Ryan is a local attorney (in Southlake) and his law practice focuses on all the types of legal issues that startups face: incorporations, mergers & aquisitions, etc. Ryan is very active in the DFW startup community and was kind enough to participate in a quick Q&A with me. FWSB: Many people seem to think that during an economic downturn, such as the one we are currently experiencing, innovation (or new company creation) is stifled. What is your perspective on that?

RR: I think economic downturns force people to re-evaluate their situation, whether they work for a startup or have a 'day job.'  For those currently in startups, the downturn forces the founders to take another look at their ideas which typically leads to refined thinking.  For those working 'day jobs', the downturn forces them to evaluate their own career, and wonder if they'll be the next victim of a layoff.  If these day job workers have been kicking around the idea of launching a startup, they tend to accelerate the launch process.

FWSB: Have you seen any trends in your own law practice with regards to the type of people looking for legal help? ie, more first time founders, more people still at their day jobs but starting something new on the side?

RR: I've noticed quite an uptick in new startups, especially since the beginning of December.  Most of these startups have founder(s) with significant tech experience and I would venture about half of them are still working at their day job. 

FWSB: One of the biggest challenges, and points of confusion, many first-time founders face is dealing with legal issues like incorporations, founders' equity, etc. Services like LegalZoom position themselves to be cheap, easy and quick alternatives to hiring an actual lawyer. What is the difference between what a service like LegalZoom has to offer and what an actual lawyer can provide?

RR: From what I've seen, services like LegalZoom do not provide documents that deal with intra-founder, IP or capital raising issues (shareholders' agreements, inventions assignments, etc.).  LegalZoom is OK if you are a one-person company that is incorporating to get liability protection.  But if you are more concerned about founders, IP, and investor issues, LegalZoom won't meet your needs.  And of course, LegalZoom can't offer a startup any substantive advice.  Basically, you just have to remember that LegalZoom (and other similar services) are geared towards those incorporating for liability reasons.

FWSB: What is the most common mistake you see first-time founders making before they come to you?

RR: With most startups, the initial investor may not be the last.  Thus, you want to be sure that your initial round, however small, won't affect the prospects of raising the second.  Alternatively, you want to make sure the investment itself is structured well.  

If a deal is pre-negotiated without counsel, it's difficult to provide any constructive advice.  Lawyers are great at papering deals, but we're just as good at providing advice.

If you are thinking about a startup and need some legal advice/assistance you can visit Ryan's website or blog for information contacting him.