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10 Signs Your Startup Should Hire a Lawyer

— May 17, 2022

One telltale sign that it might be time to hire a lawyer for your startup is if you start receiving cease and desist letters from other businesses or individuals. ~ Gino Louise Reichert, LSAT Prep Hero

When should you hire a lawyer for a startup? What is one telltale sign?  

To help you know when it’s time to hire a lawyer for your startup, we asked startup founders and legal professionals this question for their best insights. From right from the start to when cease and desist letters begin to show up, there are several telltale signs that may help you determine when to hire a lawyer for your startup.

Here are 10 signs your startup needs a lawyer:

  • Right From The Start
  • When Moving Into a New Space
  • When Ready To Expand and Grow
  • When You Reach a Predetermined Milestone
  • When Dealing With Financial Transactions
  • When Contracts Start Getting Complicated
  • When Intellectual Property Is Involved
  • When Facing Tax-related Issues
  • When Dealing With Local Legislation To Set Up
  • When Cease and Desist Letters Begin To Show Up

Right From The Start

Before you file for your first copyright, before you hire your first employee, and before you interact with your first supplier or customer, you need to hire a lawyer. That is especially true if there are two or more people creating a business together. No two business owners will be on the same page all the time on every legal issue. The first hint of a disagreement is your first telltale sign, and it can be anything from a logo design to an office location.

From the company’s inception is when you need to hire a business lawyer. Who owns the intellectual property? What are the expectations? Who is responsible for what? You have to enter such a partnership anticipating there will be disagreements down the line. Approach it like you would a marriage. Hope for the best outcome, but prepare for the worst. Prepare for a possible fallout, or else the fallout will be far worse than you can imagine. An experienced attorney will help you with all of the hard preparation that goes into that.

Alan Ahdoot, Adamson Ahdoot Law

When Moving Into a New Space

In today’s digital world, startups often begin at home, however, as they outgrow those confines, and you need to move to a more traditional office, it is time to get some legal advice. Simply negotiating rent and signing a lease can cause tremendous financial problems down the road if there are hidden conditions in the fine print.

Different properties have varying legal requirements, whether it is office space, combination areas that includes storage, or commercial property, and having legal counsel review leases and agreements can keep you abreast of latest developments concerning city, county, and state laws. Therefore, when it is time to upgrade your business location, this is the sign that you need to invest in a lawyer to make certain that moving forward, there will be no surprises and that you are informed of the property owner’s and your obligations.

Matt Miller, Embroker

When Ready To Expand and Grow

When your startup is ready to expand and grow, it’s time to bring in a lawyer and get their counsel on the right way to proceed. You might benefit from a different business structure, you might need additional insurance or there might simply be new laws that your business now must comply with that you’re unaware of. It’s better to bring in counsel before you make big changes to make sure that everything is done right and in full compliance of any state, local, or federal laws. It’s better to have the expense of working with a lawyer upfront rather than having to pay exponentially more later on in the future to clear up a mistake or worse, be hit with fines for non-compliance.

Mark Pierce, Cloud Peak Law Group

When You Reach a Predetermined Milestone

While you won’t initially need a lawyer on your team full time, you will want to get an in-house attorney when one of two milestones are reached: you have 75 -100 employees (not including contractors) or your current outsourced legal expenses are twice as much as you would be paying for in-house legal counsel. The benefit of in-house counsel is that they can have intimate familiarity with your organization and be a great catch-all for any and all legal matters. In-house counsel also means you don’t need to hum and haw over bringing issues to an attorney; you can simply contact them and present the issue. You’ll need to weigh how much you are spending hourly versus paying an attractive salary to have General Counsel in-house. 

Lawyers are incredibly expensive, but waiting too long can mean a logistical knot that needs untangling down the line. Be firm about the milestones you feel your business needs to reach and then follow through with finding a trusted attorney.

Gates Little, altLINE Sobanco

When Dealing With Financial Transactions

One telltale sign that it might be time to hire a lawyer for your startup is if you are starting to engage in activities that could potentially lead to legal problems. For example, if you are starting to raise investment capital or finalizing your business structure, it might be a good idea to consult with a lawyer to ensure that you are taking the appropriate legal steps.

Adil Advani, MyPrep

When Contracts Start Getting Complicated

Once you start getting into larger job territory, the contracts needed for those become far more complicated. Whether you’re the one creating them or you’re on the receiving end, when you reach this point in business it’s time to hire a lawyer to look things over. They’ll make sure that the contracts you’re using have all the right sections and clauses needed to protect your business, and they’ll be able to look over contracts you’ve received as well to check for any red flags and to explain anything you’re unsure about.

Colin Toh, Headphonesty

When Intellectual Property Is Involved

If your startup has developed a new product, service, or process, it’s important to protect your intellectual property. This can be done by filing for patents, trademarks, and copyrights. Intellectual property is an asset for any startup and can be the key to success, but it could be vulnerable to theft or copied by competitors if it’s not protected. When you see other businesses in your industry starting to copy your products or services or using your company name or logo, it’s time to speak with a lawyer about your options for protecting your intellectual property.

Danielle Bedford, Coople

When Facing Tax-related Issues

Intuit Must Pay Millions Over TurboTax Marketing Practices
Photo by Nataliya Vaitkevich from Pexels

If you are hiring more people, signing legal documents, and handling big amounts of money, you will realize sooner than later that you need legal advice. Navigating the taxes as a business owner can be challenging, especially in startups that usually need the guidance of an attorney to be registered with state and federal tax agencies. Having a business lawyer to help with anything tax-related will save you money in the long run by avoiding possible mistakes. It will also save you time and avoid a lot of stress.

John Cheng, Baotris

When Dealing With Local Legislation To Set Up

Starting a business takes a lot of hard work and determination, you will already have conducted a great deal of research to be where you are now. Hiring a local lawyer who knows the current legislation in your area is a must to protect yourself and your company. Business documents and contracts are legally binding, a lawyer can draft legal documents, including contracts and agreements, helping to prevent your business from becoming entangled in costly lawsuits in the future and leaving you to focus on doing what you do best.

Robin Roy Krigslund-Hansen, Formula Swiss

When Cease and Desist Letters Begin To Show Up

One telltale sign that it might be time to hire a lawyer for your startup is if you start receiving cease and desist letters from other businesses or individuals. Cease and desist letters are usually sent as a warning from the other party, letting you know that they plan to take legal action if you don’t stop infringing on their intellectual property or some other legal issue. If you’re getting these letters, it’s best to speak with an attorney who can help advise you on what to do next.

Gino Louise Reichert, LSAT Prep Hero

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