{"id":44882,"date":"2023-10-20T15:39:19","date_gmt":"2023-10-20T15:39:19","guid":{"rendered":"http:\/\/startupsmart.test\/2023\/10\/20\/why-lawyers-are-failing-start-ups-startupsmart\/"},"modified":"2023-10-20T15:39:19","modified_gmt":"2023-10-20T15:39:19","slug":"why-lawyers-are-failing-start-ups-startupsmart","status":"publish","type":"post","link":"https:\/\/www.startupsmart.com.au\/uncategorized\/why-lawyers-are-failing-start-ups-startupsmart\/","title":{"rendered":"Why lawyers are failing start-ups – StartupSmart"},"content":{"rendered":"
\"feature-justice-thumb\"<\/div>\n

\"feature-justice-thumb\"The vexed issue of getting legal help often comes down to two key questions for start-ups \u2013 when do you get it and can you afford it? Unfortunately, the legal profession can appear weighted against new businesses.<\/p>\n

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If you\u2019re a budding entrepreneur, the system is broken, according to Joel Cranshaw, a lawyer who has operated in the UK and Australia and now operates his own start-up legal business, Clearpoint Counsel, from Melbourne co-working space The Hub.<\/p>\n

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\u201cStart-ups are very poorly served by the legal profession,\u201d Cranshaw admits.<\/p>\n

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\u201cIt\u2019s not the law firm\u2019s fault, really. Charging by the hour is only about 60 years old. In the 1950s there was a big demand to value the services they have, so the big end of town demanded lawyers justify the amounts they charge.\u201d<\/p>\n

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\u201cThe result of that is that lawyers at the big end of town charge by the hour. The big corporations have leverage to push that down, whereas start-ups aren\u2019t in a position to negotiate.\u201d<\/p>\n

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\u201cThe law firm will be conscious they can\u2019t charge start-ups that much and the start-up will walk away with document which is one size fits all. The business will also probably pay more than they expected, too.\u201d<\/p>\n

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As StartupSmart<\/i>\u2019s regular legal eagles James Omond and Craig Yeung have previously explained, it\u2019s important to get a lawyer who understands your industry<\/a>, as well as do lots of your own research to ensure you keep costs down<\/a>.<\/p>\n

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But Cranshaw argues that the whole way that law firms \u2013 especially the larger ones \u2013 operate needs to change if they are to offer genuine support to new businesses.<\/p>\n

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He explains the new approach he\u2019s devised for Clearpoint, which was launched in 2011, as well as gives some top tips on how and when start-ups should deal with lawyers.<\/p>\n

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Above:<\/em><\/strong> Joel Cranshaw.<\/em><\/p>\n

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Can you explain a bit about the background to the business?<\/b><\/p>\n

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Predominantly, I\u2019ve been an in-house counsel, mostly in tech companies. About seven years ago in London, I became dissatisfied with being in-house so I moved to private practice.<\/p>\n

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On my return to Australia, I went to structure fees on an hourly basis. Which was fine, but there\u2019s always a conversation over hours and value. This isn\u2019t the same as in-house where you get paid an amount and you do everything.<\/p>\n

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I wanted to provide in-house service to a number of clients, as it\u2019s more relevant for start-ups. I\u2019ve now got four main clients, all fairly small and all have been going for a couple of years, so they can justify the service.<\/p>\n

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I have a free consultation to ask where\u2019s the company at and if they are ready for legal help. If they aren\u2019t ready I point them to all the free resources of information out there.<\/p>\n

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That just doesn\u2019t happen at the moment in law firms \u2013 they don\u2019t really look into the problems faced by start-ups and what they actually need. They just solve individual problems presented to them.<\/p>\n

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Start-ups want to know about employment arrangements and standard terms and conditions that require quite basic documents. I\u2019m developing templates along with the consultancy, in order to fill that gap.<\/p>\n

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So how does the legal industry currently treat start-ups?<\/b><\/p>\n

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A lot of start-ups say lawyers don\u2019t understand my business, because in this hourly rate paradigm, they just can\u2019t afford to. It\u2019s a cascade from large firms to small firms \u2013 that\u2019s just how we do things.<\/p>\n

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It ends up costing the start-ups more than it should because when the agreements are badly put together, they have to go back to the lawyer and pay more to fix it. There\u2019s no thinking about what start-ups need down the track.<\/p>\n

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What are the main legal issues faced early on by start-ups?<\/b><\/p>\n

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Intellectual property, employment issues, whether to use contractors or not, insurance, and standard agreements about the way you sell things.<\/p>\n

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Small start-up businesses have terms imposed upon them from a larger entity. They are forced into things and there\u2019s an element of risk for a start-up.<\/p>\n

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Most businesses continue for the first year or two with these terms. It\u2019s when they get to a turnover of $1 million, employing four or five people, they start to raise their head above the parapet.<\/p>\n

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Issues start to arise and they won\u2019t go to a lawyer until there\u2019s a problem. They might shy away because of the problems they had before with lawyers.<\/p>\n

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To be honest, there\u2019s no good reason to have legal advice until that point. If you haven\u2019t got the funding, you need to be careful with that money. But if you\u2019ve got money, you should go to see a lawyer and ask what the issues are.<\/p>\n

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Story continues on page 2. Please click below.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

The vexed issue of getting legal help often comes down to two key questions for start-ups \u2013 when do you<\/p>\n","protected":false},"author":1,"featured_media":59036,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5,19,20,1],"tags":[],"_links":{"self":[{"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/posts\/44882"}],"collection":[{"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/comments?post=44882"}],"version-history":[{"count":0,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/posts\/44882\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/media\/59036"}],"wp:attachment":[{"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/media?parent=44882"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/categories?post=44882"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/tags?post=44882"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}