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When Should A Startup Talk To A Lawyer?


We at Allied Legal have assisted countless startups at various stages in their journey. That’s why we understand that, for many startups, resources are tight from day one, and decisions have to be made about how to expend what limited finances are available. Still, every startup will reach a point where it needs legal expertise to proceed properly. This begs the question – when have you reached that point?

Immediately?

As a general rule, it’s never too early to consult with a startup lawyer. We deal with different startups on a daily basis which gives us a unique insight into the difficulties and requirements they face. A good startup lawyer will be able to provide advice and insights that will be helpful from the beginning (including how to best structure your business and protect your IP). 

That being said, it’s probably not necessary to start racking up legal fees when you’re still in the idea phase. If you’re still brainstorming or validating your offering, your resources might be better spent on this task. We recommend spending your time and money on solidifying and finalising your idea in the early stages. 

Research and development?

If you’re in the research and development stage of your startup, there’s a good chance you should talk to a lawyer. This, of course, depends on what is involved in your research and development. As a key point, if you’re hiring third party contractors to write software or develop your product, there are a number of legalities to consider:

  1. Ensuring all relevant intellectual property vests in your business? 
  2. Are you liable to pay the contractor if they don’t deliver? 
  3. The contractor’s exposure if a sub-par result is delivered.
  4. What level of warranty protection is being offered by the contractor.
  5. What level of after sales support will the contactor provide.  

The above issues should be addressed in a written agreement by which you are retaining the contractor. Although it may seem expensive going to a lawyer to hash these matters out, it’s very possible that this could save you money in the long run. 

What else can we help with?

A specialist startup lawyer should be able to assist you with the following:

  1. How should you structure your business? 
  2. Protecting your intellectual property.  
  3. Do you require a shareholders agreement? If so, what should it include?
  4. What are the privacy, tax, and other legal obligations of your startup?  This includes advice on approvals and authorisations specific to your startup.
  5. Terms and conditions required to take your product or service to market.  
  6. Employee engagement and incentive plans.
  7. Fundraising issues.
  8. Key commercial arrangements. 

Too often we see startups come to us after the fact, when the ball has already been dropped on one or more of these issues. We know from their stories that its much cheaper to prevent these problems than it is to fix them. 

Give us a call

Here at Allied Legal, we know how to protect a startup from the outset. It is, in fact, our area of expertise. If you think your startup needs some legal assistance, give us a call on 03 8638 0888, or send us an email at hello@alliedlegal.com.au.  

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