Early stage businesses need legal support for a wide variety of legal issues ranging from employment law to intellectual property protection. Startup businesses can choose to hire a law firm for one off legal services or hire a full-time legal team if they have more legal matters to deal with. However, each startup is different and will have its own set of legal concerns and budget to address them. This article explains the types of legal services startups need and the best legal solutions they can consider to manage their legal work.
What types of legal services do startups need?
At the very beginning, startup companies need to legal support with choosing the right business structure and drafting shareholder agreements which protect both the founders and early stage investors. Once these foundational documents have been drafted, startups will need robust employment contracts to protect their intellectual property (also known as IP) when hiring employees. Technology companies usually have stricter intellectual property requirements. As startup companies hire and engage with clients they will need to comply with data protection legal requirements and protect their confidential information with non-disclosure and client agreements. Startup businesses might also need specialist legal advice on an ad-hoc basis, for example on a specific deal or when a specific event happens. For example, a startup business might seek assistance with meeting the requirements of a new investor.
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How can startups protect their most valuable asset: intellectual property
When a new business is created, its value is often tied to its intellectual property. Founders should therefore protect their intellectual property with contracts. It is important to source legal contracts which are tailored to your specific requirements as every business is unique. Moreover, recycling templates from other startups or companies can lead to mistakes and gaps in your legal protection. It's also important to have the right legal documents in place for your private fundraising activities as unfair agreements can lead to founders losing control of their business or not profiting from a positive sale of the business. Finally, startups should protect their intellectual property when hiring employees as loose intellectual property clauses can lead to employees appropriating core IP for their own purposes.
Should startups work with a startup lawyer or law firm?
Startups can seek different types of legal expertise based on the amount and nature of the legal support they'll need. Experienced startup lawyers can advise startups for a retainer or even stock options whereas law firms might charge fixed fees or retainers. A specialist legal service like LegalEdge is another option which provides startups with in-house counsels on demand. Before working with a legal service provider, check if they have many startup clients or tech clients as this will ultimately determine if they're startup lawyers or not.
How to choose the right legal solution for your business
Whilst it might seem like an unnecessary expense for emerging companies, working with experienced startup lawyers or law firms will ensure that your business has the right legal protection. Moreover, the company will need to have the right legals in place when receiving venture capital or private equity funding which means it's cheaper to invest in legal at the beginning. If using a startup lawyer or law firm seems like an overkill for your specific company, consider using a software platform like Legislate to streamline your contracts and automate your compliance. Legislate offers a suite of lawyer-approved contract templates which can be tailored to your specific requirements. Tech startups use Legislate because it's easy to use and has the right provisions in place to protect their intellectual property. Moreover, tech businesses which use Legislate can easily prove their compliance to potential investors and can easily synchronise their contract data with the tools they use to make better business decisions. To get started, simply create an account!
Legislate is a legal technology startup which allows landlords, letting agents and small businesses to easily create, sign and manage contracts that are prudent and fair. Legislate’s platform is built on its patented knowledge graph which streamlines the contracting process and aggregates contract statistics to quickly unlock valuable insights. Legislate’s team marries technical and legal expertise to create a painless, smart contracting experience for its users. Legislate is backed by Parkwalk Advisors, Perivoli Innovations and angel investors.
The opinions on this page are for general information purposes only and do not constitute legal advice on which you should rely.