startup legal advice

Startup Legal Advice: A Boy’s Best Friend Is His Mother; A Startup’s Best Friend Is Its Lawyer

Linkilaw Startup Advice & Tips, Uncategorized

A Boy’s Best Friend Is His Mother; A Startup’s Best Friend Is Its Lawyer

When founding your startup, you’ll be excited and raring to go, eager to jump into the business world and start selling your product or service, building a customer base, and hauling in the profits. And you probably won’t give much thought to startup legal advice and best practices.

But it’s important not to forget that any successful business a strong legal foundation upon which to build. In the digital era, there’s the danger of startup founders dismissing the legal aspects of creating a business quickly and adopting a legal Do-It-Yourself (DIY) approach, which can have severe consequences.

It’s important that you choose the best lawyer for your business, someone you can have an honest and open relationship with to help your business not only resolve all legal challenges, but anticipate them before they become a problem.

Hopefully you won’t be approaching a lawyer to resolve disputes early in your business’s life cycle, but using a lawyer at its inception will ensure that the likelihood of disputes is reduced. Plus, you don’t want to fall into the trap of making ‘handshake agreements’ with your employees, co-founders, or third parties that have no legal basis.

In this blog post, we’re revealing some of the best startup legal advice that every startup founder must heed.

Get Your Contracts Sorted: Startup Legal Advice

Even if you’re entering into the business with your lifelong best friend, you’ll want your lawyer to sort out the relevant contracts and personalise them to best suit your business and its needs. This would include employment agreements, founders contracts, an exit strategy, contracts for third parties, a privacy policy, and terms and agreements.

Such contracts are essential, and there are many stories of the dangerous repercussions of failing to employ the services of a lawyer when forming your business. The most famous instance of disputes arising out of a failure to compile the necessary legal documentation is the Facebook story.

Co-founders Mark Zuckerberg and Eduardo Saverin failed to create a founders agreement fixing their shares of the profits, allowing Zuckerberg to dilute Saverin’s shares significantly. Were they to have employed the help of a lawyer to solidify these agreements, shares of the profits would have been certain and the founders may not have had a falling out. But their mistakes are our lessons, so the moral of the story is: Hire a lawyer.

Prevent Future Disputes With A Founders Agreement: Startup Legal Advice

However strong your business acumen, unless you have professional legal experience, it will be difficult to construct these contracts taking a DIY approach. A founders agreement will outline your professional relationship with your co-founders, while the other contracts will condition your relationship with your clients and employees. Failure to do so will make disputes more likely and settling those disputes more difficult.

You’ll eventually have no choice but to hire a lawyer to litigate these disputes, but you can avoid going through this costly and time-consuming process by cementing your legal relationships at the start.

You Need A Privacy Policy: Startup Legal Advice

Another important reason for hiring a lawyer is that they’ll be aware of recent developments in the law that would require new contracts or agreements, for example a privacy policy. This is particularly essential because of the increased dependence on the web to attract customers and the prevalence of technology for many startups.

A privacy policy will outline to your clients what information will be shared, either within your company or with third parties, and what information will be kept private. A lot of business owners might not appreciate the importance of a privacy policy, but a lawyer will understand the legal repercussions of failing to establish a comprehensive privacy policy.

Final Words: Get Customised Startup Legal Advice

Even though it’s irresponsible, it’s understandable why startups hesitate to hire a lawyer when starting up their business; it’s generally considered expensive, old-fashioned, and time consuming. However, the legal industry has evolved and modernised to suit startups’ needs. 

Now you can get startup legal advice that is affordable and with full price transparency with Linkilaw.

Linkilaw aims to provide cost-effective and personalised legal solutions and documentation for startups and empathises with startups’ needs. Book a free Startup Legal Session and get up to date and relevant startup legal advice pertinent to your specific needs. 

Click the image below to book your session.

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