On The Psychological Side Of The Legal Aspects Within The Entrepreneurial Journey - Part 2

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I'll open on a personal note - I pursued my bachelor's degree in Law and Psychology. I didn't know what to choose, but I knew I was drawn a lot to both. I did my internship at Herzog Fox & Neeman, in the Private Clients department - a department that treats all the wealthy people we all read about in the paper and whose psychological aspects are the basis for all their personal legal conduct in financial agreements, trusts, wills, assets allocation and more. After graduation I left the profession. But a lot of the principles and thinking ways have remained with me and are still guiding me through the years till these days.

As an executive coach and advisor who works with startups, entrepreneurs and investors - I once again became aware of how ingrained psychology is in all commercial and legal agreements. Today, I do understand why I studied the two degrees together, and how they exist in perfect symbiosis within my daily work - even though I don’t function as either a lawyer or a psychologist - but bring in my perception of the two worlds to the table.

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In my conversation with Lawyer Guy Lachmann, a friend and colleague, who specializes in working with founders and startups, we focused on the mental and psychological aspects inherent in the legal aspects of the entrepreneurial journey, and especially the founders agreement, in choosing the right attorney for you and what happens when people decide to part ways. An attorney is one of the closest and most important advisors to an entrepreneur, and he should be much more than just knowledgeable in laws and case law; he should also be a person who really sees you, your values, your style and helps you advance the big goal you are striving for, over small commercial insistences that don’t promote and can ruin the deal and the startup.

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Disclaimer (I am after all still an ex-attorney) - everything that will be written in the next three chapters is in the nature of providing knowledge that will help you shed light on the field and reflects our perspective and worldview, and is not a substitute for personal legal advice for you. Guy and I recommend you consult a lawyer If the topics of the podcast are relevant to you before taking any action. Each case should be examined on its own merits and its individual aspects weighed. The conversation is meant to give you a general impression and is done on the opinion of the speakers only.

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>>> Why should you choose a lawyer that is right for you and how do you choose?

An attorney who accompanies entrepreneurs must be an expert in accompanying startup companies. The approach is different from an attorney who accompanies large corporate companies or other legal fields. An attorney who accompanies entrepreneurs requires a high level of emotional intelligence - in order to be able to be present with the entrepreneur in the various challenges he experiences.

Sometimes, entrepreneurs sin in hubris and out of blind attachment to their "baby" - they refuse to listen to the wisdom of the years and the experience that an attorney will give them. In this context - it’s always important to have a healthy sense of criticism, but if you did your testing, got recommendations and chose a lawyer who is an expert in the field and paid him - you should let him do his job, otherwise - it’s a waste of time for all parties. Consultations over the right amount, with too many lawyers or advisors and such "know-it-alls" - can produce a flooding, multiplicity of opinions and waste time and energy.

There are different styles of attorneys that suit different styles of entrepreneurs; some are very dominant, some are very intervening and determined and some believe in reflecting and warning - and let the entrepreneurs choose their path. It's done from the gut.

Why should we pay close attention when we choose an attorney (assuming that professional attorneys in Israel who specialize in startups and investments - are all good)?

-Is he experienced or not?

-Is he aggressive / passive?

-Who will run with me and answer my call in the middle of the night?

-Who is culturally suitable for me?

-Who can understand what is going through my mind and my thought process?

-Who has similar interests to mine?

-With whom would I have a fun evening at a bar?

The big law firms have plans for startups, whereby the payment date is postponed or a significant discount is given, on the understanding that entrepreneurs have no ability to pay. There may be a market failure here, but it pushes the attorney to take the risk, from a similar way of looking like the way VC works - he‘ll be able to bridge the losses in one good deal for every 9 deals that fail.

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Entrepreneurs need to understand the weight of legal responsibility placed on their shoulders and find an attorney who will make sure to cover all areas of responsibility.

Some entrepreneurs try to run the legal aspects on their own up to certain stages, and even after that - being too involved in everything, the cost of the mistake can be great. The role of the attorney is to facilitate and focus the entrepreneurs, to look after them. If the legal matters are not clean and tidy "like a pharmacy" - a deal can fall through.

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When the entrepreneurs are spouses / siblings / relatives - the connection to a lawyer who will understand your emotional and psychological state is even more critical.

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First, there are many differences between starting a family business or SMB with the family, and starting a startup with a partner family member; in the legal and business structure, in the sources of money, in pace, in dream and vision, in risk and chance.

There are many benefits to conquering the world together with our loved ones - on the other hand, we don’t spread the risk, and not only do we not spread the risk - but also put a lot of stress into our family / couple relationship.

In addition, it’s worth paying attention to the external appearance of the matter and how it’s regulated, because in the psychology of investors for example - they will want to see that the legal structures are accurate. This becomes even more complex and with great explosive potential - when it comes to 2 partners who are spouses / siblings, and a third partner who is out of the loop - even being a close friend. Such situations stretch people to their edge, a lot of money is involved, so it’s even more important to ensure proper advice and a hermetic framework for things to reduce and hedge the potential for explosiveness.