3 Ways a Lawyer Protects Your Growing Tech Startup

27 Aug 2016

Gadiel Morantes

Gadiel Morantes is the chief revenue officer at Early Growth Financial Services, which addresses the lack of on-demand financial support available to startups. With more than 15 years of experience in sales, marketing and operations, Morantes helps founders streamline the relationship between the sales and business departments and coaches early-stage companies on setting up an optimal infrastructure for success.

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Envision your business as you would an intricate, delicate immune system. Taking a macro view of your business won’t immediately reveal the effects of day-to-day micro decisions, but each step and decision impacts its holistic health. For tech startups, the balancing act is especially delicate as the company evolves.

For example, Uber currently faces more than 70 federal lawsuits. Imagine where the ride service would be without having built up solid legal defenses. Like an unprotected immune system, your tech startup can be sidelined by unforeseen complications at a moment’s notice. Engaging tech-focused legal representation to protect it at the outset can be just the thing to keep your system safe from succumbing to illness.

Legal help can stave off emergencies

Inspired tech founders move quickly to capture their moments, form companies and deliver their solutions to market. Excitement over short-term gains prompts some founders to put off long-term safeguards like securing a company’s intellectual property. But an emergence of the unexpected — no matter how seemingly innocuous — can pose a real threat to your business’s equilibrium.

So think of keeping a lawyer on retainer as your tech startup’s equivalent of regular immunizations. Put it off for even a little while, and your shop will be susceptible to lawsuits, legal complications and other variables that can put it down for the count.

Here’s where you should bring in a lawyer to help you out:

To maneuver you past a potential misdiagnosis. Making the wrong choice between a limited liability company or C corporation can cause issues down the road.

What if you’re worried about being taxed more than once? A seasoned startup lawyer will keep you from classifying as a C corp and direct you to the route of an LLC. Hire a startup-savvy attorney who specializes in this kind of preventive care for young companies. The attorney will also know to recommend registering as a C corp if you plan to pursue outside funding — particularly venture capital.

Startups sometime shy from seeking legal consultation from the outset because hiring an attorney seems too expensive, but don’t let that stand in the way of protecting your company. It is an investment, but startups have options.


Also on StartupNation.com: The Entrepreneur’s Guide to Incorporation


To inoculate you against an intellectual property challenge. Without protection and counsel in place, facing a prolonged intellectual property battle can be costly and disastrous for a young company.

Select an attorney who knows the tech world. Your pick can help steer you clear of pitfalls and lock in the appropriate trademark property protection upfront.

Some boutique legal firms offer specialized tech experience without the costs of a larger firm. Large firms with startup programs may be willing to defer fees for promising companies. Either type can help you identify the structure that will serve you to your best advantage. Once a lawyer knows what kind of system he’s dealing with, he’ll know how best to manage and treat it.

To forecast for further complications. You know the saying about the devil and details. Hazards lie in fine print that only expert eyes see.

For example, what if you need an attorney experienced in working with Silicon Valley venture capitalists and with current knowledge of industry documents and terms? Select an attorney with a background in this field. It’ll keep your startup away from fundraising terms that give up too much equity or a deal that hampers raising more money in the future.

Prevention starts with early detection

Protecting against the unexpected is key to creating a company with a thriving immune system. It’s never too early — but it can be too late — to engage legal representation to help your startup strike the right balance between meeting the demands of today and fulfilling the promise of tomorrow.

Perhaps you’re unsure of how to find the right match for your business. First, activate your network to identify the players; then, do your homework. A good attorney maintains strong ties in Silicon Valley and valuable relationships that will help a startup founder build his business, both of which can be vital to a young company’s long-term health.

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