Allow me to give you some advice on something I learned the hard way: If you’re starting a business, establish a relationship with a lawyer. Do as I say, not as I did (when I started Palo Alto Software).
I confess. By nature I’m a do-it-yourself kind of person and bit of a hermit, too. I’d rather dig into the Web and play my keyboard than talk to a live person for a solution. Live people answer. So, as I started Palo Alto Software I tended to wing it, do it on my own, save the money, save the time and do it myself.
That’s a mistake. With what I know now, here’s what I should have done:
Find a Lawyer You Like and Trust
Deal with it. We live in a world of lawyers. Trying to do business without a lawyer you can call occasionally puts you in the position of the extras in the old cowboy movies who hide and watch from the corners while the main characters run the action.
True, you can establish your original legal entity using The Company Corporation or one of its competitors. I really like and recommend the do-it-yourself books and software published by Nolo Press. But those and other offerings solve specific problems and don’t mean you’re not going to want an attorney you can call on a regular basis.
You don’t want to ask an attorney about every contract or every deal; but you can’t get through normal business without occasionally needing to confer with somebody about the legal ramifications. And on major contracts, the other party will have a lawyer. So you need one.
If you’re just starting, you probably don’t need an attorney on retainer. Ideally you have somebody you know and trust, and you call that person every so often when the need arises.
For that matter, the simple matter of establishing your business is a good time to establish the relationship. While the online services do a decent job, laws are different in every state, and the best legal entity for you depends a lot on who you are, what you want and other factors that make it a good idea to talk to a real, live human first. Maybe that packaged LLC isn’t the optimal solution for you.
How do you find a lawyer? Ask the people you know whom they know. Look for basic compatibility. Get a list of names and interview them. They shouldn’t charge you for an initial interview. If they do, look somewhere else; that’s a terrible way to start. If you’re just starting the business, you want a general business attorney with small business and startup experience. The most important factor, however, is compatibility. Work with someone you think you’d like to work with. If you’re not sure, talk to some others.
I’ve changed lawyers three times in 25 years of running my own business. All three were smart, honest and good to work with. I changed once because I moved and once because that person wasn’t getting things done. My favorite lawyer was proactive, contacting me on his own initiative to bug me about things that needed to get done, such as corporate minutes. He also recommended other experts, specialists, when we needed extra help with intellectual property such as copyrights and patents.
Tim Berry is the founder and chairman of Palo Alto Software and Bplans.com. Follow him on Twitter @Timberry.
