Start-ups and Legal Counsel: The UK's most promising 'special relationship'

22 Jan 2019 | 4 min read

Start-ups are rapidly becoming an integral part of the UK market place. Growing in popularity, start-ups offer their clients the flexibility and agility they desire to remain competitive. Thanks to the streamlined and innovative work environments that underpin most start up models- swing meeting rooms at Deliveroo HQ anyone?- start-ups are able to serve international markets without the sometimes cumbersome, often complex, structures that are inherent to larger, more traditional business.

While start-ups are beneficial for the businesses they serve, start-ups are also invaluable partners of law firms and law firm practitioners; thanks to their boundary pushing strategy, focus on technology and often unusual business models, start-ups encourage the legal world to innovate alongside them, challenging legal practitioners to think imaginatively about the law and its application. In this article, we explore this relationship and discuss the mutually beneficial nature of this unique relationship.

What makes legal professionals integral to start up success?

Start-ups are typically thought of as scrappy yet plucky ventures, that range from new, rapidly growing apps such as StreetBees, fem-tech like Natural Cycles, or market disruptors a’la Nested. The list is various and expansive. What unites the large majority of these start-ups however, is their desire to do things in a differently: transforming consumers ideas of how things should get done.

However, As Neil Blumentthal, cofounder and co-CEo of Warby Parker explains in an article in Forbes: “A start-up is a company working to solve a problem where the solution is not obvious, and success is not guaranteed.” As a result, many founders and co-founders of start-ups must be able to communicate their concept effectively and define roles, responsibility and legal obligations effectively enough to ensure that their big dreams are realised. To do this, instructing legal counsel can be invaluable. Lawyers will be able to aid in defining the contractual basics: roles and responsibilities, salaries, percentage ownership and much more. Furthermore, legal counsel can help founders to shape and cultivate a longer-term strategy plan for dealing with potential legal challenges.  

Protecting your unique business identity, for example, should be at the forefront of any start-ups legal requirements. Gaining intellectual property rights over your tool, app or idea is vital in safeguarding your success and maintaining your future trading potential. Ignoring the importance of this issue can afford third parties the ability to infringe on your intellectual property without legal admonishment. Procuring the rights over intellectual property could be a make or break decision for investors coming on board, so it is essential that you bring counsel on board- and early. Lawyers can also aid in helping you develop a new revenue stream by owning your IP and generating alternate streams of revenue: “By owning your designs, you can make money from them by allowing other people or companies to use them or at a later date you could sell them to someone else”. (The Law Society)

How do Start-ups aid the legal profession?

Start-ups encourage legal imagination and can inspire legal professionals to consider new angles from which to tackle complex legal problems. While hiring an in-house counsel could be viewed by some as installing an internal roadblock that blockades cutting edge ideas from ever seeing fruition, legal representation can offer pragmatism and insight into how to move forward. J. P. Morgan was once quoted to have said, "I do not pay my lawyers to tell me what I cannot do, but to tell me how to do what I want to do." A good lawyer will enable their start-up to push the envelope and will be able to map out the road ahead for their client.

The relationship between lawyer and start up is certainly unique. While some legal practitioners may view the start up as a threat, it is important that traditionalists embrace the changing make-up of the legal industry to use start-up technology and imagination to your advantage. As for start-ups, it’s important not to underestimate how vital a good lawyer can be in safeguarding the future of your business: it would be foolhardy to view the law as a roadblock.

In fact, the relationship between lawyer and start-up could be the only special relationship that’s of any use to the UK in the coming years…. 

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