embedded these principles into our firm, http://www.colsonquinn.com/services/.
Great – thanks for sharing.
Lots of good points here. Many lawyers focus on the quality of their skills and not enough on being a trusted advisor. Startups in particular need a trusted advisor.
Thanks Matt – I agree.
Thanks for the link to my tweet, Scott.
You cover the problems very well. My particular gripe in that tweet had to do with the practice of billing up several hours to answer a question asked in email, when all that was really wanted was the answer *if* the lawyer knew it off the top of their head. Next time I start a small company I’m going to have a policy that any hours billed need to be approved in advance, after estimates of how many they will be are given.
You’re very right about the over-lawyering, and the NVCA docs in particular. There’s no reason in principle why one couldn’t take an NVCA document verbatim and simply fill in the blanks and do a round of funding without needing a lawyer at all. The contracts which people go into when they buy a candy bar are equivalently complex, but they’re implicit and contained in the uniform commercial code, and always going with the boilerplate works for everybody.
Associates doing work is a real problem. I’ve found that insisting that all work be done by partners results in better work for less money in the end, even though the nominal hourly rate is much higher, because an associate will bill for several hours researching a subject which the partner already knows off the top of their head.
Not only is the biggest problem with lawyers them being deal-killers, but being general activity killers. Too many inexperienced entrepeneurs get into ‘The lawyers say we can’t do X” disease. Lawyers can’t tell you you can’t do something. They can warn you about risks, and in extreme cases tell you that something is such a bad idea you’ll need to get someone other than them to do it (although I’ve never personally been told that) but the judgement call of whether the risk is worth it is the entrepreneur’s. Since lawyers are trained in risks and don’t generally even think about the business, they always advocate being overly conservative, sometimes to ridiculous excess.
All this sounds much more negative on lawyers than I generally feel. I view lawyers as performing a necessary function, but their costs can easily skyrocket and need to be contained, and their advice needs to be taken with a very large grain of salt. I don’t have the deep distrust for them that I have of, say, sysadmins and HR directors, who who are entrusted with running the core systems for a company and can easily get away with all kinds of stuff if they’re of dubious ethics.
Bram, many thanks for your insightful comments. As I note on my site, I’m building a different kind of law firm to try to address the issues you (and I) have raised (see, e.g., http://bit.ly/82QTxQ). I think the biggest hurdle I face is educating entrepreneurs – so that they have a better understanding of how most law firms work and what they are paying for. I really appreciate you taking the time to read my post and provide your input. Take care.
Seems like this article largely points out that entrepreneurs need to take ownership of the process and manage their lawyer(s).
Yes, that’s an important take-away. Thanks.
As soon as your lawyer says they are your business partner, fire them, they are not your partner, they are a tool to get a job done just like a computer is. Nothing more, nothing less.
I have to disagree Chris. Good lawyers are good advisors.
I agree with Nivi. A good lawyer can add a lot of value, including helping his or her client think through some of the key business issues in connection with a transaction.
Superb piece, Scott. Twittered it as soon as it popped up in my reader. 🙂 Nice job.
Thanks Rob.
Scott: Thanks for writing this post – solid examples and points.
Here my 2 cents.
Doesn’t it all really come back to #4 – “Because they don’t genuinely care about me or my matter”?
I’ve worked with dozens of lawyers over the years, and the ones that sucked have all been due to their lack of “caring”.
Yes, in some circumstances you want the “cost-effective” solution, so you overlook that.
However, in certain situations (like first time entrepreneurs, complex negotiations, financing, distribution deals, etc.), it’s invaluable to have legal representation that you trust — they understand what the hell you’re trying to do (big picture), and realize the big payout comes when everyone succeeds — oh, and they actually care.
I love my lawyer — he’s a freakin’ rockstar, works with us day & night and we truly feel he has our best interest at heart.
You’re right, Dan – good point. To a large degree, it all comes back to whether or not the lawyer is passionate about the practice of law and has made it the number one priority in his or her life; if so, it will translate into genuine caring. Indeed, passionate corporate lawyers are constanting worrying about their clients and the deals they’re working on. They think about issues in the shower; they think about them in bed; and they wake-up in the middle of the night thinking about them.
If you want to test whether your lawyer is passionate about the practice of law, send him/her an email at 6pm on Friday and see how long it takes to get a reply. If you don’t hear back until Monday morning, you know that he or she has better things to do than worry about clients over the weekend. Bottom line: if my client is working, I’m working.
Finally, with all due respect to my fellow corporate lawyers, financings and most of the other legal work for startups are not rocket science. That’s why finding a lawyer who genuinely cares can be more important than the bio.
Thanks again.
Let’s not dance to the music of conventional wisdom because it isn’t wisdom.
Most lawyers are not great, only a few are. The rest you can hate. So? Most developers aren’t great either. Most CEO’s aren’t great. Most {insert job function} aren’t great.
Find greatness, find the exception, then you won’t have to hate…
GK also left a great comment on my Facebook wall: “This is true of most lawyers but not all, find an exception and you shall find that none of these reasons apply.”
That’s great advice (most advice isn’t great). Thanks.
Hello. I’m a Canadian law student (with a heart for entrepreneurship). I enjoyed your post and will be keeping your top 10 in mind as I start my career – thank you and best wishes.
Thanks Michael. If you ever need any career advice or you just want to chat, please feel free to call me (+1 310 859 7177). Good luck.
1. An executive with 50 years of experience in Silicon Valley once told me that most lawyers are worth $600 an hour 2 hours a month and $100 the rest of the time. This executive used to deal with guys like Hewlett and Packard and John Wilson. He is right. The lawyers went to Ivy league schools, Stanford, and Cal like the rest of us and are not worth 10x engineers salary. They do not add value to the process. The merely protect the process.
2. If a lawyer starts to hem and haw about giving you an estimate run for the hills. They either do not know how to do the job and are going to charge you to figure it out or they are a crook and are planning on over billing you.
3. Ask people you trust for a good lawyer. Check around and find out who the lawyer (not the law firm) represents. Rock stars are usually over rated and don’t do the work. You will meet them once or twice at introductory meetings and you will never see them again.
Thanks for your comments. I disagree, however, with #1 — I think a strong lawyer can add significant value. Indeed, I was involved in a number of large, complex transactions while working at major firms in New York City and the structuring by tax lawyers and the counsel (and judgment) of experienced corporate partners were invaluable. A strong lawyer can also help the business guys think through some of the key issues in a complex transaction (such as a hostile takeover, a tricky securities offering or cross-border M&A).
With respect to startups, the late Craig Johnson (founder of Venture Law Group) wrote an outstanding chapter in the book The Silicon Valley Edge with respect to the role of lawyers. Here are a few quotes: “Lawyers are better positioned than other professionals to provide the kind of business advice and contacts beginning entrepreneurs need. . . . It is often a lawyer’s ability to make a key introduction to a potential source of funds or corporate partner that a beginning entrepreneur values most… Although start-up lawyers in Silicon Valley draft documents and follow form books, too, they usually play a much larger role in the businesses being started… Silicon Valley can be thought of as a network of networks, with certain people acting as gatekeepers. The successful business lawyer is one of those gatekeepers. Others in the network value their judgment and experience.”
Thanks again.
I’ve had great success this year serving my small business and start-up clients with a monthly flat fee model. It’s just that – a flat fee, not another way of counting minutes. I don’t keep time sheets. Clients don’t take advantage of my “as needed” counsel. They call me when they need help. I help them. Simple.
This plan cuts right through almost all of the topics listed above.
10. Because I’m not getting paid by the hour, I communicate concisely.
9. I communicate promptly, because I want matters checked off my to-do list – I’m not given any incentive to let things string along.
8. I don’t over-lawyer in order to justify big fees, nor do I look for short-cuts to under-lawyer a project into a too-small budget.
7. Listening is important to getting the job done right and promptly, since I’m not getting paid by the hour, working efficiently is critical to my profitability.
6. I’ve been solo for the past 5 years, so having someone to leverage wasn’t an option. Next month I’ll have an associate joining me, so we’ll have to see how this goes. Legal practice is a business, so the cost of labor is always going to be an issue. The key is making sure the clients are serviced in a way that creates the right balance of value/$. There are no simple answers to this issue.
5. Because I’m not getting paid by the hour, my incentive is to solve the problem as quickly as I can, which requires a focus on the priority issues. I have no incentive to write scores of file memos addressing minutia if an email that cuts to the chase and makes the minutia irrelevant will get the job done.
4. The only way I can be profitable is to keep clients for the long term, so I have to truly care about them as people and accept their matters as my own problems. If I don’t care about them, they won’t stick with me.
3. My lowest monthly plan is only $250/month (for a one-year commitment), excluding litigation and out-of-pocket fees. This covers most business formations, contracts, and as-needed consulting. Heck, I even throw in a trademark application if they need it. That’s not through the roof, in fact, it’s really inexpensive. But, having the 1-year commitment and automatic credit card billing allows me to project cash flow and makes an incredible difference when it comes to billing. It has changed my practice and life, literally, for the better.
2. Responsiveness and communication go hand-in-hand. The ability to project cash flow has allowed me to hire an assistant (and a new associate starting next month as discussed earlier) which is allowing me to delegate scheduling issues and be as responsive as possible while allowing me more time to actually do the work.
1. Deal-killing ticks me off. It’s not a lawyers job to make the decision and eliminate risk. Risk can’t be eliminated without killing most deals. Our job is to explain the risks and help manage the risks for our clients. These are CLIENT decisions – it’s their business and their life. We are here to counsel, not kill.
I’m happy to share more about this flat fee program and I just launched The Creative Business Lawyer Program to teach other lawyer how to create and implement the flat fee program I’ve been so successful with since May 2009. If you would like to know more about it, check out the new web site at http://www.creativebusinesslawyer.com
Thanks for the great article!
Great post!
I am the co-founder of Rocket Matter, a provider of web based legal productivity software. Our clients are solo, small and medium sized law firms.
As a business, we are a consumer of legal services. We have a recurring, monthly, flat-fee agreement with our law firm; it’s similar to what Kevin outlined above. It’s been ideal for us for several reasons, but 2 simple ones are
1 – We can predict cost.
2 – We don’t feel pressured to call, not call, or hurry through a call with our attorney. This was a challenge with our first (large) firm.
As an entrepreneur, I love this arrangement because I have found it delivers the best value to our organization. In addition, the bond between our company and our law firm has been strengthened. They feel much more like part of the team.
As a provider of services to the legal industry, we have found there is a significant movement towards value billing structures. There are a multitude of ways these arrangements can be structured, but most revolve around some variation of that outlined by Kevin in #3 of his response.
If I could now only find a good accounting firm that also offered value billing, my life would be more complete.
This is very good advice for just about any lawyer that is not in the BigLaw trap of having to bill insane hours at rates that often do not make sense.
Unfortunately, many lawyers think they “add value” by overlawyering a deal. Finding the balance is the hard part, and it takes experience and perhaps even a little gray hair. (Some clients, however, actually expect what some call overlawyering, so you have to be prepared to be as thorough as the client wants.)
Clients, don’t be suckered by so-called “blended rates” as a form of alternative billing. See #6 if you have to ask why.
When I was a younger lawyer I was always told that flat fees never worked because the dynamics of each deal were different, thus making quantification difficult. Rubbish. A good lawyer ought to be able to give you a reasonable idea of a fee, or, better yet, quote a flat rate. That said, my clients still prefer hourly billing as a rule because they know my rate is half of BigLaw’s, I bill fairly and I work quickly, even if that is to my detriment.
Unresponsiveness to client queries in this day and age is unacceptable. Some lawyers find night and weekend emails as an intrusion on personal time. I don’t get that. What is the big deal about spending a few minutes on the BlackBerry after hours to make sure a need is met? Passion for what you do can’t be taught, regardless of your profession.
Finally, anyone who says lawyers don’t add value probably, IMHO, have not worked with a good lawyer.
As Ariel said, and as Kevin has implemented in his practice, value pricing or ‘open pricing’ is the future. It is a challenge to kill the billable hour but the economy is finally forcing, if not its demise, then its relevancy.
Entrepreneurs need to find the right lawyer for their particular project. They are out there. The most progressive on value pricing are the solos and small firms. There are many talented lawyers who present themselves as ‘outsourced general counsel’ because most small firms can’t afford full time legal counsel. Yet these same firms need legal counsel.
You will see more and more progressive lawyers switching over, finally, to value pricing/open pricing and this benefits the client and the client/attorney relationship.
Great post! However, I have to disagree (a little bit) with #8.
“Overlawyering” is relative. A good lawyer will cover all of the bases, not for the purposes of billables, but to protect the client.
I’ll give you a great example. My partner was retained to review a contract transferring ownership in a small, closely-held corporation to a key employee in the firm; our firm represented the key employee. While the contract looked ok, my partner had a question: what does this mean to the employee in terms of income? He asked me (a tax attorney) to take a peek. My answer: the entire transaction, as drafted, was income to the key employee for tax purposes. As in several hundreds of thousands of dollars. The key employee had not even considered that possibility.
You shouldn’t think of hiring a lawyer as asking someone to just write a contract or incorporate a business. That’s like just going to a doctor to get an X-ray or a lab test without discussing what the results actually mean.
A good lawyer should offer comprehensive legal advice, not just type in a few legal terms. Sometimes that means pointing out potential pitfalls or questioning the substance of a transaction. And yes, sometimes that leads to more work. That’s not over lawyering. It’s doing a good job.
I have written about this issue in my blog at http://www.dypadvisors.com/blog/2009/07/16/clients-lawyers-good-business-strategy/
As one of my Twitter followers said, business people get frustrated with lawyers when they advise “haphazardly” on business matters, even when they don’t really understand business.
Unfortunately, that happens all too often. Doing more deals doesn’t necessarily solve this problem because lawyers focus on the legal issues. Business and legal savvy, not just an extensive network, is what adds value to startups.
I have been experimenting with various models but not this one. I am wondering whether that would work for management consulting, at least the advisory part after a project. I think I might try it out.
That’s an easy question to answer… I do it for all my management consulting clients to great effect. My sales cycle is shortened, I make way more money, and both my clients and I are happier with the time spent on their issues.
Scott,
I loved your post!
As a mexican attorney I’ve had to deal with US attorneys and it is very easy to recognize the issues you mention.
Hourly billing is not common in Mexico (unless for US law firms) and most clients down here will never accept hourly billing.
Effective communication I think is what most business people crave from many lawyers (transactional and litigation).
Best regards from Mexico.
Great post!
Thanks for putting this together.
My readers (scientists transitioning to entrepreneurship) will find a lot of value in it.
Neale –
Could you give a link to your site? Would be interested in what you have to say if you have a readership of scientists transitioning to entrepreneurship.
Thanks.
Great post!
I have to add one more:
I really hate it when lawyers take too much initiative and start poking into the management work just to incur minutes. A number of times, lawyers have taken initiatives to start communication with counter-parties about specific issues and have ‘missed’ the part that we have to first ask them to start doing anything.
What a great summary and I will echo the thoughts of many commenters — this should be required reading for new and senior lawyers. My pet peeve is #10 (followed closely by #9). I am a big fan of speaking in plain English. I have colleagues that often put this down, saying my style is unprofessional and I “don’t sound like a lawyer.” I think they just don’t get it.
Clients want to know and connect with what is going on and should be part of the process — it is their life, business, or dream. We are working for them, some many of our brethren seem to forget. Thank you for the great article.
Great article. I do agree with most of these, but have worked with many lawyers in the last 10 years and the newer (younger) lawyers do not lack the social skills that most lawyers do. We all hate lawyers until we need them.
Hi — Thanks so much for your article. I’m a law student in Boston working in my spare time with a startup on some patent issues (with final word from a separate law firm, of course). While everyone else is chasing the law firm dream in the insulated world of law school and recruiting — without a clue as to what law work entails — I’m proud to say that I’ve already learned a lot of the lessons that you outlined in this article. I’m passionate about startups and I revel in their day-to-day decisions. I know that I’m inexperienced but I know they are thankful for the work I do. I’ve even come across a lot of the irritations (10, 7, and 4 spring clearly to mind) that you’ve listed. I’ve discovered what putting the client first really means and your article has really affirmed that for me. Thanks again.
Hourly billing is not common in Mexico (unless for US law firms) and most clients down here will never accept hourly billing.
Effective communication I think is what most business people crave from many lawyers (transactional and litigation).
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Law Help
Part of what you’re seeing is lawyers practicing defensive law, just like doctors practice defensive medicine. Sure, it’s very unlikely that the environmental issues on a small office lease will ever come to pass. But, if they do and your lawyer didn’t address it, you’re going to sue him. Or at least that’s the fear.
#4 is what gets me. Never any real excitement about the endeavor or questions about where the concept came from or how we’re doing. They’re different animals, for sure.
Steve, I think you nailed it. Our firm just mentored at Startup Weekend, and my favorite part was the excitement of starting something.
Our talk on legal tips was called “the most down-to-earth, useful thing I’ve ever heard from a lawyer,” so we posted it online.
http://blog.claritylawgroup.com/?p=202
Topics include:
• 3 non-negotiable things you need to protect your downside
• Major discussion items for co-founders
• The dangers of paying people with equity, and how to do it right
• How to keep options open for your future upside
I will say that I formerly had a similar experience to what’s described here with an attorney and it slowed my company down, slowed me down, cost a fortune, and made me worry whether I would always have this problem.
I can honestly say that my company’s lawyer now is great and it makes all of the difference in the world. He doesn’t charge for every little thing, gives us great guidance, is always on the lookout for strong partners and contacts for us, and responsive doesn’t begin to describe how hard he works to turn things around quickly. At this point, I volunteer to have our attorney red line agreements with our partners every time because the time savings in closing the deal outweighs us picking up the tab.
Since I don’t want to advertise here, if anyone would like a referral to our attorney, please feel free to email me. joey@earbits.com
There are good lawyers and there are bad lawyers. Good lawyers don’t have time to deal with start-ups and their very banal (legal) issues. So you end up with the bad ones and with the problems you describe above.
legal templates for term sheets, series A financing docs, software development agreements, NDA, Convertible Notes, and other forms for start ups can be found at http://www.mystartuplegaltemplates.com
Becuase until the passage of the PROTECTION OF lawful COMMERCE ACT these greedy lawyers wanted to sue the gun makers into bankruptsy to line their pockets and support their demacRAT supporters
Basically, there is one reason why entrepreneurs hate lawyer and that is they are greedy, selfish bastards. They cost way too much and once they get their teeth in you they are vampires. It is ABSOLUTELY dumb to start any venture without a solid IP strategy and to patent and secure the global TM of your idea is going to cost in excess of $60K… that’s a shit ton of money for 99.99% of entrepreneurs… The majority of entrepreneurs feel like complete helpless victims when dealing with attorneys and fear having to use them… Once you have millions in the back they become a great asset!