Companies and their founders can lose millions of dollars because they didn’t have their legal stuff in order. Sometimes they lose their entire company. Before GreenSocks started, I personally lost over $100,000 due to various legal failures. I failed/learned (flearned) on more occasions than I’m willing to admit. Urgh. OkayOkay. I’ll admit to all of them:
- Not having trademarks done properly the first time cost me;
- Commercial contract loop holes cost me;
- Weak employee contracts cost me;
- My most costly mistake was neglecting the legal side of my personal financial structure.
The sad thing is, it was mostly ignorance on my part and partly because I found it “boring”. What a horrible excuse. Reading that out loud reminds me why I take the legal side of startups more seriously now.
So what legal advice do I need?
I’m not a lawyer, so I can’t answer this. Also, I don’t know your business and I don’t know your situation. The only way to know is to sit down with a lawyer and explain your business to them. Be sure to talk with them about:
- Are you ever in public?;
- Financial structure;
- What you do for customers;
- How you get paid;
- What are you personally liable for?;
- Who is responsible for what?;
- Ask lots of “what happens if?”
Where can I find a Lawyer?
The good news is that in most capital cities in Australia, there are lawyers who specialise in startups. They are usually quite tech savvy and they’ve systemised a lot of their processes which can keep the costs low. The problem is, the costs are ongoing and can blow out of proportion. Depending on your situation, they could chew up your entire budget. One solution could be to find a partner, founder, friend or investor with legal expertise.
Don’t just chase the money. Can your investor offer more?
When seeking investment, don’t just chase the money. What else can they offer? Investors are either wealthy individuals or investment firms or a business. They ALL have a good relationship with a legal team in some way. They may even have lawyers on payroll. Don’t be afraid to negotiate free legal advice into your deal. You could even sell it as a benefit to them. Obviously you’ll want an independent lawyer to manage any investments.
Luckily, GreenSocks went through a startup accelerator program called Muru-D which included fantastic legal support from Telstra. Thanks Fiona, Mel and Janelle! They saved us $1000’s in legal fees and helped us to focus on what we really needed. Time saved. Unnecessary costs avoided.
Too long and didn’t read?
Skipping legal stuff is easy to do because it’s boring and we don’t know what we don’t know. This is a mistake and it risks the health of your startup. Find a lawyer and talk to them about everything in your business. If you can’t afford a lawyer, consider finding a business partner or investor who can provide one.