In the three years that Priori Legal has spent developing its data-driven process for finding businesses the right lawyers for their needs, we’ve worked with a lot of tech startups. Our process asks a potential client to provide a brief description of their needs and matches them with lawyers from our carefully vetted legal network based on numerous criteria, including the lawyers’ detailed descriptions of their experience, skills and practice areas.
After comparing thousands of potential attorney-client matches, we’ve discovered an interesting trend: tech founders are often searching for words that don’t align with the way lawyers describe their skills.
Here are some examples:
Startups are nearly four times as likely to use the term “co-founder” to describe their legal needs as startup-focused attorneys are to describe their skills, according to our data. Startups often use the term in the context of “co-founder disputes,” “co-founder agreements” or “founder agreements.” Attorneys who can add value to early stage companies are more likely to use terms such as “shareholder/stockholder agreements”, “membership/operating agreements,” “partnership agreements” or “partnership disputes” to describe their experience in these areas.
Similarly, startups are nearly three times more likely than lawyers to use the term “vesting” in connection with their legal needs than lawyers are in describing their skill-set. Vesting is an important legal and financial concept in relation to startup equity, and it is clearly top-of-mind for both entrepreneurs and investors alike. By searching for lawyers with experience in company formation, financing, shareholder/stockholder agreements, and even option plans and securities, startups may find the help they need on this important issue.
Delaware is often the jurisdiction of choice for companies (and in fact, many venture capital investors demand it). Because Delaware’s body of business law is relatively sophisticated and well defined, businesses often choose to incorporate there. Startups are no exception. Yet lawyers are four times less likely to identify Delaware as an area of expertise than startups are to use that term when requesting legal help – regardless of the fact that virtually all lawyers with experience in company formation, incorporation and registration have experience with Delaware law.
5. “Terms of Service” or “Terms and Conditions”
Every online business should pay careful attention to its terms of service. These are legal contracts between the business and its users, and it is critical that the terms are prepared by a lawyer who understands the business and its legal obligations. Yet lawyers who work with startups are three times less likely to mention that they can help with terms than startups are to ask for help with them. If a lawyer works in technology, internet law and/or e-commerce, startups can expect them to be able to help with these terms.
Why the Disconnect?
The disconnect between what startups are asking for and what lawyers are offering stems from the fact that, although startups need help with very specific problems, lawyers are accustomed to describing their experience in broad terms. A startup may need help setting up a business in Delaware, but in law school, there is no class called “Delaware Law.” The class is called “Business Organizations,” and it just so happens to include a lot of Delaware law. It follows that when practicing at a firm, it doesn’t occur to most lawyers to list “Delaware Law” as a separate specialty because, in their understanding, it falls under their broader Corporate practice.
Similarly, most lawyers view the concept of vesting as a small but important issue within the much broader question of a company’s stock plan. Vesting might be something that founders fixate on because of confusion or disputes, but lawyers will look at the issue in the broader context of a company’s equity scheme. The result is that lawyers are much more likely to describe their relevant experience using terms like “company formation,” “option plan creation” or even “securities” than a specific feature of a stock plan, i.e., vesting.
Rethinking How to Communicate the Lawyer’s Role
For startups seeking legal advice, it is important to understand that specific needs often fall within broader legal categories. Entrepreneurs can assist in bridging the information gap by educating themselves on these broader categories, while lawyers should do their part by thinking about their practice from their prospective clients’ point of view and communicating the kinds of problems they can solve as specifically as possible.
For our part, Priori works to expedite the re-alignment process by translating lawyers’ offerings into entrepreneurial needs. We’ve developed a tool that maps the legal tasks our network attorneys specialize in onto the broader practice areas understood by our entrepreneurial clients, using proprietary technology to help bridge the gap between lawyer descriptions and client requests and ensuring our clients get exactly the help they’re looking for.