Why Lawyers Don’t Run Startups
steveblank.com
Why Lawyers Don’t Run Startups
1–10 of 33 posts
Re: Why Lawyers Don’t Run Startups
#2Lawyers don't know the first thing about running startups but a good startup lawyer will be able to think strategically right along with the founders - that is, will give advice, not in a ham-handed way that focuses purely on legal risks but rather in a way that in itself helps put those risks in perspective for the founding team so that they can see at a glance what the likelihood and potential severity of each is and how each relates to the potential benefits of the deal.
This fine piece points out that the founders should be doing this, and that is true, but the lawyers themselves should also be doing it. Otherwise, they spend all their time giving very unhelpful advice about why things can never get done.
Re: Why Lawyers Don’t Run Startups
#3Haha, I've always said, "never let your lawyers run your company".
Re: Why Lawyers Don’t Run Startups
#4It's weird. If you look at a lot of startups ("startups"?) in Germany & Austria, you'll find people with a law background among the founders. I haven't yet figured out why this is the case.
Re: Why Lawyers Don’t Run Startups
#5Excellent advice and very timely for me. Especially the advice about finding an 'advocate' in the customer's organization with the authority to over-ride lawyers and negotiating high level points with him.
Re: Why Lawyers Don’t Run Startups
#6Deborah Tannen (the linguist and author of "The Argument Culture") tells a story about how bringing in lawyers to write up an informal agreement derailed it completely.
Some companies, however, referred the matter to their attorneys so a contract could be written. In no case where attorneys became involved-- mine as well as theirs-- could we reach an agreement on working together... The adversarial nature of the legal process had polarized us beyond repair.
Re: Why Lawyers Don’t Run Startups
#7The point is that both lawyers and clients should understand their roles. The lawyer's primary job is to explain to the client the legal consequences of a given course of action. Preferably, the lawyer will have the clients non-legal interests in mind that the same time, so that they can have an intelligent discussion about weighing the risks and benefits of a given course of action.
Correspondingly, clients should understand that lawyers are there to give advice. They are not there to give direction; they are there to give advice. It's always better if the client and lawyer both understand the clients strategic goals, so that they can have, as described above, an intelligent discussion about weighing the risks and benefits of a given course of action, but the overall purpose of the lawyer is merely to give advice.
Re: Why Lawyers Don’t Run Startups
#8I think the article misses a few points. If you seek out a stereotypical lawyer (meaning nit-picky etc.), you get what you pay for - lots of lawyerly arguing, lots of problems raised etc.
Whose fault is it then if a lawyer impedes progress on an important deal? In my opinion, the fault lies with the business side. Lawyers provide a service - just like consultants. You wouldn't let a consultant run your business, so what's up with placing all the blaim on lawyers if deals get stuck? It's the business side's fault for not properly managing their lawyer and not telling him what exactly he is there for.
Legal education makes you an expert in spotting problems and helping put consensual agreements between people in enforceable language. It doesn't make you nit-picky per se, it's more a matter of character. There are first-hand lawyers out there who are probably even better at the business side than the business people themselves (think Peter Thiel) - they have an expert ability to spot lots of problems, and then proritize those and decide what's important and what not. Full disclosure: I am a Ph.D. student in law and that's what my education provided me with - an ability to prioritize problem-solving according to importance.
Re: Why Lawyers Don’t Run Startups
#9Attorneys and accountants have a primary function of limiting and mitigating risk. Entrepreneurs by definition are willing to deal risk and are much more comfortable with putting their balls on the chopping block.
Be stupid? No. There are a few great accountants and lawyers worth their salt. Be wise, but remember it's your damn company, you've put the sweat in, and you should be calling the shots. Don't be a marionette for your counsel.
Re: Why Lawyers Don’t Run Startups
#10I think the article misses a few points. If you seek out a stereotypical lawyer (meaning nit-picky etc.), you get what you pay for - lots of lawyerly arguing, lots of problems raised etc. Whose fault is it then if a lawyer impedes progress on an important deal? In my opinion, the fault lies with the business side. Lawyers provide a service - just like consultants. You wouldn't let a consultant run your business, so w…
Whose fault is it then if a lawyer impedes progress on an important deal? In my opinion, the fault lies with the business side. Lawyers provide a service - just like consultants. You wouldn't let a consultant run your business, so what's up with placing all the blaim on lawyers if deals get stuck? It's the business side's fault for not properly managing their lawyer and not telling him what exactly he is there for.
I'm pretty sure that's exactly what the author is suggesting. For example, notice things like,
"When I was a younger entrepreneur my answer would have been, “Ok. See if you can get us better terms. Call me when you’re done.” This time I said, “Make a list of the issues in bullet form, send them to me and I’ll get back to you.”"
My interpretation was that he is saying, "don't let your lawyer run your company strategy, that's your job", and this is fundamentally what you are saying as well (though with different focus).