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Finding Your Startup Lawyer: What Every Entrepreneur Should Know

Via Xcomony 

Source: Pexels

By: Linda Cole and Joshua Fox

Successful management of any new enterprise, regardless of industry, is a process demanding of concerted effort to realize opportunity with a finite set of resources. As an entrepreneur, perfecting your vision, securing and managing funds, building a team, marketing and selling, and executing on plan, all while navigating unexpected obstacles, likely occupy your every day. At the core of whether you can succeed is whether your principal team has not only the requisite ability and experience, but the support in place to sustain it. This support, typically, derives from academic advisors, industry experts, professional consultants, and, eventually, from investors.

From whom you choose to seek advice, including from which startup lawyer, will significantly impact your progress. To assume that any corporate lawyer—and there are many able ones out there—can meet the demands of your business need not be one of your early fails. The right lawyer for your startup will not purely be a legal advisor but a strategic one—that is, an integrated teammate who is uniquely prepared to support your mission.

What makes a particular lawyer worthy of this role? A set of professional skills and personal attributes that combine with your own in just the right balance to drive success. Whether this lawyer is with an outside law firm or in house as part of your core team, our collective experience across both roles reveals a strikingly similar skillset. What, precisely, do these skills look like? You may be surprised to learn that the most predictable is, in fact, not necessarily the most impactful.

1. Risk Management

If your first contact with a lawyer is prompted by risks associated with your business, such as how to document equity owned by the founders, protect intellectual property, or engage human resources, then you are not alone. It is this expectation of risk management that creates what is, in theory, where the value of the lawyer’s contribution to your startup lies. It is, of course, imperative that your lawyer be prepared to identify, analyze and recommend steps to eliminate or, at the very least, mitigate risk.

If your startup is highly data driven, for example, your lawyer must not only understand the applicable legal and regulatory framework around the collection, storage, use, and/or sale of the particular type and form of data but, likewise, the related risks and remedies, if any, that may be employed to avoid them. There are multiple means of managing risk, such as through informed decision making, contract drafting and liability insurance, but before risks can be addressed, they must first be identified.

You absolutely need to be able to look to your lawyer for input into cost-benefit analyses relative to legal risks to your business. Ideally, you will want to choose a lawyer who has experience with companies similar to your own, either in terms of industry or issues, including having worked on the types of transactions you expect to engage in. Contrary to popular belief, however, understanding and analyzing legal risk is not the only, nor is it even the most beneficial, skill that the right lawyer will bring to your startup. It is, more specifically, the lawyer who is able to adroitly shift between advisor on risk to participant in solutions from whom you will derive the greatest value. This agility is as much a mindset as it is an expertise.

2. Partnership

Your choice lawyer may be an individual attorney or a law firm, but, in either case, you should expect and receive consistent proof that your legal counsel is an engaged member of your team. Whether a lawyer (or firm) inwardly identifies as “your business partner” will noticeably manifest, in both character and actions.

Your lawyer should be ready, for example, to support the business through creative and flexible billing practices, including offering alternative fee arrangements, such as a discounted hourly rate or fixed fee per project; estimating legal fees before commencing work; or deferring collection until your startup has realized a certain amount of revenue or capital. Willingness to experiment with such measures demonstrates that a lawyer is “on your side” by supporting your financial goals, despite the risk, and taking a long-term view of the relationship—in effect, making an “investment” in you and displaying confidence in your business’s likelihood of success.

The lawyer who thinks like a partner will consistently demonstrate that he or she cares and can be depended upon. You should feel valued after interactions with your lawyer, regardless of his or her workload, and confident that you and your business will take priority at the appropriate times. Your lawyer should be reliable and responsive, promptly returning phone calls and emails; mindful of your timeline; and able to deliver work product on time and within budget. You should never be left to worry that more mature businesses, which are larger paying clients, will monopolize the attention of your lawyer.

Perhaps the most meaningful attribute and indicator that a lawyer is prepared to be an effective teammate is a genuine interest, not simply in the business but in you as a person. The right lawyer will take the time to get to know you—your personality, your leadership style, your expectations, your work routines, and even your communication preferences—and proceed to accommodate them. In cases where you expect help analyzing risk but prefer to make the final decision yourself, your lawyer should facilitate that, by guiding you through pertinent pros and cons; but, in cases where you, instead, prefer a definitive opinion, your lawyer should provide one.

Say, for example, that you are a first-time entrepreneur negotiating a term sheet for an initial round of financing, and, with negotiations faltering, you ask your lawyer whether he or she would sign the term sheet “as is.” If your lawyer understands you to have a need for clear and concise guidance around integral business decisions, your lawyer must be able to provide you with a “Yes” or “No” answer, and not an exhaustive recitation of terms. You will likely desire some balance between analysis and opinion from your lawyer, and where he or she is adeptly able to gauge which one you prefer and when, you have forged a strong partnership.

3. Collaborative Communication

Being a good communicator is essential to being a good lawyer, partner and problem solver, especially when navigating the bumpy terrain of a startup. Your lawyer should, therefore, routinely be asking incisive questions about the particular business issue, goal, or transaction at hand. How else will he or she be able to clearly comprehend what you are looking for, what you care about most, and, alternatively, what you may not think is important? It is only through asking questions that your lawyer can construct and tailor recommendations that are both sound and relevant. After all, your business is not a hypothetical, and legal advice should never be delivered to you in a vacuum.

While posing the right questions is a necessary first step toward effective communication, your lawyer should not stop there. It is equally imperative that he or she pay careful attention to your answers. Only through active listening will your lawyer be able to understand the broader context within which your specific need has arisen. If, for example, you ask your lawyer to review and interpret a contract, the advice that you receive will be most useful to you when generated from a clear understanding, not only of the proposed transaction, but, more specifically, of your objectives and leverage relative to those of the counterparty to the contract.

Returning to our example above, if you are a first-time entrepreneur engaged in collapsing negotiations for seed financing and looking to your lawyer for guidance on whether to sign the term sheet “as is,” only if your lawyer has been carefully inquisitive might he or she know, for example, if you have spent months chasing financing, have received only this one offer, and are increasingly concerned over the resulting delay in technology development. Advice appropriately shaped by these facts would include a shift in focus toward negotiating a smaller subset of your most important issues (perhaps even just one or two) in order to make sure that a deal gets done as quickly as possible.

4. Practical Advice

Although many of the questions that you will pose to your startup lawyer will have complicated answers and, thus, require detailed analyses, you, typically, will need a succinct response. While a lawyer can spend a lot of time over email or on the phone with you summarizing relevant issues and describing the review conducted to reach his or her conclusion, this propensity is contrary to the startup reality. Time is money, and you are, no doubt, both busy and cost conscious. It stands to reason, then, that the more compatible lawyer is the one who is able to “cut to the chase.” While your lawyer should be able to work back to the analysis supporting his or her conclusion, in the course of discussing your questions, practicality dictates that the lawyer should lead with that conclusion, offering a recommendation at the outset.

As an entrepreneur, most likely with a business or technical background (rather than a legal one), you should expect your lawyer to be the one to bridge the gap and have the ability to speak your language. Your lawyer should avoid the use of legalese, so that you find the advice easily understandable and relatable. In fact, an essential component of your startup lawyer’s role is not providing legal advice—that is to say, to offer counsel on related, but non-legal, matters. For example, you may ask the lawyer representing your startup in a venture capital financing to advise you regarding how frequently particular deal terms, like participating preferred stock, are seen. Knowing how prevalent deal terms are is not “legal” advice, per se, but explaining which terms are “market” and which are atypical is a key value-add. This relevant expertise will enable your lawyer to help you to prioritize and determine which terms to negotiate and which to accept.

The ability to provide practical business advice is part of a larger skillset that will distinguish your best startup lawyer from the rest. Most lawyers will be able to educate you on how to interpret a provision in a contract or analyze risk in a transaction, but the lawyer that you want to find exercises sound judgment in the provision of real-world advice. Your world is the startup world, and, as such, your lawyer must be able to expertly determine what is important to you (and what is not), given the stage that you are at. This determination is impacted by the particular circumstances and context, such as when and how urgently you may need outside financing, and the circumstances and context need to figure into the advice that you receive.

If, for example, your startup is running low on cash—with payroll, accounts payable, and other obligations due—but has received a proposal from a prospective licensee of your technology in a specific territory outside of the United States, you may need to accept terms that are less than favorable, and it is the role of the skilled startup lawyer to help you determine what your business can live with. Your lawyer should know not to “over-lawyer,” such as by drafting and negotiating the definitive agreements in a way that adds unnecessary time, complexity, and expense to the deal or, even worse, in a way that puts the deal at risk: By continuing to negotiate a matter for which there could be a compromise or by delaying the closing date through prolonged negotiations, the deal could fall through.

5. Understanding the Business

As an entrepreneur, your business is born of an idea that you believe is unique. It could be an advanced technology, an innovative service, or a progressive social mission. Whatever it is that sets your business apart needs to be substantively understood, in both design and practice, by your lawyer.

If, for example, your startup is a software-as-a-service play, your lawyer must be familiar with the software, its functionality, feasible customizations, and what steps the business is willing to take in terms of customer care, warranty, and support. Otherwise, your lawyer will not be able to negotiate successfully with tech-savvy customers, discuss the finer points of service level agreements, and explain what credits, if any, will be offered in the event of unexpected downtime. If this dexterity is not the case with your lawyer, in order to support your sales team, then you may as well be selling off-the-shelf software, because, before the contract is even signed, the prospective customer may determine that the service piece is missing.

Equally as important for your startup lawyer to grasp is the financial model and underlying accounting principles on which your business runs. Whether you are selling a product or a service, there will be a process by which revenue flows through your business. With working knowledge of this process, your lawyer can draft and negotiate license and services agreements that, to the extent possible, support the conversion of bookings into recognized revenue sooner rather than later. Be sure that the lawyer you select does not plan to simply “do deals” for your startup but that he or she plans to help you craft deals that are structured in such a way as to support your business goals.

While finding “a” startup lawyer may seem a straightforward enough task, finding “your” startup lawyer—the practitioner whose partnership, communication, and practicality will advance your business purpose—requires that you know who and what you are looking for. The right fit from the outset often proves determinative and, therefore, you will want to evaluate carefully skills that many entrepreneurs, especially those searching for a lawyer for the first time, might not intuitively focus on.

Linda Cole is a Clinical Instructor at Harvard Law School and Supervising Attorney for the Harvard Law Entrepreneurship Project. Joshua Fox is a Partner at WilmerHale in Boston and an Adjunct Lecturer at Boston University School of Law. Both are alumni of Harvard Law School.

Making it big behind the scenes

Via The Harvard Gazette

HLS Lecturer Linda Cole, (from left) and HLS Clinical Professor of Law, Brian Price and HLS Student Gaia Mattiace talk during a student meeting of the Recording Artist Project and Entertainment Law Clinic at HLS. Kris Snibbe/Harvard Staff Photographer

By: Liz Mineo

Growing up in South Florida, Rebecca Rechtszaid dreamed of becoming a professional singer, but after a case of pneumonia wrecked her vocal range in college, she settled for the next-best thing.

She couldn’t be an artist, but she could become a lawyer for artists.

“I figured I’d go to law school and I’d try to help musicians because even if I didn’t have my own voice, I could help them find theirs,” said Rechtszaid, J.D. ’19. “There hasn’t been a day when I’ve questioned my choice.”

That seems to be the case with hundreds of students who have signed up for entertainment law courses and clinics at Harvard Law School (HLS) over the past 20 years. The phenomenon underscores a trend among law students to veer from the conventional paths of corporate law or litigation and look to work in creative industries. The trend, also noticeable at other law schools around the country, has spurred growth in the niche field of entertainment law.

These students are driven by a passion for music, the arts, and showbiz, said HLS Clinical Professor of Law Brian Price, who supervises the Entertainment Law Clinic.

“It’s an exciting career for a music lover,” said Price at his office, where a wall is covered by a corkboard neatly filled with business cards from agents, managers, artists, and alumni.

Although entertainment attorneys work behind the scenes, they can have a bigger influence on artists’ careers than agents or managers, said Price. They review artists’ agreements, publishing deals, endorsements, and licensing and merchandising contracts, making sure their clients’ interests are protected. In the end, beneath the glitz, it’s all about business.

“Artists are becoming savvier and want to be involved in the business aspects of their careers,” said Price. “When they ask for legal advice, they want to know their legal rights, and how to make good deals and find ways to make more money.”

In 1998, Price founded the Recording Artists Project (RAP), a student-run group that provides legal assistance to budding artists, prompted by two students who told him of their longing to work in the music industry. Price is faculty adviser for the group.

Most HLS graduates end up working in business or corporate law, though some alumni have had successful careers in the entertainment industry. Among them are Bruce Ramer ’58, who represents clients like George Clooney and Clint Eastwood; Bert Fields ’52, who represented Michael Jackson; and legendary music lawyer Clive Davis ’56, who signed many luminaries like Whitney Houston, and boasts his own star on the Hollywood Walk of Fame. Donald Passman, J.D. ’70, has represented celebrities like Janet Jackson, Stevie Wonder, and Pink and wrote the bestseller “All You Need to Know About the Music Business”; and Aaron Rosenberg, J.D. ’02, counts John Legend, Jennifer Lopez, and Justin Bieber among his clients.

For future entertainment lawyers, the goal is often to find a job in Hollywood and experience the glamour and thrill of working with artists, but streaming and other technological changes have added new career options in entertainment law.

Take Kike Aluko, J.D. ’19, who will move to Atlanta to join the national law firm Greenberg Traurig, LLP, and work on music licensing deals, trademark protection, and artist representation. Aluko, who interned at a record label in the mid-2000s, is struck by the recent changes in the industry.

“It has grown a lot and is more diverse than a decade ago when there was no streaming or Spotify,” she said. “There are so many different avenues for people to pursue their passion rather than going to a record label.”

Kirkland Alexander Lynch, J.D. ’14, works as a business affairs strategist for the Stevie Wonder’s organization, including Stevland Morris Productions, LLC, Wonder Productions, Inc., among others. He oversees the legal aspects of anything related to shows and business deals, and travels around the world with the organization.

It is a dream job for Lynch, who abandoned his plans to work in finance after being inspired by a classmate who wanted to become a sports lawyer. “He made me think that I should pursue my true passion, which was music,” said Lynch from Los Angeles. “And I saw a path for me when I interned at Sony Music Entertainment in New York during my second year at the Law School.”

But it was while taking the Entertainment Law Clinic with Price that Lynch started learning the ropes of entertainment law. He helped a rapper from Dorchester and an indie group based in Union Square with partnerships and band agreements. Last year, Lynch launched his own media management and consulting company, Kirkland Alexander Enterprises Inc.

As members of RAP, students draft, review, and negotiate recording contracts and artists’ and managers’ agreements for musicians and other entertainers. One of the group’s most famous clients is renowned jazz bassist and singer Esperanza Spalding, now a professor of the practice in Harvard’s Music Department, who was counseled on the negotiation of her first record deal.

Breaking into the music and entertainment worlds is hard, but HLS’s strong alumni network helps young attorneys build connections that pay off. That happened to Ethan Schiffres, J.D. ’10, who reached out to Passman, whose firm is Gang, Tyre, Ramer, Brown & Passman Inc., and kept in touch with him. When Schiffres graduated, he was offered a job as a music associate. Today he’s a partner at the firm, where he reviews legal contracts for endorsements, touring, publishing deals, and trademark litigation.

Schiffres credits the Entertainment Law Clinic with providing hands-on experience and contacts with alumni willing to help the younger generation of lawyers. His biggest piece of advice is to network.

“Entertainment law is sexier than corporate law,” he said, “but it also involves hard work, passion for music and entertainment, but it really is about networking.”

Rechtszaid agreed.

“Connections are everything,” she said. “It takes a lot to muster the courage to reach [out] to somebody you don’t know, but it’s worth it.”

As the president of RAP, Rechtszaid wrote emails to the manager of Chance the Rapper and Passman last year asking them to visit Harvard to talk to HLS students. They both came.

Rechtszaid’s dream clients are Lady Gaga, the indie rock band Dorothy, and the Bronx hip-hop artist and Instagram personality Cardi B. “Cardi B is so talented and funny,” Rechtszaid said. “I want to be her best friend.”