When you’re building your startup, and you’re gathering interest, you get busy fast. Consequently, many startups skimp on the legal side, and understandably so. Lawyers can be expensive, might seem better at solving defined problems than building novel businesses, and may not always be the best strategic advisors. So many entrepreneurs focus on building their business, hoping to “manage” disputes as and when they arise. But this approach is almost inevitably going to be costly in the long run, so it is absolutely crucial that you remain strategic and keep a view of what lies ahead. And besides, the above isn’t true of all lawyers, and there are lawyers out there that relish providing strategic advice in a targeted and cost-effective manner.
At the outset, legal relationships will start to arise between partners and, if you have them, employees. Whether or not you sign formal contracts, if you start working together on a business idea, if you have not agreed who is getting what slice of the business, figuring this out later once money is already made can certainly be a heartache. While you should never focus on legal issues first, once it’s becoming clear that your business is going to be real, you should formalise these basic agreements and the corporate structure that goes with it so that everyone knows where they stand.
You also need to think strategically about the exposures of your product or service. If you’re big on working with troves of personal data, you need to understand the data protection implications and individual consents. If you’re producing new technology that might be stolen or challenged by entrenched competitors, you need to plan for lodging patents, assess the risk of an IP challenge, and act early to mitigate it. If you’re outsourcing a lot of key business functions, you need to think about the risk of the supplier failing to deliver, and if the risk is high-impact, you need to strengthen your contractual position to protect your business from the cost of losing customers and potentially falling over before it’s begun.
If you can afford it, insurance may be an excellent way to mitigate these risks. But you need to make sure it covers what you expect, since you only want to pay for insurance that will actually help you, rather than leaving you to fight both the risk and the insurer.
None of this needs to be hard or expensive. A few quid spent at the early stages can save a lot more in the long run. If you can involve a partner with legal training, that’s great, but if not, building a relationship with lawyers early on will allow you to get comfortable with their communication style, confident about their billing methods, and get them interested and invested in the businesses’ success.
Why not contact us today and a forburyTECH team member can meet with you to discuss your future.