Choosing these individuals is an important step in your company’s development, and the good news is that you are not necessarily making a choice that cannot be changed.
How to Choose Attorneys and Accountants
Most likely, your first two professionals will be an attorney and anaccountant. Attorneys and accountants serve at the pleasure of their clients
and you can replace them at anytime. You will probably find that you will
be spending more time with your attorneys at the beginning of your business
and through the funding stage, and more time with your accountants once
the business stabilizes.
QUESTIONS TO ASK EVALUATING PROFESSIONALS
In evaluating your choice of professionals, particularly attorneys, the followingquestions might be helpful.
- Does your firm specialize in small and emerging businesses?
- Do you have experience in structuring corporations? LLCs?
- Do you provide advice on the choice of entities?
- Do you have tax expertise in the firm?
- Do you have securities expertise in the firm?
- Do you have experience in preparing securities offerings?
- Do you carry professional liability insurance with securities coverage?
- Do you handle IP work in the firm?
- Do you have expertise in dealing with angel investors and venture capitalists?
- What type of support can I expect on an ongoing basis?
- Who will I be working with in the firm?
- Can I obtain bios on the firm and its members?
- What is your normal turnaround time for this type of work?
- What is your pricing structure for fees?
- Do you have payment options for your fees?
- If you quote a fixed fee, what is included?
- Are you willing to take a portion of your fee in equity?
- Will you serve on the advisory board of the company?
should ask when making your decision. Most attorneys and accountants will
present you with a written engagement agreement that describes the fee
structure and the scope of work. Many law firms prohibit their attorneys
from serving on the board of directors of their clients because of possible
conflicts between being a director and an attorney advocate.
Many law firms conduct a large portion of their business via email and
the Internet. You should make it clear how you prefer communications to
flow between you and the firm. Firms that are more progressive may even
have extranets associated with their website where documents can be
posted and reviewed confidentially by clients.
Most attorney and accountant relationships are the result of referrals by
clients or colleagues. You can browse on the Internet at www.Martindale.com
for attorneys and their biographies. Martindale-Hubbell is the leading reference
source for locating attorneys in the United States.
Martindale also has a rating system that rates outstanding attorneys based upon peer review.
The highest rating assigned is AV followed by BV. Ratings appear with the
attorney’s name on the website and in the published version of their books.
Martindale sponsors another lawyer locator site called www.lawyers.com.
Business lawyers can be a bit less visible than divorce or personal injury
lawyers and do not tend to advertise as frequently.You can often meet them
at venture capital conferences and entrepreneurial seminars in your area of
the country. Many of the websites of business law firms contain a wealth of
free information on entrepreneurial topics, as well as the biographies of the
attorneys and their area of specialty.
Build from Your Resources: Accountants are
a good source for attorney referrals and attorneys are a
good referral source for accountants.
The decision to retain a professional should be based on a variety of factors,
of which price is only one—and not the most important one. Other
more important factors are competence in the area of specialty, team
resources available, accessibility to the team, timely delivery of services, and
amiable but professional relationship to the client. The choice of your professionals
is a primarily value-based decision. New businesses need a legal
counselor as much as they need a legal technician.
There are a number of excellent attorneys and accountants in this country.
If you are satisfied with the experience and competence of the professional,
then choose the ones that you resonate with personally. You have
plenty to occupy your time with a new company—harmony among the
team members will make your life much calmer and productive.
Other Consultants
Your company may have the occasion to employ other consultants in itslifetime. You should perform some measure of diligence on the consultants.
Legitimate consultants will gladly provide you with a list of client
references and share examples of their prior work.
If anyone is doing creative work for your company, it is advisable to have a provision in the
contract that their product is work for hire, so there is no question of
ownership upon completion.
Most consultants will ask you to enter into a written agreement for their
services. It is important to you that the agreement contains specific deliverables
and a time period in which the deliverables are to be accomplished.
Too many consulting agreements have extremely vague or general deliverables
that bring no real substance or true value to the company.
There are exceptions. Some well-known consultants are available to counsel with your
company but do not provide reports or other deliverables—their advice alone is what they are selling. The agreement with the consultant is a contract that needs a legal review by company counsel.
Sequence
One of the more difficult tasks for the entrepreneur is to prioritize the company’sinterface with its professionals. New companies must normally conserve
their cash resources as they build the company to go to market.
The sequence of tasks should be roughly as follows.
- Conduct a feasibility analysis of the product or service to determine whether you have a business.
- Engage an attorney to form the entity and provide preliminary documents for a friends and family round of raising capital.
- Engage an IP attorney to file trademarks and patents if applicable.
- Draft a business plan and hire an accountant or CFO to help with the numbers. Engage a business plan consultant if required. Engage a marketing expert to formulate a strategy.
- Bring in a branding/graphic specialist to begin a corporate identity package. Use a videographer to create a promotional video.
different stages of the company’s growth. Just make certain that the underlying
business and legal structure is in place before proceeding very far.
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