• How-to

Establishing and running a startup requires a lot of legality and choosing the right legal advisory is as important as choosing your personal doctor. In a country like India, fraught with multiple compliances, it is imperative to have legal advice from the beginning, starting with the right time to set up your firm. A lot of fundamentals go hayware in the first six-eight months of a new business being set up and firms make the mistake of not seeking guidance from inception. So, be wise.

Needs for year one
Before setting out on your journey to find a legal advisor, anticipate your legal requirements for the first year as a starting point. These would typically include incorporating the firm, obtaining licenses, drafting leases, partnership agreements, employee documents, customer contracts/documents and investor documents, if you plan to seek funding during this phase. Having a legal advisor is equally advisable if there’s more than one founder in order to draft shareholder agreements, or if your business requires IP protection. It’s imperative to get a law firm suited to your needs from the beginning to avoid a crisis later.

Where to look
Start by asking peers in the startup community and other players in your industry. Current or potential investors are also good sources to tap as they usually are well-networked individuals. Other than that, you can try the usual suspects:  friends, relatives and colleagues.

Mind and money matter
Legal advice is still an expensive affair in India. Your main focus as an entrepreneur should be to find a cost-effective legal advisor. These days there is an increasing number of ‘entrepreneur lawyers’ emerging. An influx of U.S.-returned lawyers have gone about to set up startup law firms offering legal consultancy to startups and small businesses. Such firms are usually ideal for a startup, because the lawyers have significant experience, are cheaper than big law firms and share the same mindset as entrepreneurs behind a new venture. Moreover, they seek to grow with you.

Background
You must do the due diligence checks to verify the credibility of your potential legal advisor. Talk to a few clients (current or past) and check their experience with the law firm/practitioner. Client testimonials will give you the ever so valuable insight into the quality of their services. Moreover, your legal advisor should be sharp and efficient, able to understand the needs of an entrepreneur quickly, considering time is an important factor for you.

Experience
Ideally, a lawyer with experience of working in the same industry as you is the best bet. Industry knowledge is critical. On the other hand, there is no harm in hiring a ‘generalist,’ provided the practitioner fits into your criteria of cost and quality.

Remember, never compromise on quality for the sake of cost; it pays in the long run. So do factor in the cost of lawyers when you make your business plan.

©Entrepreneur October 2010

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business plan, lawyers, legal advisory, startup