Setting up a new business can be complex. Investing in early stage companies involves a high degree of risk, but for entrepreneurs this risk is part of every-day life.
Many of the risks faced by start-up’s can be mitigated through sound legal advice and planning. The reality is that many individuals shrink away at the mention of a lawyer.
Their biggest concern? Affordability.
Is law an archaic affair?
Larger clients may be able to maintain their legal advisors, however small entrepreneurs who are in the throes of establishing a business often find that obtaining sound legal advice can become too expensive.
Start-up’s require affordable, cost-effective advice that takes into account their needs, and gets them on their feet.
The legal industry is seen by consumers as an archaic affair that is overpriced, and only grudgingly accepts innovation and technology. The reality is however, that consumers have changed and, more importantly, the way information is consumed has changed over the past 10 years.
The internet has become an Aladdin’s cave of open secrets regarding legal documents and advice.
Through the use of technology and automated document creation, law firms are increasingly able to provide clients with tailored legal documents at a fixed price, at close to the price of DIY.
This gives clients an excellent mechanism through which they can access quality legal advice at affordable rates.
The dangers of DIY
DIY legal documents may appear cheaper at the outset, but they will usually end up costing you much more time, effort and money than getting a customised legal documents from your trusted lawyer.
Websites are popping up at an incredible rate promising a range of legal documents and templates that claim to be “just like the ones that lawyers use” and/or prepared by lawyers.
The first issue with these template documents is that there is no quality control. Many are mediocre in terms of their substance, language and guidance. Without the right experience you have no way of knowing what document you actually require.
Secondly, even if you do get a higher quality template, these documents are written to be as broad and non-specific as possible and are unlikely to adequately protect your unique interests. You can read more about the difference between template and tailored agreements here.
For start-ups on a tight budget we recommend that you start from a template and then seek professional legal advice to settle it.
When to seek legal advice
As a rule of thumb, you should always seek legal advice where you are involved in:
- a transaction worth a substantial amount;
- a transaction with tax implications;
- forming a company; and/or
- granting/selling securities of any kind (eg: shares/units).
If you are on a tight budget, you should work with a start-up lawyer to ascertain which documents you ought to invest in and which ones you may be able to DIY at low-risk.