It’s not always easy to know whether or not your startup needs a lawyer, especially if yours is a tech company. While you will need an attorney who is well versed in startup legalities, engaging a litigator who knows about technology is a conscious choice. Startups do need legal support, but having an attorney on retainer for all the legal support you need may not be necessary. It’s important to give due consideration to things like cost, investment of time and energy, and the balance of risk and benefit.

Are you forming your own company? In many cases, you don’t need a lawyer to get your company started. If you want to start an ecommerce business today, you may find all of the information you need online and be up and selling in no time. On the other hand, if you’re looking for your current tech business to grow and expand quickly, you may want to seek legal advice regarding the different types of businesses that are available in order to protect yourself legally and financially. Sole proprietorship, LLC, and incorporation are very different types of businesses, and it may be important to weigh the specific advantages and disadvantages of each, depending on what it is you intend to sell and where you intend to go in the future.  

An exception to this general rule is those cases in which the founders of a company and their investors and partners come together at the start. The equity rights might need to be set in stone at the onset, especially if new products will be developed. In certain aspects of the technology business, lawyers are required to negotiate deals for projects or the development of new software or apps. A lawyer might also be important for advising on the corporate structure or the place of incorporation.  

Are you developing an internet protocol (IP)? An internet protocol is a set of rules that regulate internet activity and facilitate completion of a variety of actions on the web. While many ecommerce businesses do not need to be concerned with this, others do. An IP address is part of the interconnected grid that controls online communications. Its purpose is to identify the initiating devices and internet destinations. In many situations, a lawyer is not necessary for startups that operate online, especially those that are facilitated through online templates or social media platforms. But if your IP is at the center of your business and unique to your shop, you should hire an attorney. If your company is affirmative in one area, you may want to look to alternatives for legal support like the United States Patent and Trademark Office (USPTO) legal assistance programs.

Are you hiring employees?  You won’t need a lawyer to develop a simple employee contract. While an employment agreement is an important step, the document itself is not particularly complicated, templates can be found online, and a contract specific to your company can be generated by answering a few simple questions. Effective and well-designed employment contracts may be more important as your business grows, but even then it is not always necessary. Many tech startups choose to hire contractors at the beginning of their businesses, which offers flexibility as the company goes through the anticipated growing pains. The agreement with a contractor is very different than the agreement that is reached with an employee, and the legalities of hiring a contractor are much less complicated.

Are you intending to make a profit? This seems like a rhetorical question, but it’s important to remember that once your business begins to generate an income, you will want to talk to attorneys and financial planners.  Doing so allows you to understand everything from fixed and variable annuities to the value and applications of intellectual property law. You will also need to discuss the newly revised tax codes and the ways in which new tax law may positively or adversely affect you, your business assets, and your employees. The importance of hiring reliable, knowledgeable advisors in the area of finances cannot be overstated–you’ll be thankful as your business grows.

Each tech startup is different, and whether or not you need a lawyer is dependent on some important variables. While you may be tempted to “skate by” without the assistance of an attorney, it doesn’t hurt to look closely at the issues specific to your circumstances and ask yourself regularly whether or not NOW is the time to consult legal counsel.

What advice do you have for a tech startup?