Deferred, fixed pricing can help startups get off the ground
Startup businesses will play a significant role in the evolving corporate marketplace in the future – if they are provided with the right professional support from law firms at the outset, argues one managing partner.
In conversation with Lawyers Weekly, Lehman Walsh managing partner Janya Eighani outlined her firm’s new policy of assisting startups by way of not charging fees until such time as funding has been secured for the aspiring business’ venture.
The firm will operate on a fixed-fee basis with those startups, she said.
“Startups are prone to skipping the most crucial step in their business, proper legal advice and services, due to lack of funding. Deferred fees system helps [startups explore] the opportunities of fundraising with access to proper legal services and advice,” she explained.
“Fixed pricing helps the [startup know exactly] what each task costs. It gives clarity and guidance and assists in allocating the limited funds available to the startup appropriately. It helps clients know exactly how much to budget for legal expenses.”
Such a billing approach also means that a startup will get corporate legal services that are deferred until the company does its first funding at some minimum amount, Ms Eighani continued.
“The most well-funded startups know that the fundraising process takes careful research and planning. We take away the stress and assist the startup to prepare for the process. After all, convincing an experienced investor that your team has the grit and tenacity to develop a next-generation product or service is no small feat.”
It is important, she argued, for law firms to support startups in such ways because those emerging businesses will “contribute to our corporate world” in the future.
“The lack of available funding for legal services causes a lot of startups to look at ‘home jobs’ or a DYI approach when dealing with setting up the companies, structuring, shareholding agreements, funding agreements and arrangements, etc. Such corner-cutting manifests itself when things go wrong – and when they do, they really go wrong,” she explained.
“If you have a toothache, you don’t pull out your own tooth; you go to a dentist. When you need agreements, structuring arrangements, taxation advice, etc., you shouldn’t have to resort to Google. We are flexible with our fees, because we don’t want people to pull their own teeth/draft their own contracts.”
There are two professionals every startup will need early on, Ms Eighani continued: an accountant and a lawyer.
“Many startups shy away from engaging the services of lawyers due to limited funding and the idea that lawyers are too expensive. The reason for engaging a lawyer may not be so apparent to most startups,” she said.
“An experienced lawyer will provide vital assistance in almost every aspect of your business, from basic zoning compliance and copyright and trademark advice to formal business incorporation and litigation and liability.”