Start Right for Startups: Part 1
Whether just at inception, or well into the growth and establishment phase, startups have specific legal needs that often differ from those of other businesses. Managing risk and engaging legal counsel before potential problems become real issues is an important part of ensuring the long-term success of any startup.
The Risks
Startups are special – not only to their founders, but also when it comes to the challenges they face. Many startups are focused on growth potential and engagement, with the more technical and legal items on the back burner. However, without access to legal expertise from inception, many startups risk later challenges which can be detrimental, including contract disputes, intellectual property loss, employment-related problems, compliance issues, and more.
Many large law firms aren't able to meet the specific needs of startups, whether due to cost, inefficiency, or incongruency on pace. Startup founders often end up in a position where they feel that they have no choice but to press on, leaving legal issues to be dealt with later or as they arise. Many founders end up in situations where they are relying on template legal documents, agreeing to contracts without independent legal advice, and guessing on sensitive issues that could lead to later exposure – both for the startup, and in some cases, the founder personally.
Preventing Problems
Startups are more than just small businesses; their innovation sets them apart. While large institutions and organizations often have policies and procedures in place to address common concerns (like conflicts of interest and confidentiality), as well as in-house counsel to review agreements and advise on the legal implications of business decisions, many startups do not have the same protective measures or access to advice in place. A comprehensive approach to legal advice can often seem inaccessible, even if a founder does have the time to focus on problem prevention and risk management as a priority.
The reality is that most startups face different challenges than other businesses which are larger or have more traditional structures. It's important for founders to know that their hard work won't later go to waste or be put at risk because of an unforeseen legal issue, or a problem that was present but not addressed appropriately due to a lack of access to advice. Virtual in-house legal counsel can help address the gaps that startups face as they work to grow.
Why Have Virtual In-House Counsel?
While a traditional legal retainer with a large firm doesn't make sense for most startups and small businesses, access to virtual in-house legal counsel can help bridge the gap and manage risk. The benefits include access to a wide range of legal advice for businesses without their own dedicated in-house counsel (or those that have a full-time in-house counsel, but need assistance on specific requests), such as:
· Providing research, analysis, and advice on potential legal issues;
· Representing companies with outside disputes (litigation, arbitration, mediation, and contentious negotiations);
· Reviewing contracts and agreements; and,
· Advising on privacy, compliance, or other related business and legal issues.
Conclusion
Access to legal advice can make a difference for startups at all stages when it comes to managing risk, addressing disputes, and other important issues that many startups face. Building a strong foundation for a startup requires not only innovation, but effective implementation to help ensure a successful future. With the right assistance in place, startups can flourish, and founders can have peace of mind with the knowledge that potential issues are being addressed before they become real problems.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.