startup when to hire securities lawyer

Failure to comply with securities laws can wipe out your startup’s cash, and then some. At the most extreme, offenders can face criminal charges on both the state and federal level. It is essential your small business has an understand of the laws before raising capital, and should consider hiring a securities law attorney for assistance.

Full Answer

Should your startup hire a lawyer?

Mar 15, 2022 · Most fast-growing startups get by for long periods of time before hiring their first in-house lawyer. It’s not that startups don’t have important legal …

Do I need a lawyer for my Small Business?

Jul 30, 2015 · Your lawyer can help make sure you know what you can and cannot do under the securities laws. When selecting legal counsel, a startup can also look to a firm that can help connect it with potential seed, angel or institutional investors, as well as counsel who knows how to drive capital raising deals to maximize company proceeds.

Do You Have Your legal Ducks in a row as an entrepreneur?

Securities law is the field of U.S. law that aims to regulate the various aspects of transactions and other dealings with interests under consideration for purchase. Failure to comply with securities laws can wipe out your startup’s cash, and then some. At the most extreme, offenders can face criminal charges on both the state and federal level. It is essential your small business has an …

How much does it cost to hire a lawyer?

Even though cash may be tight, hiring a lawyer for your startup is an investment in your future, and can help get your startup off the ground. Mon - Fri 9:30 am - …

When should a startup hire a general counsel?

You will generally need to hire a general counsel six to twelve months prior to taking your company public. This is due to the large amount of work and complex legal issues involved in a properly handled IPO.

What two characteristics should a lawyer have when working with a start up?

Take note of what the attorney says and does, and look for the following qualities:Experience. ... Understanding. ... Ability to communicate. ... Availability. ... Rapport. ... References. ... Reasonable fees.Feb 28, 2013

Why do companies hire general counsel?

An in-house counsel becomes a cost-saving investment when it seeks the right specialty legal advice from trusted and qualified specialists. They can manage outside legal advisors with a keener, more experienced eye, and free up time that would have otherwise come out of other non-legal employee schedules.Jun 21, 2020

How do you know if you'd make a good lawyer?

You work well with others. That's right—being a lawyer means working with people! ... You can persuade others. The ability to persuade=the practice of law. ... You are independent and self-disciplined. ... You can endure the grind. ... You don't take things at face value. ... You must be able to network.Sep 9, 2019

What personality type is a lawyer?

According to a 1993 study conducted by Larry Richard, the most prevalent personality types for lawyers are: ISTJ (17.8 per cent) INTJ (13.1 per cent) ESTJ (10.3 per cent)Jan 21, 2019

What do you look for in a general counsel?

Outline of Key Attributes and Skills to Be a General CounselJudgment.Deal with complex, significant matters that cut across legal and related areas.Leadership.Use of legal strategically.Anticipate legal issues and risks.Visionary.Ability to inspire others.Hard working.More items...

What is expert guidance?

Expert guidance can help you comply with IRS rules, state laws, and corporate formalities that pertain to whichever type of entity you’ve formed. Tax laws are tricky and frequently change. Seemingly minor factors in business operations can create huge differences in tax liability.

Do startups have DIY?

Startups tend to have “DIY” in their DNA . Founders are likely to find themselves changing the copier toner or fixing a leaky faucet in the moments between updating the business plan and meeting with a prospective investor. Most entrepreneurs are clever and dedicated, but when it comes to legal matters, DIY doesn’t cut it.

Can a lawyer prevent you from being sued?

While even the best lawyer can’t prevent you from being sued by upset customers or disgruntled employees, your attorney can make sure you have the right protections in place so a potential lawsuit doesn’t pose an existential threat to your company.

Do startups need legal counsel?

Every startup will eventually need legal counsel; it’s part of doing business. If you’re hoping to raise capital, bring on new partners, or move towards an exit, your incentive to lawyer up is even stronger, since a company with its legal affairs in order is very attractive to investors. Retaining good legal counsel is an investment in your ...

What Is a Security?

A security represents an investment in a business. It can take the form of shares of stock, bonds, a package of loans or mortgages offered for sale by a financial institution or a financial instrument representing investment in a company or an international project. Shares of stock, convertible notes and stock options are all securities.

What are Securities Laws?

Securities laws exist both at the federal and state level to help govern the sale and issuance of securities. The Securities Act of 1933 is the federal law that requires that securities sold to the public be registered with the SEC and that complete information about the seller and the stock offering is made available to investors.

Why do Securities Laws Exist?

Most financial transactions requires the issuance of securities. Securities laws and regulations aim at ensuring that investors receive accurate and necessary information regarding the type and value of the interest under consideration of purpose.

How do you raise money in compliance with securities law?

While the legal requirements of securities law are intricate, compliance should be entirely manageable for small businesses.

What could happen if your company does not comply with securities law?

One of the things that new entrepreneurs often find most shocking is the degree of restrictions that both the federal and state governments impose on their capital raising activities. Securities law is something they associate with large public companies, not the small nimble companies that they started.

The Bottom Line

Securities law is the field of U.S. law that aims to regulate the various aspects of transactions and other dealings with interests under consideration for purchase. Failure to comply with securities laws can wipe out your startup’s cash, and then some. At the most extreme, offenders can face criminal charges on both the state and federal level.

You may not need to hire a lawyer as soon as you think when starting a business

Once you have a great idea for your start-up business, do you need to hire a lawyer to help you get started? Not necessarily. A lot of the initial steps related to choosing and forming your business entity you can do on your own.

Deciding on Your Business Structure

You will need to decide what type of ownership structure makes sense for your new business. Most states have information on their secretary of state (SOS) website about the different types of business entities you can choose from—solo proprietor, LLC, corporation, and partnership.

Checking for Name Availability

Choosing a name for your business is another initial step you will need to take. While there are some legal requirements related to naming your business, this can usually be done quite easily without the help of a lawyer.

Forming Your Business Entity

Once you have decided on the business structure and a name of your new business, you are ready to form your business entity. If you've decided on a sole proprietorship or partnership, you won't need to file any forms or pay any fees (although partners should enter into a partnership agreement).

Operating the Business

Once the formation tasks are done, you can focus your energy on getting your business up and running, figuring out the best way to sell your services or products, and creating the online presence you want.

Why do startups fail?

Most startups fail. There are more factors that can cause a startup to fail than to succeed. So, startup founders owe it to themselves and their companies to maximize their chances of success. One of the most commonly ignored opportunities is legal issues.

What is a good startup lawyer?

Lawyers are incredibly talented at recognizing patterns. A great startup lawyer taps into his or her experience from advising other startups to ensure that you and your company don’t fall into the same traps that caused others to fail.

Can you fix a legal mistake without penalties?

Some legal mistakes might not be fixable without penalties. For instance, if you violate employment laws by treating someone as an independent contractor when they are really an employee, you may be subject to fines and penalties by the state and federal government (even after fixing the mistake).

Why do I need a lawyer for my startup?

In addition, hiring a lawyer in the early stages can help you address the legal risks around the most common sources of startup failure , like co-founder conflicts. For example, a lawyer can help you prepare a co-founder agreement to protect your interests and the startup.

How much does a lawyer charge per hour?

The lawyers most start-ups will deal with are likely in the $350-$800 an hour range, but this varies from firm to firm, obviously. Most big firms bill in increments of six minutes (i.e., 0.1 of an hour), but some charge in 0.25 hour increments. The range for hourly rates is huge. A junior lawyer at a small firm in a smaller city may charge $150 an hour, while senior partners in big firms in major cities have been known to charge over $1,000 an hour.

Is it important to hire a lawyer?

Hiring and working with a lawyer is often confusing and daunting, especially if you’ve never done it before. But when you’re starting a business, it’s crucial. With the right expertise on your side, you can feel confident you’ve got your legal ducks in a row as you’re getting down to business.

Is LegalZoom good for incorporation?

LegalZoom can be good if you know exactly what you need, but it can’t advise you on what is appropriate for your specific situation.

Where is Rebecca Thorman?

Her blog Kontrary offers career, business, and life advice that works. She writes from Washington, D.C.

Why is hiring a lawyer important?

Hiring the right lawyer for your startup is an important decision because your lawyer will help you with almost every step along the way. Your lawyer will guide you through some of your highest highs (raising your first round of funding) and your lowest lows (firing your first employee). Hopefully, the first lawyer you hire is around through ...

What is a law firm?

Law firms are typically composed of partners, associates, paralegals, and interns. Not all are structured this way, but most are. It is essential that you understand whether the attorney you’re interviewing or a first-year associate will be doing your legal work; and, whether or not that matters to you!

Do I need an outside counsel for a startup?

It is up to you to decide whether your startup will require an outside counsel (a law firm) or inside counsel (an employee of the startup). Typically, startups hire outside counsel at the onset, and eventually hire an in-house counsel to assist with business operations and regulatory matters while continuing to retain outside counsel for more specialized legal matters.

Should I hire an attorney for my startup?

Similar to dating, hiring an employee, or choosing the right sweater, you must feel comfortable with the decision and that the chosen lawyer is the right fit for your startup. We hope this article helps you get it right the first time!

Why Your Startup Needs A Lawyer

How to Find The Right Lawyer

When to Use Legal Software and Online Services

Closing Arguments

• Every startup will eventually need legal counsel; it’s part of doing business. If you’re hoping to raise capital, bring on new partners, or move towards an exit, your incentive to lawyer up is even stronger, since a company with its legal affairs in order is very attractive to investors. Retaining good legal counsel is an investment in your company...

See more on lightercapital.com

Deciding on Your Business Structure

• You will need to decide what type of ownership structure makes sense for your new business. Most states have information on their secretary of state (SOS) website about the different types of business entities you can choose from—solo proprietor, LLC, corporation, and partnership. There are also many online and other resources available to help you...

See more on nolo.com

Checking For Name Availability

Forming Your Business Entity

Operating The Business