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Friday, February 6, 2009
Inside Legal Services
Lawyers testify about what entrepreneurs should ask of them
By Mass High Tech staff
The Murphy brothers' software-selling family tree
MHT managing editor Rodney Brown on NECN: 22 tech companies give back to community
Andrew Merken
Partner, Burns & Levinson
An upshot of this economic downturn (as with past ones) is an uptick in the number of new ventures started. Employees who are downsized or individuals who see opportunity amid the chaos are searching for ways to run their own company or fill a perceived niche in the marketplace.
The following are the top five sets of questions (not necessarily in order of importance) that you should ask any lawyer you interview:
• What is your experience in my industry? What other companies in my industry do you currently represent or have you represented? With what industry or trade groups are you involved, and in what capacity?
• How are you connected to angel investors, venture capitalists, investment bankers, and service providers such as accountants, insurance agents, headhunters and marketing consultants? Will you “open up your Rolodex” to me in making introductions without charging me for this service? Will you introduce me to potential customers and business partners?
• Will you be doing the work, or one or more of your partners/associates? Who will handle the incorporation/organization, capital raising, employment and consulting agreements, intellectual property protection and licensing? How will you manage the team to make sure that the work is done efficiently, correctly and quickly? How do I reach you nights and weekends?
• What is your hourly rate and the rates of others who I may be working with? How much will each phase of my work cost?
• Will you give me at least three references to current or former clients so I can ask them some questions about their experience working with you?
Russell N. Stein
Chair of the corporate and business law group, Ruberto, Israel & Weiner
While inherently risk takers, smart entrepreneurs are savvy enough to understand the need to minimize risk. That includes making sure their advisers know their way around the industry in question, not just the legal issues, but from a business perspective as well.
When a fast-moving deal is in play, there’s no time for on-the-job training. Smart entrepreneurs want lawyers who’ve been there before — done similar deals, and understand the subtle nuances inherent in their industry.
My experience is very much that they also want a legal team that’s as nimble and flexible as they are, with sophisticated technical skills, sure, but also lean and dynamic enough to move quickly and adjust as needed, to follow the momentum of the deal.
Finally, since budgets are often tight, they want a firm that’s efficient in terms of how they staff and manage a deal.
C. Forbes Sargent
Partner, Sherin and Lodgen LLP
When interviewing law firms, there are many factors beyond whether there are qualified lawyers at the firm that entrepreneurs must consider. First, does the firm have the service capabilities the entrepreneur needs? Secondly, is the firm a good fit with the entrepreneur’s technology or industry? Third, is there a connection between the personalities of entrepreneur and lawyer, as they will be working closely together? With that in mind, here are the questions I am most often asked:
• Have you represented startup companies before, and are you familiar with the issues they encounter in starting and growing a business?
• Will you be the contact person and working on this personally or will you be assigning most of the work to a junior attorney?
• Are you able to devote the time and attention that a startup business needs?
• Are your rates affordable for a startup, and are you willing to be flexible on billing?
John Kenneth Felter
Partner, Ropes & Gray LLP
• What do you know about my company and my business plan?
• What specific experience and specialized expertise do you have that are relevant to this case?
• When will you identify and perform cost-benefit and risk-reward analyses of alternative case strategies that are available to me?
• How will you help me accomplish my business objectives in this case?
• How will you minimize any interference to my operations?
• When will you provide me with an informed initial evaluation of this case?
• What will you do to contain legal fees and make them predictable?
• Will you agree to share risks and rewards and base your fees on various case outcomes?
• Has your firm ever represented any of my competitors?
• Is there any reason why you cannot always be available and devote your full attention to this case?
• Give me three reasons why I should retain you.
• If I do not retain you, who would you recommend to represent me?
Andrew Updegrove
Partner, Gesmer Updegrove LLP
What we look for at my firm is long-term partnerships with talented people doing innovative things. Frankly, what our clients are doing is usually more interesting than what we do, so we like to roll up our sleeves and pitch in. After working with more than 1,800 startups, we know what works and what doesn’t, what to watch out for and what to take advantage of. We think we help our clients succeed, so we like questions that indicate that a potential client appreciates the value we can provide as business as well as legal advisers.
After that, we like questions that indicate the client understands what he or she is getting into, and has the right attitude toward what lies ahead. Experience is great, but the next best thing is a realistic approach, an ability to learn quickly, and an appetite for the substantial work that lies ahead. This firm is my startup, so I know what it’s like to quit a day job and take a blind leap. It’s a heady experience, but one that requires common sense as well as enthusiasm to be successful.
Sarah Columbia
Partner, McDermott, Will & Emery
The first question I am typically asked by the smart entrepreneur is: “How can you grow with us?” This is code for several different questions. Can you help us as we get started with limited resources (i.e. can you work with us to limit our expenses in the early days)? Can you grow with us as we move along our business plan? Do you have the serious technology expertise and depth to support us for all kinds of IP issues?
These are challenging questions and challenging times. It is not easy to find a legal team that will work with you in the early days yet has the depth and expertise to grow with you as you realize your goals and objectives. But it is essential to find a legal team that has exactly this fit. You need to know that, as you grow and expand, the legal expertise of the team can grow and expand with you.
The challenge as the entrepreneurial company thrives is that its growth could bring about assorted needs — technology, licensing, strategy, litigation, partnering, etc. You want to make sure that you are aligned with a legal team that can bring to bear whichever one or more of these resources you may need.
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