Technology

How To Make Sure Startup Clients Do Not Waste Your Time

Before they hit it big, startups are pretty useless clients. Here's how you can avoid wasting your time.

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In my last two posts on working with startups, I addressed how to pitch startups and then how to add value as a startup lawyer. Today, I want to address an equally important topic: how to make sure startup clients aren’t wasting your time.

This is an important topic because before they hit it big, startups are pretty useless clients. They ask for services for which they either cannot or will not pay. Remember the mentality here: the entrepreneur invests time in this company because they think they’re going to hit it big. It does not help that they have read articles telling them to negotiate deferred fees with their lawyers.

There are two ways startups waste a lawyer’s time:

1. Asking a lawyer to do work they could do themselves.
2. Sticking around too long after they have failed.

If you’re a lawyer, you should teach the startup how to do some basic things themselves like maintain a cap table, apply for a trademark, and make basic changes to documents. This will make your relationship clear: I’m here to handle the big stuff, the small stuff you sweat yourself until you’re ready to pay my regular hourly rate.

The second issue is trickier because it requires you to know when a startup has failed. If everyone could figure that out, then VCs wouldn’t lose so much money investing. How are you, a lawyer, supposed to know the difference between a failed startup and a startup that has not yet hit it big but is on the way there? Take for instance Meerkat, which is spreading like wildfire. Before they built Meerkat, the company was called Yevvo, and then Air, and neither were very successful, despite raising money from top of the line investors. Many people might have given up on a company like Meerkat, and they would have been wrong.

Here’s my suggestion to lawyers working with startups. Make it clear to them ahead of time that you will continue to work on deferred or reduced fees but they have to provide you with quarterly updates. They would do the same for their investors, and you are investing in them. After each update, ask yourself this question: are my clients making progress? That might not mean profitability, but there should be progress.

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Zach Abramowitz is a former Biglaw associate and currently CEO and co-founder of ReplyAll. You can follow Zach on Twitter (@zachabramowitz) or reach him by email at zach@replyall.me.

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