What Type of Lawyer Do I Hire and When?

What Type of Lawyer Do I Hire and When?:

A Playbook for all Founders and CEOs

By Allison Hushek on September 18, 2023

Myth or reality, lawyers have a bad reputation for overcharging clients. When you’re a startup, this causes financial fears for Founders and CEOs. Below is a playbook for which type of lawyer to hire, and when, so you know your money is well-spent.

Intellectual Property: Presuming you’ve already formed a business entity (e.g., S-Corp, C-Corp, LLC) after consulting with a tax professional and a corporate lawyer to understand the pros and cons of entity types (corporations, partnerships), the first step as a new business owner is to protect your intellectual property (IP). Situating your IP correctly at the beginning of your venture is money well spent because it creates assets that will increase the value of your company later.

Copyrights. Copyrights can be a DIY project because they are simple and affordable. An idea is copyrightable the moment it is fixed in a tangible medium. You can add a copyright line at the bottom of any idea the minute the pen hits the paper (“©[year][owner]. All Rights Reserved”). Even though it’s not necessary given common law protections, I advise filing an application through the US Copyright Office (copyright.gov) because it’s cheap. If you file within 3 months after first publication of the work or prior to an infringement of the work, statuatory damages and attorneys’ fees will be available to copyright owners in court actions; otherwise, actual damages and profits would only be available to copyright owners. Be sure to select the correct application to file, as there are different types of copyrights, depending on the type of work (e.g., literary, visual, sound recording).

Trademarks. Trademarks are trickier, so I advise spending the money on a trademark lawyer to file. You can put a “TM” symbol on your logos and names for common law protection, but filing can earn you a circle-R symbol, which looks more professional and again adds valuable assets to your portfolio. Additional benefits of filing include: obtaining proper advice about which class(es) and geographic region(s) to file in so your IP is not built like a house of cards; publicly listing your marks in a searchable database (uspto.gov) to deter others from using the same name; earning the right to bring a lawsuit against an infringer in federal court; and using your U.S. registrations as a basis for filing for protection in foreign countries. Before approaching a trademark lawyer, though, I advise to do the following basic search of the name you selected so you’re not wasting your money on an already-chosen name: (i) google search (check through the 4th page for any similar names in similar industries), (ii) domain names search, (iii) USPTO.gov trademark search, (iv) your applicable state’s business entity search (usually through the Secretary of State website), and (v) social media handles. If there’s a name out there in a similar industry that’s close to the name you selected, choose another name because the costly battle in court down the road is not worth it. Once you’ve settled on a name, be sure to include a trademark line at the bottom of your website, advertisements and presentation decks (“[name] and [logo] Design are registered trademarks of [company]”).

Domain Names. Domain names, unlike trademarks, are inexpensive DIY projects. Once the name is cleared by a trademark lawyer to use (not an easy task since the invention of the internet), snap up any domain names, including obvious misspellings, in whichever URL extension(s) that is(are) applicable to your industry. Don’t overdo it, but don’t be underinclusive.

Patents. If your company has patentable inventions, hire a patent lawyer who is a registered patent practitioner (e.g., a lawyer who passed the USPTO’s exam and met the qualifications to represent patent applicants before the USPTO). A patentable invention is created by a person who invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvements thereof; and it must be non-obvious. If the Founder created the invention prior to the creation of the company, the patent lawyer must draft an assignment from the inventor to the company so the chain of title is perfected.

Initial Policies: You now have a public-facing website and need a Privacy Policy (PP) and Terms of Use (ToU) policy, and depending on your business, possibly an End User License Agreement (EULA). If you have some money, hire a lawyer to draft these, especially if you collect data from customers (and most especially, if from minors under 13). If you do not have the money, it’s possible at this early stage to research some similarly-situated sites and put something together yourself.

Human Resources: If you have employees at this point, it’s safe to assume you’ve hired an HR director or outside HR firm to handle the employer basics: payroll, benefits, policies, anti-harassment training and most importantly from a legal perspective, the IP Assignment and Confidentiality Agreement that should be signed by every employee on the first day of employment. I generally do not recommend having employees sign employment agreements because it can lead to litigation down the road. They can sign offer letters as an agreement to start employment at the agreed-upon terms. If you want to lock in a C-level employee for a term certain, and/or you are offering equity options/grants, hire an employment and/or corporate lawyer authorized to practice law in the respective state that the employment is primarily taking place in to draft these types of agreements.

NDAs: Non-Disclosure Agreements (NDAs) are necessary to protect a company’s trade secrets and should be used when meeting all potential vendors and partners. If you’re meeting with reputable and well-known investors and they tell you it’s not standard procedure for them to sign an NDA, putting the word “Confidential” and using the copyright line on your investor deck should suffice to protect your ideas for such a meeting.

Regulatory Licenses and Permits: Assuming you know the business you’re in well, you likely know which regulatory licenses/permits to apply for. If you’re good at paperwork and following instructions, you can likely apply for these yourself; if you don’t want to bother, simply hire a lawyer who is familiar with your industry to do so.

Commercial Contracts: When you’re ready to make deals, I recommend hiring an in-house counsel to avoid minimum billable hours by an outside law firm. If you’re not ready to commit to adding another employee – because benefits, employer taxes, bonuses and equity grants are too pricey, hire an interim or fractional in-house counsel on a part-time or full-time basis.

Benefits of an In-House Counsel: In-house counsel have less clients and are able to be proactive versus reactive; this minimizes litigation, and in turn keeps insurance rates low. Further, in-house counsel are part of the executive team and have a deeper knowledge of the company’s strategies and goals; this leads to more comprehensive contract drafting which is advantageous when there are future partner disagreements. In addition, in-house counsel implement legal infrastructure for the business; this results in increased valuations, expeditious audits, and when the time comes, accelerated due diligence. Examples of legal infrastructure include: uniforming contract templates for your core business units instead of jumbling through varying partner templates in order to quickly close deals and ensure critical legal protections are incorporated; including necessary IP assignment clauses in vendor agreements to avoid chain of title issues; implementing a calendaring system so contract expirations or payment due dates don’t fall through the cracks; instituting marketing controls to protect the brand; and engaging in legislative tracking to circumvent regulatory problems. Finally, in-house counsel do not have minimum billable hour requirements; this means less surprises on monthly invoices.

Rounds of Financing, M&As and IPOs: If you’ve found investors, you’ll need a lawyer skilled in financing deals to draft the appropriate documents. That may be your in-house lawyer or someone hired from an outside law firm to handle. In the future, if you decide to undergo a merger or acquisition, or take your company public (a very expensive operation, by the way), you’ll need an M&A lawyer or corporate securities lawyer, respectively, to handle the transaction. Again, this may be your in-house lawyer or someone hired from an outside law firm.

Conclusion: From a corporate perspective, there are two sides of a company’s story: finance and legal. Don’t let the fear of being overcharged by lawyers cause you to ignore fifty percent of the corporate story. The playbook above should give you the confidence to have your legal documents and systems in order so you’re ready for the moment you take your company to the next level.

Playbook Law is a solo firm providing General Counsel Services for Startups and Interim In-House Counsel for Established Companies in the Technology, Gaming, Entertainment + Sports industries.

This blog is provided for information purposes only and does not constitute legal advice and is not intended to form an attorney-client relationship.

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