How to Choose a Great Lawyer for Your Startup
As the co-founder of MasterClass, I learned firsthand the importance of having the right legal resources for your startup. After handing off my responsibilities there, I took a year off to travel and ultimately moved to New York City, where I founded my next startup, Outlier.org (which I recently sold). This time around, I was determined to be more systematic in how I chose a lawyer.
I’ve been doing business for nearly 20 years, and a mediocre lawyer can destroy deals, a good lawyer makes your whole machine run more smoothly, and a great lawyer? That’s what I sought to find. I’ll explain my process here, then what I’ve found to be the best traits and abilities in a lawyer. So whether you’re a law firm looking to work with startup founders or a founder looking for a law firm, here’s what I’ve learned about lawyerly greatness.
The Search Process
I started by contacting the top three law firms in NYC that handled tech deals. Since I was new to the New York ecosystem, I interviewed each one. My primary requirement was responsiveness — not necessarily that they’d get work done quickly, but that they’d let me know they were on it and provide an ETA. Time is an essential part of any negotiation, and you need to be in control of it. If your lawyer is randomly responding to you and is unreliable, you’re not in control of the negotiation, and you’ll be unable to manage it effectively while increasing your annoyance level (which has various knock-on effects). Additionally, startups die without money; an extra day can mean the difference between existence and extinction.
Each firm was very transparent about its responsiveness, as they’re looking for a good fit as well. Most committed to being responsive, but when pushed further, I’d find some softness in the commitment.
I also asked which other firms they saw across the table the most. Each one gave the names of the other firms I was interviewing, and one additional, Gunderson Dettmer, which I wasn’t familiar with. They all spoke highly of each other, which was a good sign, and tried to win the business based on their aligned area of expertise, their smaller teams in NYC, their expanded capabilities, and even some nice invites to ski trips. All offered to defer compensation for my new corporate formation and other legal work until my first round of funding. Don’t expect that same treatment; I was getting the red carpet thanks to my track record.
Finding the Right Lawyer
A fellow founder put me in touch with Gunderson, and I added them to the mix. I was introduced to Ryan Purcell, who had in-depth knowledge of tech deals, contracts, and structures at his fingertips, no matter what I asked. He was also clear when he didn’t know about an area and would suggest someone else I could talk to or another firm to handle the specifics of niche IP questions I had.
It came down to Gunderson and a large, excellent firm. Both were committed to prompt replies, both had plenty of experience at the table, but Ryan’s effortless access to details and ability to explain complex topics edged out the competition. And I’d have to say, choosing Ryan Purcell as our corporate attorney at Outlier.org may have been one of the best decisions of my professional life.
Traits and Abilities of a Great Startup Lawyer
I’ll describe the traits and abilities I found in Ryan that made the difference and what to look for. These do not have to be contained in a single lawyer or even a lawyer at all, but you will need access to them inside or outside your company. Ryan is a unicorn; it is unlikely you’ll find another one. If you can’t find a Ryan, there is nothing wrong with finding a few people, or a horse and a narwhal, combining their strengths, and making yourself a unicorn.
1. Access to Current Standard Deal Terms
Whether that’s liquidation preferences on a convertible note or board composition on a priced round, you need to know what the market expects. VC and other investors tend to be fickle in their requirements, and those requirements are frequently driven by the current market temperature and trends. A good lawyer will be seeing deals constantly and able to tell you if you are being asked for too much, or if you are asking too much yourself and to expect pushback. Besides promptness, this magical market knowledge will allow you to move faster, more accurately, and more confidently than you would otherwise. It’s also perishable knowledge. You don’t need what happened six months ago; you need someone who is seeing deals today.
2. An Educator
I’ve worked in education for a long time now; I know when someone is a good teacher. Ryan could pick up a cold call from our COO, Jeff Buening, and me, listen to what issue we were facing, and within 20 minutes have explained the law enough for us to feel confident making a decision. On that topic, Jeff said, “I can remember routinely wrapping up calls with Ryan and messaging you that Ryan’s insight and counsel was probably worth even more than the already insanely high hourly rates we were paying.” It is that valuable. He won’t keep repeating legalese; he’ll immediately re-explain in layman’s terms if it’s not landing. I suspect this results from Ryan’s high confidence plus an in-control ego. Frequently, I have found that mediocre lawyers feel the need to prove themselves in every conversation by showing they know more than you about the law. Ryan proves himself by showing he knows exactly what you need to know, and how you need to know it.
3. The Ability to Discuss Risk as Percentages
I’ve found that lawyers will be overly cautious and overly conservative. You have to push hard to get something like a risk percentage for a strategy or tactic. It’s easy to say something carries risk; a great many things do. It’s hard to say how much. You need experience and confidence to give a risk percentage and the knowledge that your client knows that a percentage is purely directional, not exact. It helps us make decisions about what avenue to pursue. This is something that your lawyer should be able to do, not someone else in your organization.
4. Transparency and Direct Feedback
Your lawyer should tell you early if a deadline will slip. Ryan was also good at telling me if I was being too harsh. It would usually start, “Maybe I’m being too charitable…” and he’d then give a reasonable explanation of another party’s actions. However, it’s important to remember that transparency and direct feedback are a two-way street. It will be far easier for your lawyer to give you unpleasant news or direct feedback if you are good at taking that feedback well. You are an integral part of your lawyer’s ability to give useful feedback. Don’t shoot the messenger.
5. Creativity
Ryan is a master negotiator. I’m not sure if he started that way, but by the end of our over five years working together, I was aware of it. He can creatively figure out levers and workarounds that get the other party across the line. He’s also a good narrative storyteller, so he can spin things to opposing counsel and help me tell the story to the other party. His creativity also gives me confidence that when he says something is not possible, it is not possible, and I can stop wasting time on it myself.
The Law Firm vs. The Lawyer
The law firm is not the lawyer. Law firms are like PR agencies or investment banks. Your experience depends on the person you’re working with, not the person who sold you on the institution. Make sure you talk to the actual person you’ll work with. I’ve had a good experience with Gunderson overall, but that is primarily with Ryan. Another notable is David Sharrow, their IP attorney who, like Ryan, is exceptional at making complex legal concepts accessible. Ava Plasse, our former VP of Video, attended an open forum with David and came away with the ability to navigate IP concerns deftly, which we validated many times throughout the years. Frequently navigating IP concerns is knowing when you need to call your lawyer.
You may find other things are important to you, but this is a list of what I’ve found to be indispensable in my businesses.
Final Thoughts
We could not have pulled off the extraordinarily complex feat of creating low-cost, for-credit college education without Ryan and the team at Gunderson from incorporation to sale. Startups are hard enough as it is. Your startup’s success depends on having the right people in your corner. Don’t settle for a mediocre lawyer — find your unicorn, or create one from pieces if you have to. It will pay dividends.
