Sunday, April 20, 2008

On Being An Entrepreneur's Lawyer: What Alec Saunders Wants

When I asked Alec Saunders, VOIP god, CEO of iotum and all-round start-up evangelist, what he thought it meant to be an entrepreneur's lawyer, he had some thoughts. Lots of them. Here's his reply:

" I think there's a culture shift that has to happen for lawyers and law firms to be great partners for entrepreneurs. I used that term partner specifically too, because that's what's really needed. When an entrepreneur starts up a company, he or she can really only afford a few key roles at the executive level: development, business development, and perhaps marketing. Everything else has to outsourced or fractionalized. Finance and legal are two of the most expensive, as well as being two of the biggest things that have to be "right", or the entrepreneur is screwed down the road.

So, when I say culture shift, I mean:

1. People who have experience. That means either a solid business law firm, or (my preference) a few smaller really smart individual practitioners. Theoreticians or people fresh out of school aren't going to do it. My nightmare is getting stuck working with a junior in a large firm. The biggest value to me is practicality. The two kinds of experience most needed are real world securities experience and contract knowledge. Real world negotiating experience is also highly valuable.

2. People who get things done and done fast. Startups are always operating in the mode that things need to be done yesterday. A lawyer with a file of solid precedents, and a practical sense of how to make them into the documents I need is gold. The last I want to pay for is drafting a document from scratch.

3. People who understand that I have to control costs, without sacrificing quality. A relationship with a law firm where the clock is always running just isn't going to work. A relationship with a firm that will quote me a firm or capped price is killer. An advisor that I can phone and ask a few quick questions of is a necessity.

There's a lot of give and take between an entrepreneur and his / her advisors. That relationship gets built over time, and frankly, I think it should be recognized appropriately as well -- with equity if it makes sense."