Ms Perfect Lawyer

As a startup, can you afford hiring a US lawyer?

Well, my friend, I would put the question the other way around: Can you afford NOT to? Probably not. You will soon learn that your Lawyer in the US, is what your Accountant is for you in the Nordics – simply put, she is your go to person in all kind of decision making situations relating to the legal and financial side of your business, and you’ll want to make sure to keep her direct number securely saved, and ready at hand, in your cell phone.

It’s true, though, that US lawyers are incredibly expensive. I once got a 1,500 USD bill from a lawyer who helped me change presidents in the company. She needed a standard template and 10 minutes of work to do it. For me, it took 2 weeks of sales to make back the profit to pay her bill.

Hiring a US Counsel

So, let me share some useful tips when hiring a US counsel:

1. The basic characteristics are the same.In short, you basically want the same kind of lawyer as you would look for in your home country. Someone who is service minded, always available, who works fast, understands your business and your needs, who is proactive but won’t overdo things or respond to anything else than you actually asked for. Also, it’s great if she’s easy to chat with, but that is rarely a problem here in the US.
2. Find your dream team. I moved to California to work for Favro in 2015, and I will willingly admit that it took a while before I had put together a ”dream team” of advisors. The fact that I was actually on location, in Silicon Valley, made it a lot easier to go ”shopping” for lawyers. After some searching, I was able to find a great lawyer in Palo Alto, whom I can call regarding just about anything. He won’t charge me for a quick consultation, and when he charges me a fee, he always lets me know in advance. If I ask him something that’s beyond his law firm’s area of expertise, he will refer me to someone in his network. Occasionally, we work with larger and more renowned law firms as well – this can be because an investor asks us, or because we need to make an impression on a counter-party (this all seems very old-fashioned, though, I know).
3. Ask for prices up-front. It’s expensive to hire a lawyer in the Nordics, I know. But it’s even more expensive in the US. It’s actually ridiculously expensive. So, when deciding what lawyer to use it makes sense to ask for her hourly fee. Having said that, however, it’s always the ROI that counts in the end, so an expensive lawyer might actually be worth the money if they contribute a lot to your business. If you hire someone for ”commodity work”, for example incorporation of your US entity, you should be able to get a fixed fee that shouldn’t be all that high, but if you hire an expert to handle your world-wide patents, then you are probably willing to pay a bit more. If you are a non-lawyer, it’s almost impossible to know what amount of work you should expect your lawyer to put on the task. What you do know, however, is what business value is created thanks to the lawyers work. Did you get a deal done? Did he plan your taxes in a good way? Did you cap your liability risk in your customer contracts? Make your own ”budget” – what are you willing to pay to get the work done? What are the business risk of not getting it properly done?
4. Ask who will actually work with my case. Will I get help from an experienced senior partner (at a higher cost), or will I only get help from the juniors? And what is the workload like at the firm? If it’s too heavy, they might not be able to prioritize you as much as you would like to (this tends to happen even more often if you’re still a very small start-up). If it’s too light, they might spend more hours on your case than is really necessary. Also, find out if it’s a firm where they share the profits equally, so you know that people will do what they’re actually good at, since there is no incentive taking work from another lawyer at the law firm with more expertise.
5. Look for a cultural match. Personally, it’s very important to me to work with progressive and socially conscious law firms, who promote gender equality, work life balance for the employees, good leadership etc. I am confident that people will deliver higher value when their motivated by passion, and not by fear.
6. Sign an engagement letter. In the US, it’s standard (and in some states even mandatory) that you sign an engagement letter before the lawyer gets started on your case. Don’t be surprised if you at a later point see the same law firm representing your counter-party in another matter – the ethical rules on conflicts of interest are less strict in the US than they are in Sweden, and can be waived by the client to a certain degree.
7. Be aware of the multiple legal systems. There are two legal systems here in the US – one federal law, and one state law. As a main rule, you’re not allowed to practice law in a specific state unless you are licensed there. This means you will sometimes have to consult with more than one lawyer, depending on the applicable jurisdiction.
8. Expect nothing beyond the scope of engagement. US lawyers are very careful not to exceed the scope of their assignment, according to the signed engagement letter. Needless to say, this is because their professional liability insurance wouldn’t cover them otherwise. This can be quite frustrating when you are on the client side, but if you find the right lawyer you will see that they are probably going to be a bit pragmatic about this.

How to work with your US Counsel

Now that you have successfully found yourself a great law firm, you need to be smart about how you work with them. I try to follow these basic principles to get the best value for my money.

1. Clarify your ask – and overshare information. Make sure the lawyer understands your question, and why you’re asking it. Make sure the lawyer gets all the information she needs to give a good advice. I know that you can be afraid of spamming your lawyer with too much information – you don’t even want to think about the hours and hours it will take for her to go through all that! – but trust me: we lawyers are trained to skim through large amount of information in a short period of time. Rest assured that your lawyer will only deep dive into the things that really matter. And then, least but not last, always make sure there is a predetermined agenda for the lawyer/client meetings, so that you know what information to bring.
2. Ask for a cost estimate in advance.I rarely ask for a fixed price (unless it’s a clean ”Commodity” that I’m buying), since a fixed price will necessarily include a risk premium. Instead, I ask for an estimate and make sure the lawyer is always very transparent regarding time spent and accrued costs, so that I will have an actual chance to do something about it in case it gets more expensive than I originally expected.
3. Decide format of response. Instruct your lawyer how you want her to respond to you: a written memo, a legal opinion signed by two partners, an e-mail, a meeting or a phone call? I often find it most efficient to receive an e-mail in bullet form and then we walk through it in a phone call where I get a chance to ask about any questions I might have. If you’re working on a larger project, for instance a sales process, you will need some sort of project management plan as well.
4. Set a time-plan together.Agree clearly on the deadlines are and make sure you have internal resources needed to set the lawyer up for success. Make sure you work efficiently on your side, so that you don’t become a blocker, or increase the cost. Some people seem to think that a lawyer will take care of everything for them, once you’ve had your introductory meeting. Guess what? They won’t. It’s like buying a gym card: No matter how expensive it was, you’re going to have to lift some weights in order to get the desired result. Work together with your lawyer – it will save you cost, and you will increase the quality of the lawyer work! In addition, they will feel motivated and hopefully prioritize you before other clients.

Legal tech

On a final note, here are some thoughts on legal tech. There are many companies popping up now, that I think will challenge the way big law firms have traditionally worked and been structured. For example, there are tools for personal data handling and tax filing, and there are even tools for how to find the right lawyer to work with (upcounsel, legal.io).

You can also find a lot of information online, and law has become more accessible in a way.  I’m all for doing it yourself, to the extent you have the time to; just remember that an experienced lawyer will need considerably less time to solve your question, than you would have needed yourself, and the outcome will probably be better. Think about the alternative cost. I think, that a good lawyer should be able to advice what questions you should be able to solve yourself, and even point you in the right direction and show you some tools you could use.