Being a founder, not to mention a CEO, can be a very lonely place, carrying loads of stress and requiring to constantly be at peak performance. This often makes it hard to find a balance between one's professional and personal life. Maintaining strong relationships with the co-founders and investors is also not an easy task, where clarity and empathy are not always present. As one of my entrepreneurs says: “It’s not the technological challenge we deal with, it’s the mental one.”
“Throughout my +15 years as a professional, I've always been attracted to the intersection of business and psychology through entrepreneurship - What makes people tick? How do people think and act? And what motivates people in business? What drives me is being there for the amazing entrepreneurs, who are under constant pressure, so that they can make our world a better place. That’s what I’m here for, and this is my podcast – The Human Founder.”
With Adv. Guy Lachmann, Senior Partner, Pearl Cohen Law Firm
This 3-part series will discuss the psychological aspects that are intertwined with the legal aspects of the entrepreneurial journey - and most importantly - the founders' agreement, choosing a lawyer, and the case of separation between partners.
The importance of choosing a lawyer that is right for you and how to go about it
An attorney who accompanies entrepreneurs on their entrepreneurial journey must be an expert in startup companies. The approach is different from an attorney who works for large corporate companies or other legal fields. An attorney who works for entrepreneurs requires a high level of emotional intelligence to represent the startup alongside the entrepreneurs in the various challenges that arise.
Sometimes, entrepreneurs have excessive self-confidence and pride in their startup and this blind attachment to their "baby" leads them to refuse to listen to the advice of an attorney even with their years of experience. In this context - it’s always important for entrepreneurs to be able to take and give criticism in a healthy manner. If you did your due diligence, got recommendations, and chose a lawyer who is an expert in the field and paid him - let him do his job. Otherwise, it’s a waste of time for all parties. But remember. Having too many lawyers or advisors and such "know-it-alls" can lead to too many opinions which will most likely waste time and energy for everyone involved.
There are different styles of attorneys that suit different styles of entrepreneurs; some are very dominant, determined and will try to intervene, while others believe in a more reflective and cautious approach that lets the entrepreneurs choose their path. They work more from a gut feeling.
What to pay close attention to when choosing an attorney (assuming he is already a professional, startup lawyer)?
- Is s/he experienced?
- Is s/he aggressive or passive?
- Is s/he willing to stick by my side; will s/he do what it takes- including answering my calls in the middle of the night?
- Is s/he culturally suitable to me?
- Can s/he understand my thought process?
- Does s/he have similar interests to me?
- Would I have fun with him/her on the appropriate occasions?
Big law firms have different payment plans for startups whereby payment can be made later or at a discounted price because there is an understanding that entrepreneurs at early stages normally don't yet have the means to pay for lawyer fees. There may be a market failure here, but it pushes the attorney to take the risk, like how a VC would – any losses a firm may receive from such risks will be made up for with successes from other accounts; one good deal is worth 9 failed deals.
Entrepreneurs need to understand the weight of legal responsibility that they have on their shoulders and find an attorney who will cover all areas of responsibility.
Some entrepreneurs try to run the legal aspects on their own up to a certain stage, but after that, being too involved can be costly. The role of the attorney is to facilitate and focus the entrepreneurs– to look after them. If the legal matters are not clean, tidy, and running smoothly, a deal can fall through.
When entrepreneurs are spouses/siblings/relatives, a lawyer who will understand your emotional and psychological state is even more critical.
First, there are many differences between starting a family business or SMB with family and starting a startup with a partner or family member– in the legal and business structure, sources of money, pace, dream, vision, risk, and chance.
Though there are many benefits to conquering the world with our loved ones there are also some drawbacks. For example, the risks taken stay within the family, so the consequences are felt more harshly. Moreover, a lot of stress is put onto the couples/ families in such a dynamic.
It is also important for investors to see that the legal structures are accurate. This becomes even more complex and with greater consequences when two partners are spouses/siblings, yet the third partner has no relations- even if s/he is a close friend. These circumstances can really push people to their edge, especially when a lot of money is involved. Therefore, it is even more important to ensure you are getting proper advice and surrounded by an airtight framework to reduce any sort of explosions from occurring.
Disclaimer (I am after all still an ex-attorney) - this series will provide knowledge that will help you shed light on the field but reflects our perspective and worldview and is not a substitute for legal advice. Guy and I recommend you consult a lawyer if the topics of the podcast are relevant to you before taking any action. Each case should be examined on its own merits and its individual aspects weighed. The conversation is meant to give you a general impression from the opinion of the speakers only.