Lawyers to Tech Startups: Move Fast But Seek Counsel



What’s the difference between legally advising tech startups versus more traditional companies?


“The speed with which technology moves really requires tech companies to focus on and embed legal from the beginning of their product development lifecycle all the way through their process,” Robin Fleming, vice president of technology at Angie’s List, told Bloomberg BNA in an interview.

Scrappy startups often avoid seeking legal advice because they lack funds and are focused on fast development, Fleming and others on a panel at SXSW, an annual technology, film and music festival in Austin, said today. But tech entrepreneurs can protect their innovations and add value to their business if they take steps early to address intellectual property and employee issues, panelists said.

Once a startup is incorporated, its legal budget should focus on protecting its IP, Brian McGinnis, a partner at Barnes & Thornburg LLP, said. A company that holds patents, trademarks or copyrights is often worth more in the eyes of venture capitalist and private equity firms, McGinnis said he tells startup clients.

“We try to tell them the ways that legal can add value to their business, especially when it comes to getting investment and getting sold,” McGinnis told Bloomberg BNA in an interview.

The process of securing patents can be very expensive for startups, but a knowledgeable lawyer can help companies look for less expensive options, McGinnis said. For example, a provisional patent application allows a company to reserve their right to file a patent for a year, so entrepreneurs can protect their ideas while still marketing them publically, he said. Patent and trademark clearances are also relatively inexpensive services attorneys can provide to ensure a startup isn’t infringing on others’ IP.

Protecting human capital is also crucial in a startup’s early stages, Thomas Haskins, another partner at Barnes & Thornburg, said. Disputes stemming from noncompete and nondisclosure agreements can be especially expensive as tech companies fight for a limited talent pool, he said.

Be it in software or staff, the best way to focus legal efforts is to know where your company’s value lies, he said.

“Know what your company is,” Haskins said. “Are you putting sufficient resources and capital to make sure that’s protected?”

The panel was sponsored by Barnes & Thornburg.