For large law firms, startups and emerging companies can create a strong pipeline of potential new business. However, because such clients can’t always pay the going rate immediately, their work has to be managed carefully, so it doesn’t swallow too many firm resources without yielding much — or anything — in the early stages.
“There is certainly an art to representing these clients,” said Nathan Seiler, a Business & Transactions Partner who co-leads Ballard Spahr’s Emerging Growth Practice and is based in Boulder, Colo. “You have to understand where they started and what their growth trajectory looks like,” Seiler says. “Their lifecycle is going to determine what sort of partnership they’re going to need from their law firm. One of the keys is taking a very practical approach and sequencing how we address their various legal needs at the appropriate time.”
In the six years since Ballard Spahr created its formal Emerging Growth Practice, Seiler and Greg Seltzer, who co-leads the practice, have found some approaches to be especially helpful in nurturing startup clients.
Anticipate What May Be Coming
At the outset, foresight may be the attribute a startup client finds most useful in an attorney. “It’s important to understand how the company plans to grow, and to learn what success looks like for it,” Seiler says. “That’s going to inform how the company need to position itself along the way.”
For Seltzer, it amounts to “looking around corners.” If a startup needs to add more staff to capture more market share, for example, then employment law counseling is what’s called for. If an emerging company needs to protect its innovation, then patent or trademark prosecution may be the first priority.
“A pivotal part of our relationships with startups is forecasting what needs will arise and when,” Seltzer explains.
Be Prepared for Multi-Faceted Needs
Closely tied to the need to anticipate what a client’s future might look like is the ability of a law firm to offer the specific assistance that certain circumstances call for.
“To work with startup clients, you have to have a very broad skill base,” Seltzer notes. Services that these startups need have crossed over into many key practice areas like M&A, biosciences, intellectual property, Fintech, and Consumer Finance. All these areas highlight the need for wide-ranging but deep access to experts to fully serve a startup’s needs.
Seiler agrees. “I’m not a computer engineer. I’m not a coder. I don’t have a Ph.D. in biology,” he adds. “But, where and when appropriate, we do have attorneys with experience in those fields. And that helps us make sure that when we take on an emerging growth client, we can offer the best of what’s needed.”
Have Informed, Perspective-Driven Expectations
Startup clients are not the only ones who get to have expectations. To make sure the work that Ballard Spahr performs for emerging growth companies is an investment rather than a shot in the dark, the firm puts prospective clients through an assessment process at the outset.
“We’re not going to on-board tons of startups and hope that one makes it big,” Seltzer explains. “That’s not sustainable. We’re more selective in the startups that we work with. We perform due diligence on them. We try to diagnose whether a company is able to be successful. They need to have a workable plan for the future and a solid idea of how to get there. I need to see and understand what problem the company is solving.”
That said, reasonable expectations with regard to each client are necessary. “We don’t take on our emerging company clients with the expectation that they’re going to have billion-dollar exits,” Seltzer adds. “We look to assist startup companies and grow them into M&A clients.”
Seiler notes the process is rewarding and “it can be very exciting to watch these companies grow and move through their lifecycles.”
“Emerging companies are where some of the most interesting ideas in business come from and working with them is one of the things I like best about practicing law,” he says. “One of our primary duties to the newly minted entrepreneur is to help educate them to become adept and efficient consumers of legal services.”