Most of the Entrepreneurs I meet as a Start-up attorney seem to skeptic as hell. Skeptic about law, about lawyers. Well, I am not surprised at this. I firmly believe that lawyers absolutely terrorize their clients. They use heavy connotations, create complex situations, use the “if you do not hire me, you are going to be in deep trouble” theory. So, as an experimental exercise, I visited several lawyers, posing as a distressed client, not telling them that I belong to the same breed as they do. 🙂 . I presented them with a fictional, but believable situation and lo and behold , they left no stones unturned to make me believe that I was in deep sh*t. Believe me, at that moment, I reminisced the tantrik babas in Bollywood movies , who confidently corner the poor bhakt ( No political reference please!!!) to believe that, every problem is a big problem and that they are the only messiahs, good enough to solve every problem that ever arises. Surprisingly, most of the lawyers are so good at this art, that, had I not been a lawyer, I would have genuinely succumbed to this mounting pressure.
But the question here is, is law for start-ups really so complicated? Is every legal problem a big problem? The answer is a clear NO. Sometimes the solutions are really simple, it just needs to be carefully broken down into parts and constructive application of basic theories of law combined with logic (We call this process “lawgic swad anusaar” ) does the magic. Many times entrepreneurs who research well can themselves figure out a way. It’s really not a rocket science.
As much as this is true, the fact that every business needs to have a strong legal foundation cannot be denied. I would recommend that just like every entrepreneur researches about the business model, competitors, growth, finance etc. they should invest some time reading about what will make their company legally compliant. Making a list of all the mandatory and optional compliances, prioritizing them and most importantly setting a budget for the same will make a big difference in your journey. Let’s call this DYLY. ( “Do your law yourself”). To simplify this process I am making a tentative flow-chart, generally applicable to all businesses to give my dear entrepreneurs an overview of the basic legal documentations and compliances one needs to be prepared for. While this flow chart is not business specific, you might have to research in greater detail about any other particular licenses, permissions needed to carry out your business activities.
Remember, time is the essence. It is observed that, most of the legal issues in start-ups arise because an entrepreneur is not aware of the compliance or is merely being ignorant. To give you an example non appointment of an auditor in the prescribed time, attracts fine of Rs. 100/day. Error management is always way more expensive. Being legally compliant also ensures an extremely smooth due-diligence process, during fund-raising. Investors appreciate entrepreneurs knowing the basics of their business instead of relying on a lawyer all the time.
Lastly, please know that all lawyers are lawyers but they are not necessarily start-up lawyers. So choose a lawyer, who is passionate about business as much as he is passionate about law. A lawyer who does not know how to restructure a business, while honoring the law cannot really contribute much to the building of your dream entity.
We will be back soon, helping you decode the law. Till then, good-bye!