This blog post is addressed to startups that are looking for legal counsel. I was prompted to write it because of the September 24th announcement by NY Attorney General that the AG office reached an agreement with an online legal directory Avvo to reform its attorney ratings and improve disclosures for consumers.
Startup founders have a big task to handle: on one hand, they have a small (or no) budget set aside for legal services, but on the other hand, some understand that a lack of legal review can disadvantage them significantly in the future. Many startup founders have not even talked to a lawyer before. So, where and how do they look for a lawyer or a legal team that would be a good fit?
Legal services are mostly a referrals business. Most matters we handle are our existing clients' new projects or referrals to new clients made by the existing ones. So, the first thing that startup founders should do is "ask the audience," - i.e., reach out to their networks for referrals.
If this yields no results, then some ask a business accelerator or a VC for names of firms that are active in this space. Bigger firms may not be well set up to handle small matters, but some give discounts or defer their fees.
Others turn to the Internet. Recently, we have seen a proliferation of legal platforms or directories that allow users to select a lawyer based on their profile. Platforms usually add their fee on top of the lawyer's rate. All financial transactions are handled through the platform.
Being a part of a legal platform is a great way for a beginner solo practitioner with few or no clients to start their own practice. All they have to do is create a profile and respond to client inquiries. And here is where there is room for misleading information.
Let's take a look at Avvo, one such legal platform. It does not vet its attorneys like some other platforms that require recommendations and in-person interviews. Any attorney can create a profile on Avvo, and then even achieve a superb rating. According to the NY AG, such rating could have been misleading.
The more information attorneys add to their profile, the better is their rating. Attaining a high rating is not dissimilar to obtaining a search engine optimization of a website. It does not necessarily correspond to the experience of that lawyer, but rather to the information that is publicly available about him / her. As part of the agreement with the NY AG, Avvo will remove the ratings for attorneys who do not actively participate in Avvo's directory and disclose the content and limit of its ratings system to the users. Also, Avvo agreed to ensure that all legal forms posted to its website for customers' use are first reviewed by a NY attorney with relevant experience. Further, Avvo agreed to make other clarifying statements to their users, as well as pay a $50,000 fine.
Startup founders (and everyone else for that matter) should do a careful independent investigation of the attorney or the legal team they are about to hire, including viewing the attorney's website, searching other sources of information about the attorney online, and checking if there is any disciplinary information about the attorney with the state bar association. It is always a good idea to ask for references.
Also, ask your attorney to provide estimates for the projects you give to them. As a startup, you only have a limited budget for legal fees, and you want to make sure it is well spent.
This article is not legal advice, and was written for general informational purposes only. If you have questions or comments about the article or are interested in learning more about this topic, feel free to contact its author Arina Shulga. Ms. Shulga is the co-founder of Ross & Shulga PLLC, a New York-based boutique law firm specializing in advising individual and corporate clients on aspects of corporate and securities law.
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