In the process of starting and growing ventures, everyone deals with attorneys across a wide spectrum of issues. Depending the business, these range from incorporations to investment documents, operating agreements, intellectual property issues, and many others.
The whole concept of the rule of law goes back at least to the Roman Republic. In many ways it is the foundation of civil society, and much older than relatively new ideas like organized business entities.
I point this out only to underline the fact that the idea of legal advice and structuring is centrally important to what we do as entrepreneurs.
The lawyer's job is to protect his client first and foremost. It is not to enhance the business prospects, unless this happens as a byproduct of protecting the client's interest. This is an excellent point of view for your attorney to have.
What's critical, though, is for the entrepreneur to understand the process and to manage and direct it as the person in charge. In lots of ways this is not a doctor-patient relationship in which the patient is in a subordinate position. If you feel that way about your legal advisers, it is time to have a candid conversation with them.
Attorneys are only as good as the people that employ them. Here are a couple of thoughts:
1. Be certain to drill down on advice that seems to be the conclusion of a train of thought, but where you have not heard or understood "how we got from here to there." I've sen an IP case recently where the advice to the client was largely to miss substantial market opportunities while waiting for a patent process. When the entrepreneur drilled down, he found there were alternatives that accomplished much the same protection without losing the opportunity. Yes, the alternatives carried some risk - but not much - and missing the market is an unattractive idea.
2. When structuring, be certain you - the entrepreneur - understand the tax implications and future limitations you place on yourself in the choices around how you set up your company. If you start a venture with five parts, and later plan to divide them into separate companies, for instance, make sure you have a clear view of the future hurdles you'll face.
3. Ask about size. Some structures fit companies until they grow to a certain size and then have less value. Others are the opposite. Understand which is which and where you might fit.
4. Get the facts and weigh the alternatives yourself. I saw a deal the other day that I, frankly, didn't think was fundable. The solo entrepreneur told me, however, that he had received a termsheet from an angel I knew but that his lawyer had advised him to walk away because the lawyer thought "they could get a lot better terms" elsewhere. I urged him to understand what that meant, (He didn't know) and sit down and talk to the angel directly about what might be negotiable. It isn't the lawyer's place to be making those kinds of recommendations, unless the lawyer is going to invest himself.
5. NEVER let lawyers negotiate on your behalf with potential partners or the other side's lawyers. Do all of that yourself with your business advisers, draft the terms in plain English, and ask the lawyers to prepare the documents. There's nothing wrong with asking lawyers for their advice to you as you negotiate a deal, but don't let them do it. Their role is only to protect you, not to reach an agreement.
6. Make your lawyer walk you through a draft before you give it to someone else. Again, you have to make sure that a new term, concept, or subtlety has not been inserted that you didn't expect, understand, or agree to.
The whole idea here is that your lawyers will be happier with you if you always seek to understand the underlying thoughts, ideas and principles. In addition, if you creatively explore alternatives and "what if" scenarios from your unique entrepreneurial perspective, you will add a lot of value to their work.
You'll be well protected - and successful. A nice combination.