Choosing A Corporate Attorney
Jan 20 2008

Picture by Sandy Blanchard
rocks-across-water-sblanchard.jpgChoosing a corporate attorney is an interesting endeavor.  I have avoided using attorney’s for Babble Soft in the past because a) they are very expensive, b) sometimes they make you feel like they need to review everything you do for fear of some horrible thing happening, and c) I wasn’t sure what I was going to do with my life what my strategic business plan was.   Since I have a new business strategy and have decided to raise funds, an attorney is a must have.

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I’ve met with a couple and spoken to a few more.  The first I spoke to was the attorney at my first company and although I would love to work with her we both agreed that the firm she is at now is catered more for more established businesses (i.e., very, very expensive).   It is so much better to understand that up front because we have worked on many outside projects together, and I consider her a friend.

The second attorney I spoke to was referred by another entrepreneur in the area.  I liked her and her partner but a few things gave me pause.  One potential area of risk is the fact we might end up doing business with the other entrepreneur’s company which might result in a conflict of interest.  They had good rates and good experience but did not have an in-house tax attorney.  Since Babble Soft is currently an LLC and we’d like to continue as an LLC for at least our first round of financing, having someone who understands the tax implications could be important.

The third attorney I met had done some pro-bono work for me a year or so ago because I guess he knew I couldn’t afford his services at the time.  What I liked about him is that he does have a tax attorney in his firm, has represented several small companies in the technology space, one of my business Advisor’s has worked with him in the past, he was on time for our meeting, said he could help with introductions to potential investors, and he sent a brief follow-up note after our meeting expressing his interest in working with me.  However, his rate is $125/hour more than the attorneys at the second firm I spoke with!

Special thanks to @princess_belle who blogs at GloKay, @chelpixie who blogs at, and LPT who blogs at Direct2Dell who tweeted me things to think about and questions to ask the attorneys.  I plan on making a decision in the next couple of weeks so if you have attorney stories or suggestions to share with me or the blogosphere, please leave a comment.  Thank you!

Author: | Filed under: babble soft, entrepreneur, entrepreneurship, fundraising, twitter | Tags: , , , , , , | 11 Comments »

11 Comments on “Choosing A Corporate Attorney”

  1. 1 Sonia Simone said at 10:29 AM on January 20th, 2008:

    My experience from the corporate world, including working with some fairly good-sized companies (the company I’m with now owns $1B in hard assets and pays taxes in about 12 countries) is that you don’t necessarily need a tax attorney, you need tax experts. An excellent accountant who specializes in taxation issues for your particular circumstance should do you nicely.

    I have an LLC for my side business, and in my experience, the tax implications are not at all complex. Even if you go to a full corporation, there are lots of folks out there who can handily address your tax situation.

    So my advice would be not to shun firm #2 for its lack of a tax attorney–just build that competence w/another firm. I certainly would not pay a $125/hour differential for all of my legal advice just for the luxury of an on-staff tax attorney.

  2. 2 Michelle / chelpixie said at 10:56 AM on January 20th, 2008:

    So far it’s looking like #2 isn’t going to work. If you did get involved with that other business and that conflict did occur…yeah I’d just be careful of making that decision.

    The third sounds best but knowing that he’s a bit more an hour I’d think about how much you’ll need him in reality. If it’s not a lot then it’d be worth it to retain him.

    Not sure

  3. 3 Aruni said at 8:04 AM on January 21st, 2008:

    Hi Sonia – I do have a good tax accountant but so far we haven’t had any complicated things going on. It’s more around the rasising of funds and granting units to future employees. Thanks for the great advice!

    Hi Chelpixie – I will mostly need the attorney for fundraising and probably some future contract work. I’m also wondering if the third one is more efficient/experienced if the actual hours he spends on something is less then really it could be a wash on fees.

  4. 4 Erin Defosse said at 8:51 AM on January 21st, 2008:

    The other significant issue to consider that has not been really addressed here is that whoever you chose should better have lots of experience in the area of business you are entering in. In this case the attorney should be well versed with properly setting up a startup entity, managing the investment transaction (whether from VCs or angels), and should have been principally involved in papering the sale of a startup to another (hopefully larger) company. The last thing you want is to be involved with someone that is learning on your dime. I’ve seen this happen to startups before and the lack of experience will end up costing the company a lot of money and perhaps even put an investment or sale deal at risk. So, my advice is to look at experience and track record first and then see what is the best deal you can get.

  5. 5 Aruni said at 9:28 AM on January 21st, 2008:

    Thanks Erin. That is true. Like they say “you get what you pay for!” Hopefully I’ll be able to negotiate a reasonable per major event fee and keep the other legal expenses at a minimum.

  6. 6 kate mckeon said at 11:29 AM on January 21st, 2008:

    I’ve gone through a variety of attorney interview processes for start-up and very small companies. The realization hit last year that there’s no way to get it all perfectly right the first stab so the question became how to mitigate the possible boo-boos.

    I ended up with an attorney who has practiced small business for 20+ years (small being $1M-$100M). He has a background working with risky ventures, but he doesn’t call himself a tech guy which seems to add 50% to anyone’s fee. He also prefers to keep negotiations collegial thus getting everyone to agreement MUCH faster. AND (bonus, woot!) he’s less expensive than everyone else I’ve used. The last acquisition I did (very simple deal) + my stock consulting agreement paperwork came to less than $1000, total. Unbelievable. He’s been market-tested (arbitration, litigation), but he’s never been driven by money.

    If you can find a corporate attorney that seems chill, you may have a winner. Despite the panic they like to create, a solid corporate attorney with his own shingle is likely to be just fine. Now, I’m not talking about guys who “do corporate and family law,” avoid them. They don’t know which end is up.

    If you know some successful small businesses (not necessarily internet related), give their counsel a try.

    I pay $200/hr. My atty is deeply connected to tax atty and tax accountants and fundamentally understands when to bring one in. It really isn’t all that necessary. If you find yourself spending several hours creating cool deal structures, you are probably wasting time.

    My ramblings. Best wishes in the hunt! I’ve paid $200-$625/hr for legal counsel as a small business owner. I love talking to the really expensive guys, but find they don’t get much done for me. The few thousand dollars worth of difference is really minute in the overall scheme of your business – your peace of mind is paramount. I dare say finding a solid individual attorney who can get to know you, but doesn’t need you as a client, is the best kind.

  7. 7 Aruni said at 6:46 PM on January 21st, 2008:

    Thanks for the great and thoughtful comment Kate! I liked your blog and found interesting your recent post on Entrepreneurs and Angel investors.

    $200/hr is an outstanding rate for a good attorney! Where do you live? Here in Austin (a high-tech town) I haven’t run into a lawyer with that kind of rate with the 20+ years experience. :-)

  8. 8 thom singer said at 9:29 PM on January 21st, 2008:

    Aruni –

    I spent 4 years as the marketing / business development manager for a group of technology focused corporate attorneys. The thing I learned is that picking your attorney is like picking your spouse. You need to find one that you will like during the good times and the bad times.

    Experienced and specialized attorneys are very expensive, but many of them will work with you to discount or defer fees if they believe in what you are doing.

    I suggest you talk to three or four attorneys who have experience with start ups who come from different firms who are tech friendly. You will find that you will quickly make a “love connection” and know the right choice.

    If you do not feel that connection, keep looking. Much like choosing a spouse, if you settle you will regret it later.


  9. 9 Aruni said at 10:13 PM on January 22nd, 2008:

    Hi Thom – good advice. That’s a tall order. Took me quite some time to decide to marry my husband. Don’t think I can get rid of him that easy. :-)

  10. 10 Tony K said at 4:51 PM on January 23rd, 2008:

    Hi Aruni, do you have an email that I can reach you at?


  11. 11 Aruni said at 5:51 PM on January 23rd, 2008:

    Hi Tony – you can always send me an email at blogger at babblesoft dot com. Address should be on the About page. I’ll do my best to write back. :-)