Founders v. Lawyers

Published on: 17 Feb 2018

Relationships. One of the most complex issues that captivated writers and bloggers for as long as we can remember. In the midst of the rise of the knowledge economy and with most of our habits being disrupted by new ideas and creations, we find ourselves stuck in a world of chaos. A world where the law is not up to the standard, legislators are struggling to adapt, and lawyers are lost in translation. 

From a regional standpoint, we are much lagging in awareness and understanding of what the real startup ecosystem is all about and it is not just a wave that has taken its toll on news and conferences but rather a big bang when it comes to the way we deal with each other moving forward. 

Focusing back on the relationship between the entrepreneur and legal services we believe it to be crucial to go in-depth into the relationship between the founder of a startup and the legal service provider looking to cater to such startup, or should I say to provide to this founder. 

The entrepreneur or the founder is not any person, he/she is not an individual that followed a traditional path in life and is not someone you can engage in with the same level of intellect as you would approach any other person. A founder is a masochist who learns to enjoy the painful moments in search for a great success. A founder is someone who knows how to multi-task without jeopardizing quality, and a founder is someone who has a very high level of communication skills, elevated to the point that you cannot engage with him/her without worrying about how the conversation is going to conclude. 

The entrepreneurial spirit requires high levels of dedication, a creative approach to life and no societal boundaries keeping him in convergence with the usual norms that do not leave room for innovation. Indeed if an interaction were to happen on a business level, one would have to grasp the mindset. The dedication of the entrepreneur will need to match that of the service provider. 

The entrepreneur is in a hurry; he is so much in a hurry that it stresses him continually. Nevertheless, he still wants his work to be perfect and this is hardly doable if there were no smart engineering in the process. Ultimately what the entrepreneur wants is a result that enables him to showcase his idea, validate it, and bring users and investors towards it, and then build the rest of it as he/she goes. What he is looking for is a result at the beginning and a starting process as he moves on. 

A startup is a particular and unique structure built around an idea, a team, and an execution method that defies all logic. Each startup begins with a materialized concept amongst a group of people who decide to create a team and execute such idea. At this stage, the team is still not aware of the amount of effort and funding needed, to reach such result, a result that is not even accurately defined yet. The need at this point is for the building blocks: i.e. the shareholder agreement and intellectual property assignments. What legal service providers fail to see at this level is that such client is not a corporate client and does not require more than the minimal intervention needed to build a strong foundation. Legal services providers today remain detached from such reality by not positioning themselves in a way to be startup friendly and to lure those founders into seeking such support without worrying or being afraid of a Hulk-like fee, or a retro style approach. 

Once startups have built a team and started working on the core concept, they will need to structure the relationships and incentives of each member of their team. This is when employment agreements, service agreements, N.D.A's and other relevant contracts come into play. The lawyer at this stage is still not in a position to request a hefty retainer fee and expect the entrepreneur to take it. 

Let’s face it. If you are an entrepreneur, you are a risk taker. You have to be to live with the uncertainty of where your next paycheck will come from. As an entrepreneur, you have to overcome numerous obstacles every day to ensure that your business will thrive and your employees will be paid. You have to push the envelope and bend the rules if you are going to launch your business and make it a success. Unless you are a trust fund baby or have friends that don’t care how you spend their money, building something out of nothing takes courage, creativity, innovation, and commitment. As Peter Drucker says, “The best way to predict the future is to create it,” and entrepreneurs are people who make things happen.

Although entrepreneurs are known to have the unflappable work ethic, they are not rule followers. Part of being an entrepreneur is that there comes a time when you can no longer operate under someone else’s rules. We hate to be told constantly what to do and when to do it. Entrepreneurs were not born to punch the clock.

Lawyers, by contrast, are risk-averse. Many of us went to law school to get a stable well-paying job. The practice of law itself is all about reducing or allocating risk. Most lawyers who practice have never started their practice or started their own business, and they have no idea what the typical business person goes through on any given day just to keep the doors open. In fact, most lawyers are confronted with the cases that result from failed deals which only exacerbates the lawyers’ fear of what can happen when the proper legal precautions are not taken.