The Startup Lawyer Tech Audit

A lot has been written on the kinds of questions you should ask a startup attorney/firm before hiring them, much of which is quite good. I’d recommend Five Questions That Startups Should Ask a Prospective Law Firm by Matt Bartus.  I want to focus on something seemingly esoteric, but surprisingly important in terms of the value that startup lawyers deliver to their clients: legal tech.

There are very basic ways that technology and process can dramatically cut down on the time that it takes to complete a transaction.  Getting the right answers to the following questions won’t guarantee that you’ve found a good firm, but it will at least signal that the attorneys you’re talking to have the right business mindset in place; that cost-effectiveness, and not just technical perfection, is one of their priorities.

1. Do you have a fixed-fee formation package?

It doesn’t matter if you aren’t actually using them for a formation.  The simple fact that they have a fixed-fee package suggests that they understand standardization and template building, and have put processes in place to ensure that the wheel isn’t reinvented every time another client comes along.

2. Do you use document automation software?

Building off #1, the next step in the use of standard documents is the automation of their drafting.  A number of companies have emerged with excellent software solutions for building a firm’s form documents into dynamic templates that can be manipulated with a few clicks, removing the hours of editing and proofing that go into producing a set of docs.  Even when a firm has standardized templates (#1), filling those templates out manually can take quite some time.

Not everything can be automated. In fact, most things probably can’t.  But again, what we’re looking for is a signal. Is this firm thinking hard about how to cut out the fat and streamline when it’s possible, or do they have the (pathetically common) lawyer attitude that time saved just means less money to collect.

3. What kind of proofing software do your associates use?

You’d be amazed how much time (hours) associates can bill for simply turning back-and-forth between pages to make sure that the word “Fair Market Value” is defined, or that the company’s name has the commas in the right places.  While highly imperfect, software solutions exist for cutting this down significantly. Ask about it.  If the firm doesn’t know what you’re talking about, what does that tell you?

4. Do you keep all executed documents in PDF form, and are they OCR’ed?

It may sound like I’m just geeking out on you now, but picture this scenario: your company hired Guy X as an executive officer sometime in the past 4 years.  For some reason, you need to know the exact date that he was elected by the Board, and you call your firm to ask for the info.  An associate (me), who bills by the hour, gets asked to look it up.  Which do you prefer:

A. I type in Guy X’s name into a search box, and up pops the executed board minutes for the date on which he was elected.

B. I have to wade through unsearchable PDFs or (worse) open an actual minute book binder and read through each set of minutes until I find the guy’s name.

Imagine how many times this scenario will play out in the life of your company.  Think diligence in a venture capital round. Yeah, you get the idea.

There are of course a host of other questions and issues that you could get into with your prospective firm.  But these four questions should be enough of a litmus test to place the business attitude of the firm you’re talking to.  Do they see themselves not just as professionals, but as service providers whose integrity depends on the value they deliver?  You’d be shocked by how many attorneys, even in my field, think that all it should take to be an excellent lawyer is an “attention to detail.”  Thankfully, the rest of us are here to eat their lunch.  Delicious.