The question is not whether a start-up will need a lawyer. It will, at predictable moments. The real question is when bringing in a lawyer avoids costly mistakes, and when the lack of involvement creates problems that get resolved later, on worse terms.
Founders who wait until they have a problem before seeking advice generally pay more than those who plan ahead. A poorly drafted shareholders' agreement that blocks a fundraising round, unassigned intellectual property rights that weaken due diligence, BSPCE (French start-up share warrants) poorly structured and therefore not eligible for the favourable tax regime: each of these mistakes could have been avoided with early involvement.
When incorporating the company
Incorporation is the first critical milestone. The choice of legal form, the drafting of the articles of association, the split of share capital between founders and the first governance rules have lasting effects. Poorly drafted articles or an ill-considered split of the capital can create deadlocks as soon as the first major decisions have to be taken.
If several founders are involved, a shareholders' agreement signed at incorporation is strongly recommended. It is not reserved for companies that are already established: it organises relations between founders at a time when everyone gets along, which is the ideal time to draft it.
Before the first significant commercial contract
A start-up's first commercial contract (with a major customer, a distribution partner or a critical supplier) deserves a legal review. The general terms proposed by the other party are usually drafted in its favour. An outside review helps identify excessive liability clauses, unwanted exclusivity commitments and unbalanced termination terms.
Before hiring the first key people
A start-up's first employees often have access to sensitive information and contribute to significant technological or commercial assets. Employment contracts must include confidentiality clauses, non-compete clauses where relevant and, above all, clear clauses on the ownership of works created in the course of their duties. Without these clauses, the situation is governed by statutory rules that do not necessarily match the company's needs.
Before a fundraising round
This is the milestone where a lawyer's involvement is most obvious and most widely recognised in the ecosystem. A fundraising round involves complex documents and commits the company for years. But the involvement should start before the term sheet, not after: the company's legal fundamentals (shareholders' agreement, intellectual property, key contracts) need to be in order before due diligence begins.
When shareholders disagree
Tensions between founders are common. They may concern strategic direction, remuneration, the allocation of roles or the timing of an exit. A lawyer can help find an amicable solution, structure an orderly exit or, if necessary, defend a shareholder's rights. The earlier the involvement, the more options remain open.
At each growth stage
Each growth stage (new funding round, external growth, international expansion, restructuring, preparation for a sale) brings its own legal needs. It helps to have an established working relationship with a lawyer before these stages arrive, to save time and build trust when they occur.
To find out more about how we assist you, see our dedicated start-up lawyer page.
To be assisted: start-up formation lawyer: articles of association, founders' agreement, BSA-AIR.
