Picking a law firm

Posted on 09. Jul, 2008 by in Formation

An important aspect of finding a good law firm is to verify that they are “plugged-into” the investment community where you want to raise money.  This means that they have a track record forming companies that take investor money, preferably Venture Capital as this is the most sophisticated type of early-stage investor.

The implications for using a good law firm are:

  • The formation will be done with the big picture in mind (raise money, get acquired or IPO).
  • Investors will see your legal representation as a “check-box” and a soft recommendation of your potential.
  • Potential deal breakers will be avoided, such as not having Intellectual Property properly assigned to the company.

So, how do you find the best law firms in your area?  Our suggestion is to find the local entrepreneurial not-for-profit entity.  This local entity/organization is usually state sponsored, but varies from region to region.  This organization will most likely host networking events.  The sponsors of these events will be the local service providers, including law firms, that are reaching out to the entrepreneurs.  Therefore the first step is to find these sponsors, do some homework on the firms, and meet with them.

Each firm will have its own strengths/weaknesses.  The key is to ask around within the entrepreneurial community and find out:

  1. The firm’s reputation with entrepreneurs (if possible, the reputation with investors is equally, if not more, important).
  2. The accessibility of the representative that you’ll be working with (hopefully a partner, but it depends on the size of the firm).
  3. What terms they offer.  This is key, as some firms will allow deferrals of the payments until the first financing event.  This varies greatly on your geographic location, so do your homework to make sure the terms are competitive.

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