Question: For an entrepreneur, when should a lawyer be introduced into the conversation when dealing with Angels and / or VCs?
Our Take: This depends a on whom your lawyer is and also who you are. From your question, my assumption would be that you aren’t perfectly comfortable with how your lawyer will “play” in front of your potential investors.
Investors are used to lawyers. We use them on all of our deals and our companies use them on all of their deals. In fact, some of us lawyers become investors! It’s no secret that we all have them and even if they aren’t present on the front line, we all assume that each other have a lawyer in the background.
As far as when to introduce your lawyer to potential investors, consider who your lawyer is. Is he or she an aggressive, take charge, “win at all costs” type? Is he or she a junior person relative to the potential investors you are speaking to? In these two cases, you might want to let the business deal take a bit of shape before you set your lawyer loose.
On the other hand, if you have a well-experience, non-confrontational, business advocate type of lawyer, it’s probably never too early to introduce them if they can help move along the business process. In fact, we often see many of the same partners from the bigger firms on the other sides of deals and are happy to interface with them from the onset.
Whatever you do, make sure that if you need your lawyer, get your lawyer involved. If you are starting to discuss terms and are getting in over your head, get your attorney involved ASAP. It’s none too fun a situation if you negotiate a deal with a potential investor and then have to recant after your lawyer becomes involved.
Along with a similar post, this situation underscores hiring an attorney who is a trusted partner, not simply an hourly paid service advisor. If you feel comfortable with your counsel, most likely your investors will too. I can’t recall any deals that have died because of a particular company’s counsel’s behavior, but we certainly have many war stories to tell of lawyers whose behavior has made the process much less fun.