Even one lawsuit can devastate the prospects of a startup
“Fail Fast, Fail Often” is a popular mantra among entrepreneurs that is only half-true when it comes to the legal mistakes that startups make. Getting into legal trouble often results in the sudden dissolution or a slow death of a dream business as the startup’s funds are depleted to pay legal fees. Sometimes, just the shadow of a lawsuit can kill potential fundraising that is ongoing.
1 in 10 startups fail because of legal-related issues
A research of 200 founders’ post-mortems has revealed that 1 out of 10 startups have winded up their operations due to legal challenges. It is difficult to accurately pinpoint which areas of your startup that are most vulnerable to legal troubles without tapping into a lawyer’s expertise and experience.
Every startup needs to begin with good legal documentation
It is common for startups to be overwhelmed with the day-to-day tasks of building their product and business, hence overlooking and underestimating the value of sound legal documentation. Compared to the excitement of building, the need to protect the company from legal troubles appears less urgent as these troubles seem to only occur in worst-case scenarios. The effort to disentangle a startup from complicated and avoidable legal troubles later would often require painful sacrifices, most of all the sacrifice of having to rechannel precious resources away from growing one’s business.
Good legal documentation serves to safeguard the longevity of businesses. It is therefore imperative that startups invest in solid, reliable legal documentation at the start and not treat it as an inconvenient and expensive afterthought.
The challenges startups face in getting the right legal basics
#1. DIY with legal templates comes with risks
Startups may choose to download or buy legal templates off the internet and make tweaks on their own. It is tempting to do this as you can save on legal costs. While this may be cost-effective, it does come with risk since most of the time, the person customising the templates does not have legal training.
The risks that come with this method is that it may not be sufficiently or correctly customised to your business (incompletely or poorly worded, not protecting your interests), it might not be based in Singapore law or it might be outdated.
- Partners and employees with whom you have contracts with may be more tempted to break the rules if they think they are less at risk because of a vague contract
- It can be difficult to enforce these contracts
- It can be expensive to enforce these contracts when you have to hire a lawyer to undo the damage
Ultimately, saving on proper and solid legal documentation at the start may prove costlier in the long run. Seeking legal counsel remains to be the most reliable way to determine the usefulness of your legal documents for achieving your business goals.
Advantages of working with lawyers to draft your legal documents are:
- Lawyers have developed their own templates over the firm’s cumulative experience
- Practicing lawyers will spend time to understand your business and translate it to your contracts
- Many lawyers are more affordable than most startups think
#2. Many startups don’t know how to start finding a good startup lawyer to work with
Our survey showed that personal referrals remain the most popular way of getting legal help in Singapore. 83% of our respondents prefer engaging a lawyer referred to them by family or friends rather than a lawyer they found through Google or advertisements.
Finding a good startup lawyer through personal referrals may not be viable for founders who do not have connections in the local startup scene. The effort and time needed to search and evaluate lawyers on their own may be daunting, especially for founders without prior knowledge of the standard prices of legal services. Legal fees for drafting documents can be quite wide and benchmarks can be difficult to find online.
Taken together with the earlier point, it is understandable why many startups might opt for only engaging lawyers when the need arises. Many lawyers in our network discuss generally how a part of their work is extricating startups from complicated situations that have come up because they did not spend more resources getting their legal fundamentals down at the start when they were drafting important legal documents.
Nonetheless, as Singapore becomes the world’s number one for start-up talent, it has become much easier to find experienced lawyers who specialise in providing legal services for startups in Singapore. These lawyers and their firms often set their fees at competitive rates to best meet the needs of their startup clients.
An alternative – Asia Law Network’s Startup Package
Our mission is to leverage technology to make access to great legal help easy and affordable to people and businesses in Asia. This is why we are collaborating with established incubators, VCs and a panel of lawyers to make it easy, transparent and affordable to get your legal fundamentals right with reliable documentation for your business.
With it, we want to remove all the uncertainty and hassle for startups to quickly find a solution to their legal needs at very competitive rates.
A flat, transparent fee of S$4,000 to get your legal fundamentals done by great lawyers quickly
You no longer have to go through the trouble of researching, finding and connecting with multiple law firms to get quotations. We curated a panel of law firms with the experience and expertise of advising startups to offer help startups get their legal fundamentals right for a transparent and flat fee of S$4,000 (excl GST).
The competitive fee gets you 20 credits which you can use to get the specific documentation and templates you need from the law firm you select so you pay for exactly what you need. After you check out, your law firm will get in touch within 5 working days to get you started quickly.
A better way to get legal documents for your startup
|Without Startup Package||With Startup Package
|Time-consuming and difficult to research and identify lawyers with the right expertise and experience (especially if you don’t have legal contacts)||Curated panel of lawyers all have experience and expertise in advising startups and includes firms with prominent technology lawyers|
|Uncertain about the legal fees; difficult to find benchmarks; wide range of legal fees for drafting startup documents||Transparent, competitive fees for each of the law firms – pick and choose how you want to spend your credits|
|Time consuming to research, negotiate, transact and get started||Law firm that you select will be in touch within 5 working days to get you started on getting your legal fundamentals done quickly|
|Risky using downloaded or bought templates and customising it without the advice of an experienced lawyer||Only practicing lawyers from great law firms will provide comprehensive, customise drafting and access to their templates|
Who should be interested in our Startup Package?
This is for you if you are a:
- Startup planning to incorporate in Singapore and Indonesia
- Existing startup aiming to tighten contracts
- Non-SG based startup looking to do business in Singapore
- Local SME looking to improve on internal and external agreements
- SG Startup expanding into Indonesia
Looking to start off your business on the right foot or to review and tighten your existing legal contracts?
Sign up for Quick Contracts and get all your legal documents done quickly and conveniently. From a flat S$4,000 (excl GST), you will get 20 legal credits with a reputable law firm, which allows you to pick and choose the contracts your business needs. Lawyers will spend time with you to understand your business and its risks which is essential to help customise your legal documents. Your lawyer(s) will be in touch and get started within a week. Get started right away!
This article does not constitute legal advice or a legal opinion on any matter discussed and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and practice in this area. If you require any advice or information, please speak to practicing lawyer in your jurisdiction. No individual who is a member, partner, shareholder or consultant of, in or to any constituent part of Interstellar Group Pte. Ltd. accepts or assumes responsibility, or has any liability, to any person in respect of this article.