How Far Does Duty to a Client Go?

One of my startup clients called me the other day. It was the CEO. He got right to the point.

“I’ve got a problem,” he said. “I owe you money, and we’ve run into some real financial problems. Here’s what we are doing to overcome it, and you are high on my list to be paid. If you want to stop working with us, I understand.”

Working with startups is an art. You need to know how to triage issues and control legal spend. Most importantly, you need to align your goals for them as a legal adviser with their goals for the company, and understand how to do so in an environment where resources for legal are scarce.

We were working on the company’s largest deal to date, and were running into legal problems. On top of that, we were working on a second big deal that also had its challenges. The company was up for a funding round, and closing at least one of these deals was important. As their fractional general counsel, I played a pivotal role in getting across the deal finish line by understanding the risk-reward position of the company, and negotiating with the other side to understand their concerns, then striking just the right balance so that both parties could get to “yes.” Which they did.

I have a strong relationship with this client, and have developed a personal relationship with important team members, including the CEO. I understand their technology, and can talk easily with their technologists and engineers. Perhaps most importantly, I understand the leadership, their goals, their ethos, and their passion.

Because we have a shared trust and mutual goals, my answer was an easy one. There are times when it makes sense to share the risk with the client and go all in.

“I’m not going to let you fail. Only use me where you really need me. Don’t abuse me, but if I’m the difference between success and failure, call me, I’m going to help you.”

I don’t do this because I am sitting on a pot of IPO gold. It’s because I believe in this client, and can tell the difference between the legal work that can wait, and the work that absolutely has to be done to keep the company alive. Having been a general counsel helps. Knowing what strategic advice a client needs can make the difference between a game-changing product coming to market, or whether your client even survives. As an attorney, with an ethical duty to clients, we owe them that level of care and advice.

Duty, General Counsel, Legal Problems, Startup Law

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