Law Firm

Which law firm is right for you?

Once you have identified the ideal location for your venture, your next objective is to find a law firm that can assist you in setting up for success. However, this is easier said than done. You are seeking a firm with expertise and knowledge in working with new (tech) companies, a willingness to dedicate time to your project, and fees that are not exorbitant like those charged to large corporations.

If you have never been exposed to this, you may not know where to start, especially in a country where your network is limited. You will have a choice between larger, well-known law firms that charge fees you cannot afford and may not pay much attention to your venture, or smaller shops that may lack the necessary experience. If a friend or connection recommends a firm, that's great. However, make sure to do your homework and understand if this firm has the qualifications to guide you legally.

There are a few important things you need to pay particular attention to and discuss with the firm to ensure they understand the venture space. For instance, what are the essential terms that should be included in the articles of association or shareholder agreement to protect you as the original founder in case of a founding team breakout? Or, which legal setup is necessary to safeguard you from a potential company relocation to a foreign jurisdiction in the future? Also, should you establish an option pool at the time of incorporation?

It is important to have a basic legal knowledge so that you can evaluate which law firm will be the best partner for you. Having the right legal partner from the beginning will prove to be a valuable asset in the long run.

During one of my early trips to Berlin to prepare my move to the city, a friend introduced me to a small legal shop owned by one of his connections. While the shop primarily focused on arbitration, the owner possessed the necessary legal knowledge to assist us in incorporating our business at a reasonable cost. At that time, I believed that this was all we required. This firm provided us with excellent support until our first (and unsuccessful) attempt at raising funds in 2017. Since their expertise lay in a different area of law, they lacked the specific knowledge needed for the intricacies of that specific fundraising process.

I then partnered with a reputable and competent firm to handle the deal's negotiation and execution, following the investors' conditions (equity-based round, incorporation of a Delaware-based holding). Unfortunately, this firm—and two others afterward—failed to finalize the agreement. The main reason? My initial law firm hadn't established the proper legal framework to protect founders in these conditions. The result: a founder-friendly term sheet and over €20,000 (from my own pocket) in legal fees wasted.

In 2019, we, finally, found the right firm and lawyer who played a crucial role in assisting us with our sole funding raise and facilitating the sale of the company to Priceline two years later.

Key Takeaway #10

Choosing established, experienced law firms or small shops to set up your business and assist with funding raises may not be the best choice. Instead, search for mid-size firms that have experience with venture capital and international exposure. Seek advice and learn from other early stage companies about their recommendations and experiences.