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Counseling a startup company presents many challenges. Lawyers must provide complex legal and business advice for aggressive and eager companies. To compound this challenge, startups often require sophisticated advice immediately. To respond to these demands, lawyers must understand the unique characteristics of startup companies. Participants in a recent law.com online seminar discuss managing culture-conflicts between startups and law firms. FROM JOHN DELANEY, MORRISON & FOERSTER , NEW YORK, N.Y. One of the challenges for any lawyer working with startup companies is to adjust to the differences between these companies and more traditional “old media” companies. Startup companies — particularly those in the Internet space — have a number of characteristics of which practitioners need to be aware: 1. Startups often do not have in-house counsel and, as a result, may have difficulty in identifying or articulating issues that need legal attention; 2. Startups are typically inexperienced in working with lawyers and may have misconceptions or unrealistic expectations about what lawyers do and the services that they provide; 3. In light of Nos. 1 and 2 above, attorneys working with startups generally need to be more “proactive” in assisting the client than would be the case in working with larger, more mature clients; 4. Also as a result of Nos. 1 and 2, attorneys working with startups need to understand the client’s business model and the industry in which the client competes; such knowledge will assist the attorney in identifying and addressing legal issues of which the client itself may be unaware; and 5. Many startups are founded by people in their 20s who may have very little prior work experience (or at least prior management experience); as a result, these entrepreneurs — although exciting to work with — may require more “hand holding” than executives at more established companies; for example, whereas a licensing attorney for a Fortune 500 company may draft a form licensing agreement for the company after being informed by the client of the key provisions of the agreement, a licensing attorney for a startup company may have to work with the founders to help them decide what the key terms of the agreement should be. I’d be interested in hearing any thoughts regarding other unique challenges in working with startup companies. FROM JAY BIDWELL, DIRECTOR OF CORPORATE STRATEGY & GENERAL COUNSEL, ADATOM.COM, MILPITAS, CALIF. Outside counsel should also take into consideration human resources within small Internet companies are at a premium. Therefore, such a client will not be able to respond timely to many of the inquiries requested by outside counsel. There are so many things going on, it can be hard to get Internet companies to focus on legal issues with the traditional approaches. FROM EMIL CHANG I concur with John’s message. Having worked both for large law firms and now having worked for several startups as their in-house counsel, I’ll add my two cents. With startups, in my experience, there are two critical issues that I believe all outside attorneys should pay attention to. One is the result of your work and one is time. Startups, until they are profitable, are really in a survival game. Every deal (joint venture, partnership, etc.) may be critical to the company. The job of the lawyer is to facilitate the process and bring it to close (within reasonable limits of course). Quite often, dotting the “i”s and crossing the “t”s are risks to be taken to close the deal in a timely manner. The other point about time is that eventually the startup will run out of money — soon or later. So, everything should have been done yesterday! FROM V. SCOTT KILLINGSWORTH, POWELL, GOLDSTEIN, FRAZER & MURPHY, ALTANTA, GA. I believe the most difficult task for the lawyer in many instances — particularly where the startup is run by someone who is very smart and accomplished in their own field (such as technology or medicine) — is to determine the boundary between what the client does and does not know about business and risk and law, with sufficient accuracy to know how much handholding to give. I believe all good business lawyers adapt the level of detail in their risk-identification and warning efforts, in their explanations of the implications of a deal, and in their drafting, according to how sophisticated the client appears to be in these areas. This is only good practice. The problem is — especially with those highly-educated entrepreneurs [and virtually all M.D.s!] — that these people (a) literally don’t know what they don’t know, (b) may be embarrassed to admit ignorance of anything, and (c) may incorrectly assume that you can just reason through anything if you’re smart enough — that whatever is logical, is the law. This can lead to the client saying, “Don’t bother me with the details, just get the deal done.” …. “And of course protect me.” We have no option but to try to protect the client, but within what range of risk? Sometimes, I believe, you just have to force the client to listen to some lectures about business and law, until by feedback during those conversations you get a feel of just how much they do understand, where their blind spots are, and what level and type of risk they are really prepared to accept. Until you get that feeling of knowing the client, it can be really risky, both for the client and for the lawyer, to “just get the deal done!” If things go wrong, the client may be very tempted to say, “I was counting on the lawyer to be sure I was protected.”

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