1. Do they have the right background / specialization?
Your main lawyer needs to have deep experience with corporate and securities law as it relates to early stage, fast growing companies. IPOs and M&A are a totally different skillset that won’t be relevant to you for a very long time, unless you’re in the 0.001% truly building a unicorn.
And norms vary significantly by broad industries. A corporate lawyer who works mostly in healthcare or energy, just as examples, will not have the domain expertise of someone who understands how scaling technology and CPG companies interact with legal.
2. How scalable are they?
Solo lawyers and tiny law firms (2-5 people) can be cheaper than more established firms, but they lack all of the infrastructure necessary to scale clients. That lack of scalability will inevitably lead to bottlenecks and slow response times when you need things to be moving. We see it all the time.
Scalable lawyers have direct access to a team of paralegals and other attorneys, technology, institutional knowledge, template libraries, support staff, and also specialists (who don’t have to be in the same firm).
Credentials also matter for scalability. Backgrounds of lawyers, schools they’ve attended, other companies they’ve worked for are all signals of how far these lawyers can take you without making costly mistakes.
3. Are they right-sized or overkill for what you’re building?
Very large firms have built their brands, and structured their pricing, around marquee unicorns. Are you building that type of company? If you’re not, their pricing will not only dramatically shorten your runway, but you’ll find responsiveness to be a problem as you’ll be competing for their attention with companies they consider to be their more important clients.
4. Can you trust their advice when negotiating with investors?
Conflicts of interest matter, especially with startup lawyers who will serve as some of your most key strategic advisors in negotiating against repeat players who have far more experience than you do. For more on this, see: When VCs “own” your startup’s lawyers.
Hiring lawyers you can really trust when the stakes are high means not using any lawyers that your investors, who have misaligned interests, seem very interested in pushing onto you.
5. Do other entrepreneurs like them?
Engaging a law firm – highly trained flesh and blood people – is not at all like purchasing a product. There are lots of soft variables around responsiveness, style, even cultural values that can play into whether they’re a good fit for your company. You want to talk directly to the specific lawyers you’re going to be working with, particularly the most senior attorney who will be your main point of contact on the highest level issues.
Lots of founders get burned because they hire a law firm simply due to its broad brand, and then find that they’ve ended up stuck with that firm’s B or C-team. The outcome can be a disaster.
Additional suggested reading: Lies about Startup Legal Fees