What is Startup Legal Documents Drafting?
Setting up a startup requires the drafting of certain legal documents to guide you through your business operations and encourage your growth. There are various documents to draft and they should be done properly to help you protect your interests and establish strong working relationships, such as with employees or vendors.
Read the rest of this article to explore some common startup legal documents, how to draft them for clarity, and how a qualified lawyer can help you with the drafting process.
What are Core Startup Legal Documents?
Some of the most common and important startup legal documents include the following:
- Founders’ agreement. This document specifies guidelines for co-founders, such as regarding equity splits and vesting schedules.
- Bylaws. This provides internal company rules for how it’s managed and how decisions are made.
- Non-disclosure agreement (NDA). To protect business information, such as trade secrets or customer lists, the company should have an NDA that explains provisions to avoid exposing sensitive information to third parties.
- Intellectual property (IP) assignment. This document states that content or IP created by founders or contractors belongs to the company.
- Employment agreements. These contracts specify the working relationship between the company and employees they hire, defining their roles, duties, and compensation.
- Terms of Service. This document needs to be clearly drafted so that there are rules for people using the company’s website or app to follow.
- Privacy policy. This document explains how the company will use and protect user or customer data.
- Articles of incorporation. This document outlines the business entity and structure, as well as explains its purpose.
- Shareholder agreement. This contract covers what rights and responsibilities shareholders have. It outlines various provisions, such as regarding share transfers and decision-making processes.
- Employment offer letter. When hiring employees, the company will make an offer and include it in an employment offer letter. This document explains what the employee can expect from the job position, such as compensation and benefits.
- Noncompete agreement. This is a restrictive document that prevents company employees from competing with the company, such as by working for a competitor, for a specific period after leaving their job.
What are Tips for Drafting Startup Legal Documents?
While the content you’ll need to include in startup legal documents will obviously vary depending on the type of contracts or documents you require, there are some general tips to consider.
Use Plain Language
It’s a misconception to think that legal documents need to contain legal jargon. In fact, this can make them challenging for people to understand, resulting in disputes. When drafting your startup legal documents, you should try to make them as simple as possible.
For example, when drafting a Terms of Service, describe user rights and prohibited activities clearly and avoid using technical legal terms.
Tailor Documents to the Company
You shouldn’t rely on generic online templates that don’t enable you to customize the agreement or document terms to suit your products/services, employees, contractors, and business goals. For example, a founders’ agreement should include specific details related to ownership percentages and vesting terms.
Define Important Terms
All key terms must be properly and consistently defined to prevent misinterpretations. For example, in an NDA, the agreement must specify exactly what constitutes confidential information that must be protected.
Consider Future Business Changes
A company will quickly evolve from being a startup. Your documents must be drafted to accommodate this future growth. For example, when writing company bylaws, you should include information for how new directors can be appointed.
Focus on Rights and Responsibilities
A common thread running through startup legal documents is clarity on parties’ roles and duties. These must be transparent so that all parties know what’s expected of them. For example, when drafting employment agreements, you should explain the employee’s job duties and performance expectations, while providing clarity on compensation and benefits.
How Does a Lawyer Assist With Startup Legal Documents Drafting?
Hiring a lawyer to draft your startup legal documents can be highly beneficial. A lawyer not only understands all the relevant laws, ensuring that your documents are aligned with them to prevent non-compliance penalties, but they can assist you by:
- Considering your startup’s requirements. A lawyer will evaluate the startup’s model, structure, and goals so that all legal documents reflect its situation and growth journey.
- Choosing the correct legal structure. A lawyer can help you to establish the most appropriate legal structure, which determines necessary provisions you should include in your legal documents.
- Drafting clear and precise documents. Since lawyers have experience in drafting legal contracts and documents, they’ll ensure all the paperwork is written in plain language that’s legally enforceable but easy for all parties to understand.
- Verifying document integrity. A lawyer will check all startup legal documents across other company documents and policies to ensure there’s no conflicting information that could result in disputes.
- Periodically reviewing the documents. This ensures that the startup documents remain updated and, when required, reflect significant changes to the business and relevant laws.
Where to Find a Lawyer for Startup Legal Documents Drafting
If you need to hire a lawyer to draft your essential startup legal documents, you can easily find a reputable and experienced one on an online legal network like ContractsCounsel.
ContractsCounsel is one of the largest online legal marketplaces that enables you to connect with a curated network of vetted lawyers. All the lawyers on the platform are experienced and you can review their profile information to help you select the most suitable one for your requirements.
Here are the steps to follow if you want to ask a lawyer on the platform to draft your startup legal documents.
- Go to the ContractsCounsel marketplace.
- Post your project for free. Include a few details to help you find the most suitable lawyer, such as specific documents you want drafted or any specific concerns you have regarding them.
- You’ll receive multiple bids from lawyers directly on the platform.
- Before selecting a lawyer to work with, review the lawyers’ profiles. You’ll find information that includes the lawyers’ location, client ratings for previous projects, expertise, years of experience, and credentials.
- Connect with a lawyer you think is best suited to your requirements and hire them to draft your startup legal agreements.
