Finding and Vetting Web3 Attorneys: Five Lessons

The Path to Finding Great Representation in Web3

One of the common challenges our founders face is choosing the right attorneys. Few attorneys have focused on the issues that apply to Web3 to the extent that they can legitimately claim to be experts. With the broadening market appreciation of the importance of decentralized technologies, the attorneys who have developed public personas for Web3 advocacy are often oversubscribed for their services or quickly hired in-house. There are stellar Web3 lawyers who operate within law firms or who run their own practices, but they are difficult to find without a focused search.

Like other markets, the market for legal services involves information asymmetry: lawyers know their own capabilities, qualifications and track records, but prospective clients have limited information to vet attorneys. The market for lawyers involves greater information asymmetry than many, because lawyers’ track records are opaque: the attorney-client privilege shields the outcomes of many representations from public review. On top of that, the bar for competent representation is low from a legal ethics perspective: the legal profession is not going to ensure you receive the optimal representation for your purpose. The combination of privilege and a low bar for competence aids lemons by giving them in the same wrapping as peaches. Caveat emptor applies.

Despite the difficulty of finding and engaging talented counsel, Web3 founders should make finding counsel a preliminary step on the product development roadmap. The legal issues in the industry are complex: projects often involve transfers of value between (a) numerous participants, (b) across several jurisdictions, (c) whose identities may be unknown. Any of the considerations in (a)-(c) alone generates serious legal considerations; combined, these factors require significant legal planning. A legal barrier at any part of the founder’s planned product or ecosystem can have crucial ramifications for product design.

Too often, legal and compliance considerations are an afterthought, and, as a result, teams find themselves re-tooling their products to account for those considerations when they could have been dealt with from the beginning. Undoing the consequences of inadequate legal attention is likely to have financial and time costs that are multiples greater than the upfront cost of appropriate planning. Having trusted counsel to help engineer compliant paths to success creates a competitive advantage for founders whose rivals may fall into traps that are expensive or impossible to remedy. Blindly following the mantra to “move fast and break things” in Web3 can lead to breaking the company. Move fast in the right lanes and be clear-eyed about the legal risks you’re taking.

Through our discussions with the most thoughtful founders in Web3 and our own study of the legal market, we have distilled five lessons that can guide founders through the process of engaging lawyers. In this series, we will walk you through methods to:

  • Leverage your network to find quality representation
  • Organize your facts and break your product plan into digestible steps
  • Know which type of counsel you are looking to engage
  • Choose a legal architect to manage the overall legal plan and oversee its implementation
  • Ensure that you balance work efficiently between the architect and attorneys who execute on your plan

The ordering of the lessons is important. In order to find and vet attorneys for the best fit for their project, founders should focus on finding a reliable and efficient way of developing a list of lawyers that are promising candidates to serve their needs. Prior to meeting with those candidates, founders should spend time articulating their product plan in a way that someone who is not intimately familiar with the details will be able to understand. If a founder articulates in plain language what they plan to build and how they have built their product to date, the founder will be able to communicate effectively with prospective attorneys. Communicating the facts clearly will allow founders to focus the initial discussion on the attorneys’ legal impressions, which are crucial for determining whether they are a strong fit for the job.

In vetting attorneys, founders should be aware of the different roles attorneys play in developing and implementing a legal strategy. Paramount for Web3 founders is to find a lawyer with sufficient grasp of the project-specific issues that the founder faces, who can design a plan for accomplishing the founder’s vision in a compliant manner. This lawyer is the architect of the legal strategy. In order to ensure efficient and cost-effective implementation of the legal strategy, founders should be aware of the relative roles of their legal architect and the lawyers who will execute the strategy, the carpenters. With these frameworks, founders should be able to derive meaningful insights about the fit between the lawyers they seek to hire and the goals they seek to accomplish.

The legal landscape in Web3 differs from other industries and the stakes are high, which increases the burden on founders to think critically about how they consume legal services. Our aim is to equip founders with frameworks that aid in organizing their search for appropriate representation. As Web3 founders more clearly articulate what they need from lawyers, we believe lawyers will be able to adapt to founders’ needs by developing the knowledge base and skills that effective representation requires.

Lesson 1: Leverage Your Network to Find Quality Representation

Given that the market for legal services is opaque, founders need to spend more effort sifting through indirect indicators of attorney quality than they would have to in a transparent market. Searching for information without a plan (e.g., on Google) will overload you and lead to decision fatigue: AdWords increases confusion for the legal consumer. The best way to source lawyer candidates is to leverage your network.

You should begin your attorney search by asking fellow founders, investors, and networks whether they have come across an attorney who is a strong fit for your project. Each person you speak to will have a unique perspective and a unique bias that you will need to consider.

  • Founders: Fellow founders have the most comparable experience to yours with their attorneys. Founders can save you the time they spent looking for counsel by pointing out what worked and what did not from their perspectives. In order to obtain useful information, you should ask about the specifics of their impressions: did the lawyers they liked take a proactive role in shaping their legal strategy? Were those lawyers particularly skilled in aspects relevant to your project as well as with respect to their general grasp of legal frameworks? You should aim to move past general impressions, because you may only be getting information on the other founder’s social fit or lack of social fit with their counsel otherwise. Pay particular attention to any red flags the founders mention, as those can help you save time in talking to lawyers who may not serve you best.
  • Investors: Investors generally have broad experience working with counsel as well as observing portfolio companies’ experiences. Investors can synthesize their experience with companies that faced similar issues to yours and direct you to attorneys who possess skills that would be helpful to you. Investors with a lengthy history in the industry may have insight into a lawyer’s track record by virtue of having repeated observations. When you ask investors for a recommendation for counsel, make sure to emphasize that you want their perspective with regards to portfolio companies’ experience. You want to make sure not to end up with a lawyer who is skilled in venture capital law but less knowledgeable in Web3 law.
  • Networks: Look to accelerators or DAOs for multiple points of view. Communities of Web3 builders both provide a wide array of perspectives and can be leveraged to expand the list of potential lawyers to speak to while offering several perspectives on the strengths and weaknesses of those lawyers. Accelerators bring together founders, investors and mentors. DAOs bring together contributors with diverse experiences and can provide rapid feedback. Law-specific DAOs, like LexDAO, bring together lawyers focused on Web3 and often retain databases of lawyers who provide specific legal services. The risk in polling communities is that they may begin to “talk their own book” by directing you to members of their community. If the community has a reputation for excellence, this could be beneficial; make sure to be aware of bias and think for yourself.

Only after checking personal contacts should you consider web-based research to find an attorney. If you need to add to the list of candidates, identify companies that have built comparable products to yours and look for any press releases or websites that mention the attorneys who represented the company. Once you have identified lawyers who have represented comparable companies, you can see if the firm has represented multiple clients on similar matters. While this method of searching and refining may identify additional promising candidates, there are limitations. Often lawyers do not broadcast their representations, so a lack of results may not signify a lack of experience. Additionally, the content you find online is curated and seeks to place attorneys in the best light, making it difficult to interpret the results you find.

Once you have identified a reasonable list of candidates (2–4 is a good starting point) through your network and research, aim to schedule calls to begin your diligence. Prepare for those calls by marshaling your facts.

Lesson 2: Organize your facts and break your product plan into digestible steps

In order to evaluate prospective counsel, founders should have a ready grasp of the details that lawyers need to know to give an informed view. At a high level of generality, lawyers process facts based on their legal knowledge and reasoning to deliver an opinion of how clients can accomplish their goals and reduce risk. If you approach an attorney without a clear statement of what your business is and what you are trying to accomplish, you risk engaging them to do the fact discovery you could have done on your own. You also do not get to the most important aspects of your prospective engagement: the quality of their legal analysis.

Here are some questions and details to reflect upon that can help you identify your needs before you look for counsel.

  • What am I building, specifically? Deliver a blueprint: be clear and complete. Translate the Web3-speak. If you are developing a protocol that permits staking, for instance, break down what you mean by staking and how a member of your ecosystem can use and benefit from staking. If you have not fully developed your product roadmap, work to describe a handful of possible paths the product could take. Just as you will need to rely on the lawyer for legal analysis, the lawyer will need to rely on you to deliver the product vision.
  • How do I plan to build? The process can be as important as the outcome for attorneys. Break down the workstreams involved in creating your product and identify who is doing the work and where they will be located. Consider whether there will be different types of contributors and what forms of compensation they will receive. Think about the likely ways in which you will scale: you might contract for some services and hire some people outright; you might rely on protocols or software to accomplish certain tasks. Think of the people and tools you will need to help you build and note how you rely on them and how they rely on you.
  • Who will use what I build? Lawyers want to know about commercial relationships. Give the characteristics of the people or businesses who will use your product. Note whether they are identified, identifiable, or anonymous. Consider where they are located, how they will find out about your product, and how they will access it. Think about how users can change or exploit your product and how the relationship can go wrong.
  • Where is the money coming from and where is it going? Whether you are taking on investments or reaping profits, money flows have critical regulatory implications. If you are fundraising, gauge how much you are looking to raise and from whom. Knowing the profile of your investors and how many you will have can be important for structuring your legal entities. Think about how capital ultimately returns to those investors. Think about how your product monetizes and what you do with the proceeds. The pathway that money (in whatever form) takes to enter and exit your account or ecosystem can signal meaningful regulatory and tax implications.
  • How did I get to where I am now? The path you took to your current stage of building could have implications for how you proceed. Almost every founder who reaches the point of engaging counsel has made significant strides in building a product.

If you cover these five questions in detail prior to your meeting with a prospective lawyer, you will be able to accelerate the attorney-client dialogue, which will yield the substance you need to evaluate to make a decision on whether to move ahead with an engagement or not.

Lesson 3: Know Which Lawyer You are Looking to Engage

It is likely that at some point in your building process, you will engage more than one lawyer or law firm at the same time. Know what you want to get out of each representation you seek. Web3 founders should think about legal representation on two levels: broad strategy and technical implementation. To borrow a building analogy, you will likely need one architect and a few carpenters.

At the beginning of your product development, your priority should be to find an architect. This is the person who sees your overall strategy and grasps the large issues that you face. The architect is also likely to be your most expensive attorney, which increases the cost of failure. Your mission is to find your architect first. The architect is for planning and the carpenters are for action. Plan before you act.

As you build, you will need to find lawyers who can accomplish discrete tasks efficiently. Carpenters generally perform either low specialization, repeatable execution (e.g., managing NDAs) or highly specific, siloed execution (e.g., tax review). While you still want to aim for high quality representation in these areas, the variance of results between attorneys is likely lower. Carpenters should be less expensive and their engagements should be limited to performing the specific tasks you need them to perform.

In many cases, you will find an architect and carpenters within the same law firm. There are many advantages to leveraging the network of the firm: your architect can find quick execution for you and source specialist advice quickly. Depending on how prolonged and expensive the carpenters’ tasks, you may have a direct conversation with the architect about the merits of finding assistance beyond the firm for some matters. If your architect’s firm is very expensive for all matters, you should work to find mutual trust with the architect to balance the value of the internal network with the limitations of an early company’s budget.

The remainder of this series considers architects in the singular. In practice, a firm may house a team of lawyers that together provide the core architectural services you seek. The same analysis of fit and competence applies whether you are looking to engage a single attorney or a team of attorneys to guide your broad legal strategy. For simplicity, we will consider the architect as a single lawyer throughout the discussion.

Lesson 4: Choose Your Architect Well

The architect is the person who translates your plans into a legal roadmap. This lawyer sees your near-term and long-term blockers and helps you develop a legally viable plan to eliminate them. Your architect is not necessarily the person you ask to form an LLC; they are the person you ask whether you need to form an LLC, where you need to form it, and how formation fits into the broader construction of your legal environment. Identifying this lawyer is where you spend 80% of your effort in finding sound legal counsel. If you get this right, the architect will help you filter for quality carpenters.

How can you get more specific about what you should seek from this person? You need to find a fit on a personal basis and on a skills basis. Personal fit is a gating matter, because you need to feel able to inform your lawyer of all of the relevant details. You also need to find someone who is comfortable communicating with you directly, by asking for clarifications, explaining legal analysis in an accessible manner, and pointing out hard truths. Here are some indicators that you and your lawyer have personal fit:

  • You and your lawyer speak directly on matters of consequence, not through an intermediary.
  • Your lawyer listens and does not assume conclusions before you have a chance to explain the details.
  • You feel that you can call them without scheduling an appointment far in advance for important matters.
  • There is a reasonable balance between you communicating important information and your attorney relaying legal analysis based on that information.
  • You feel comfortable speaking with them.
  • You believe your lawyer conducts themselves honestly and you have no contrary indications.

These points are simple, but it is easy to walk into an expert’s world and assume that clinical distance is the norm. If you feel distanced by a prospective architect, you should pay attention to any flags and consider whether you really want to give this person a seat at the table to assist you in making existential decisions about your company.

The Vectors of Skill

Assessing skills fit is the hardest task for founders. Legal markets are opaque and useful proxies for assessing “track record” do not exist. Founders can simplify the task by considering five skill vectors: specific knowledge, general knowledge, creativity, speed of learning, and time capacity.

Specific Knowledge. Specific knowledge encompasses familiarity and experience with the distinct legal and infrastructural features of Web3. “Specific knowledge” needs to be calibrated, though: too much precision in filtering will return a null set. For instance, there are a select few attorneys who legitimately specialize in metaverse projects and perhaps none who specialize in unlocking liquidity for metaverse real estate assets. What you are looking for is someone who does not need to learn the basics of Web3 before being able to provide you with useful advice. A lawyer who possesses broad Web3 knowledge can spot industry-specific issues. Here are some knowledge criteria that you can consider when vetting a lawyer’s Web3 savvy (the list can contract or expand based on your product plan):

  • The difference between fungible and non-fungible tokens
  • The difference between layer 1 and layer 2
  • Token generation, token sales and airdrops
  • Decentralization
  • Staking
  • Fractionalization
  • Custody
  • Incorporating in multiple jurisdictions
  • Regulatory regimes and enforcement actions that affect Web3 projects, particularly SEC and CFTC enforcement actions
  • Tax implications of crypto transactions, generally

You can start assessing specific knowledge on the attorney’s website, but dig deeper. Have they written anything of merit or spoken on topics relevant to your project? Discount “client release” newsletters that summarize new regulations / market developments, as many firms dress their windows with these materials regardless of whether they pursue the subject matter seriously. Also, discount “continuing legal education (CLE)” lectures: these are lawyer-to-lawyer lectures that should not be viewed as verification of subject-matter expertise.

The best way to appraise a lawyer’s specific knowledge is through conversation. Ask whether the prospective architect has dealt with products similar to yours. If they have, have them discuss which issues were comparable and what issues are distinct between those product plans and yours. See if the attorney can maintain a Web3 discussion by mentioning well-known protocols, infrastructure, or other products. Detect whether the lawyer engages with the subject matter, nods silently, or changes the topic. Count how many times they say, “I’d have to look into that,” because “looking into that” is going to cost you a lot of money. Ask whether they have been representing Web3 clients for years, months, or weeks. You could even ask if they have had more or fewer than 3, 5, or 10 Web3 representations. Clarify whether these representations have been one-off services or long-term engagements and ask what percentage of the engagements are ongoing.

It is useful to ask if a lawyer has any direct experience with digital assets. If your lawyer has used Web3 products and made themselves familiar with how protocols, wallets, exchanges, etc. function, that knowledge will help them understand what you are trying to accomplish. Be careful about filtering too heavily on an attorney’s use of Web3 products, however. Lawyers are often risk averse and / or may be barred from investing in digital assets by firm policies. They can have intimate subject-matter knowledge of the legal aspects while being fairly inexperienced with Web3 products as users.

General Knowledge. Not every great architect will be steeped in Web3 lore. While specific knowledge is a prized trait in an architect, you may find a strong architect whose value stems from their general legal acumen. Attorneys are trained to view the law as a “seamless web,” meaning that the answers to novel legal questions are derived from the current body of law. In truth, many of the concepts that drive legal analysis in Web3 have close analogues in other areas of the law. A great lawyer can hear a fact pattern from an entirely foreign industry and parse the general issues that need to be addressed.

You can assess general knowledge in two ways: (a) by observing how the attorney spots and analyzes issues in your statement of facts; and (b) by discussing the lawyer’s analogous industry experience.

Issue Spotting. There is a saying at Harvard Law School: “Spot the issue, A+”. A core function of lawyering is minimizing the number of “unknown unknowns” for the client by shining a light on the issues the client faces. Once the risks are known, the client and attorney can prioritize research and analysis to address the most pressing “known unknowns.” You can get a glimpse into an attorney’s general knowledge by asking them, based on the facts you have given, to spell out the issues they see in your product plan. A good attorney will be able to break down for you where they see problems, what they would need to know to help you resolve those problems, and what it takes to get that knowledge.

Another indicator of a good issue spotter is whether they ask follow up questions based on the facts you give. Take note of those questions and at the end of their efforts to clarify, ask what issues led them to ask the questions. A lawyer who takes the facts as granted is not doing their job. They need to explore the details you give them to make sure they have a complete understanding of what you are building and to make distinctions between subtle fact patterns that can lead to different legal outcomes.

Watch out for attorneys who take this to the extreme. An architect needs to be able to filter the issues by tiers of importance: critical, worth addressing, minor issue. Without ranking the issues, the attorney has no compass for how to optimize legal merit and progress. Your architect needs to have the confidence to cut through the bramblebush of legal complexity to deliver you an actionable legal game plan that is in sync with your product plan.

Analogous Industries. To date, the body of Web3-specific law is small. Much of the applicable statutory, regulatory and judicial landscape derives from efforts to address problems in other industries. For instance, “know your customer” (KYC) regulations–which are a pervasive part of the Web3 landscape–were implemented to regulate banks after the passage of the 2001 Patriot Act and money transmitter laws can be traced back to the Truth in Lending Act of 1968. If an attorney has meaningful experience in adjacent industries, like fintech, payments, banking regulation, and startup financing, they will have a body of experience to draw upon that will apply to Web3 products. You can vet the usefulness of an attorney’s analogous industry experience by asking how their experience informs their view of what you plan to build. Ask them to discuss the similarities and differences they see between the regulations that apply to products in other industries they service and the product you are building.

Creativity. The challenges of Web3 call upon attorneys to create new pathways for entrepreneurs to build novel technology. A lawyer who does not take a creative approach in Web3 will be a sinking weight on your company. They will say you can do nothing and send you bills. A high-performing attorney in the industry needs to have strong convergent and divergent thinking skills: they have to grasp the existing constraints the law presents and construct compliant processes that did not exist previously.

Testing a lawyer’s creativity is difficult. The best way to get a sense of whether they are forward thinking is to ask about their approach to new markets. Do they favor a “wait and see” approach or are they prepared to move the industry forward? Ask if they have built viable legal strategies in the face of ambiguous policies in the past. See if their strategies have been tested by regulatory inquiries and, if so, what the result of the inquiries was.

There is a difference between creativity and negligence. You need to make sure that you are not dealing with a lawyer with a rubber stamp. There are some attorneys and firms that will simply deliver you a letter stating that your approach is compliant or nod along with your plan. Consider a laissez faire attitude a yellow flag: ask why the attorney is so confident there are no issues and figure out how much creative energy has gone into their analysis. If you find someone who sells confidence over creativity, you may have the costly endeavor of undoing their mistakes in the future.

Speed of Learning. Web3 lawyers need to learn quickly. Regulators and legislatures are consistently proposing changes that could meaningfully alter the approach you should take. Your lawyer needs to process new information and integrate it into their perspective in a time efficient manner, both to deliver up-to-date advice and to spare your budget. Where lawyers lack the specific knowledge needed to grasp the Web3 intricacies of your product, speed of learning can make up for day 1 deficiencies.

Assessing learning speed is impossible without direct inquiry. If a lawyer needs to look into certain issues, do not feel reservation in asking how long it will take to learn. Ask whether they will be bearing the cost of learning or not. You will never get a lawyer to write off all of the time it takes to study an issue, primarily because all legal work requires research; however, if you have a lawyer who scores low on specific knowledge (but high otherwise), you could propose a cap on billable hours spent getting up to speed. Bear in mind that the lawyer’s investment in learning pays future dividends for their practice.

By clarifying whether the lawyer is willing to take risk on billable hours to obtain sufficient specific knowledge to help you develop a comprehensive legal strategy, you can assess the lawyer’s confidence in their own ability to learn quickly. They will be able to weigh the opportunity cost of learning against forgone billable time. If the lawyer pushes back on the proposal to cap billable time for obtaining Web3 specific knowledge, ask for the reasoning. Listen to how they respond for indications that they lack confidence in their ability to gain the requisite knowledge quickly and weigh their reasoning.

Time Capacity. Your lawyer needs to have time to focus on your project. If the perfect attorney has little time to serve your needs, you will get caught in a frustrating cycle of trying to get timely feedback, resolving to find new representation, and being drawn back in by a flash of the lawyer’s brilliance on the rare occasion that they make time for you. The attorney’s incentives conflict with the client’s desire on time capacity: attorneys want to fill as much of their work time with billable hours as possible; clients want some slack in an attorney’s schedule so that the attorney can promptly respond to time-sensitive requests.

You can get a sense for whether a lawyer has time to represent you by asking pointed questions about their practice. Ask how many representations they plan to handle at the same time as yours. Assume, as a rough rule of thumb, that the lawyer has eight hours of effective billable time per day. Take the ratio of # of representations to effective billable capacity to get a rough estimate of how much time per representation the lawyer can spend on average per day. Ask whether the attorney expects to be available to meet on twenty-four hours’ notice and, if not, how much notice is needed for them to feel confident they will have availability.

Time capacity is inversely proportional to the breadth of your lawyer’s reputation for excellence. The more visible the lawyer’s success, the harder it is to find time on their calendar. If you pursue an engagement with a lawyer known to be a rock star, keep two things in mind: (a) approach them well in advance of a burning need to have a lawyer, because there may be a waitlist; and (b) know that you will be competing with some of the most compelling client projects for their time. A counterpoint to consider is that time capacity is dependent on the other components of skill. A lawyer with deep specific knowledge who learns very quickly may have sufficient capacity even with a long client list. Even so, the legal profession is not known for efficiency: its profit model works better the longer tasks take. Vigorous representation also requires lawyers to spend significant time interacting with clients, which limits the extent to which efficiency can free their calendars. Pay close attention to the signals your lawyer sends about time. If the lawyer perpetually pushes meetings and shuffles you off the line to get to another call, consider finding someone who is highly skilled and less visible.

Time capacity can be a negative signal as well. If an attorney has a wide-open calendar, that could tell you that they are having trouble keeping business or that they give short shrift to their existing client base and focus more on signing up new clients. Be careful in making a hasty judgment that availability implies a deficiency, however. Lawyers are notoriously poor salesmen and mostly incompetent marketers. You need to look for red flags, but you can also find underappreciated value.

Weighing Skill Vectors

Once you have collected information about a lawyer, you must consider how to weigh their skills. It is much harder to ascribe numerical value to the skill vectors than to think about their symbolic relationship. You can use any scale you want to consider the discrete value of a specific vector, such as a scale from 0–10. What matters within the vector is an attorney’s score relative to the other attorneys you have considered, not the specific number you assign. Here is a framework to think about the relationships between skills.

Capacity is a gating item. The greatest lawyer is of no use to you if they have no time to represent you. For that reason, capacity is generally binary: either the lawyer has time, or they do not. You can discount the value you ascribe to capacity to the extent that you have greater uncertainty about the lawyer’s schedule. You can also discount capacity if you get clear signals that the lawyer has too much capacity.

Specific knowledge is crucial. It can be satisfied both by a baseline of expertise and an ability to learn. The baseline number is a constant. The ability to learn increases the implied value of specific knowledge dramatically as the value increases, but not linearly. Ability to learn functions more like a slow growing exponential function: a low ability to learn should have little effect on specific knowledge, but a high ability to learn should accelerate it quickly.

General knowledge is important. General knowledge creates baseline legal ability and buttresses specific knowledge. However, general knowledge does not replace specific knowledge. General knowledge bears a discount to specific knowledge; yet, in combination specific knowledge and general knowledge have synergistic value. For this reason, the combination of general and specific knowledge should be multiplied by a synergistic factor.

Creativity is an x factor. A creative lawyer can make the difference between strong representation and excellent representation; conversely, an uncreative lawyer can hinder progress and create an economic drag on your company. Creativity cannot replace specific or general knowledge: a lawyer who is highly creative but lacks knowledge would not be very helpful. Given the foregoing considerations, creativity should be seen as a value that can be added to or subtracted from the composition of specific and general knowledge.

What matters most when you evaluate lawyers’ skills is that you index the scores you assign to the lawyers you evaluate by comparing each to the other and then thinking about how the relationships between these factors affect your appraisal of the value the lawyer will have in furthering your project. If you use the factors to think systematically and scientifically about counsel selection, your chances of identifying an architect who will advance your plan increase significantly.

Lesson 5: Ensure that You Have Carpenters for the Right Tasks

Founders generally think about engaging lawyers when they feel a specific need. The first-time founders feel this need is typically when they begin to raise funds. Often, founders make significant headway in investor discussions, receive a term sheet, and realize that the term sheet presents many legal questions that the founders are not able to evaluate without counsel. At this point, founders scramble to find a lawyer to manage the documentation of their fundraise. During the fundraise, the scope of legal representation can expand; suddenly the same lawyer is farming the founder out to a colleague to advise on regulatory matters and multi-jurisdictional legal structures. This common fact pattern is a bad one.

More often than not, when a founder searches for representation in a panic, they get the wrong team of lawyers. It is common to find founders switch representation between their seed and Series A raises for this reason. The cause of this problem is not necessarily that the founder has found bad lawyers; it is more likely that the founder has cobbled together a team of carpenters with no blueprint. Carpenters often take a siloed approach: they can be the masters of deal documentation, but they may lack an integrated understanding of how the documentation fits into later regulatory concerns or tax matters. The same goes for the superior regulatory lawyer or tax specialist: they may be domain experts, but it is less common that they see the whole picture. This is why a founder should find an architect first.

Founders need to think about staffing their entire legal team, even after finding an architect. Why not find a team of architects to do all of the legal work? Simply: the bills. You hire architects to be big thinkers, which takes time and money. Apart from the architect, you need to find lawyers who can optimize your legal spend; otherwise, you are not going to make it. The methods founders can use to evaluate when to delegate execution to a carpenter and whether a specific carpenter will deliver competent results are much simpler than the framework for evaluating architects.

As discussed above, the first place to look for execution guidance is your architect. If you are able to find reasonably priced execution within the firm, you may defer to the architect’s judgment in utilizing the resources available at the firm. Often the cost of coordinating multiple lawyers in different practices can exceed the savings on rate. However, founders need to be aware that not all legal work should be equally priced: some things do not require the review of a former judicial clerk or an SEC alum. Knowing how to evaluate the dynamics and scope of certain types of execution will help guide you to identify times when you should think critically about whether to engage counsel apart from your architect’s firm.

Carpenters are needed for (a) low-risk, repeatable tasks and (b) highly specialized tasks that may be low or high risk. Factors to consider when your legal plan requires one of these forms of execution are discussed in detail below.

Repeatable, low-risk tasks

How are you supposed to know what is low risk and repeatable? First, consider that “low risk” does not mean that poor execution would have little consequence. Rather, it means that there is a low risk that an average attorney who regularly performs the task you need to be completed will deliver intolerable results. Second, repeatable work is work that can be performed in high volume: generally, variation in facts between clients does not significantly increase the complexity of performing the task.

A good test for low-risk, repeatable work is Google. If you google the task and find a profusion of services that offer to perform the task for you automatically, there is a good chance that the service is low-risk and repeatable. For instance, a search of “form an llc” yields pages of services that offer fast formation services for a low price. These tasks can be automated profitably, because they scale with little downside: llc formation is a volume business that is difficult for a competent computer to botch. By contrast, “vasp regulation compliance” does not return automated services. Few lawyers have dealt rigorously with virtual asset service provider laws and the downside of getting a VASP analysis wrong can be significant.

Another useful test for risk / repeatability is to consider how many startups have needed an attorney to perform a similar task in the past. As an example, in the last decade a very large number of startups have had to deal with cap table management, including considerations like 83-b elections. As a consequence, the lawyers’ playbook for managing early-stage company cap tables is standard and the market for basic venture legal services is highly competitive.

Once you have clarified that you need a lawyer for a low-risk, repeatable task, you should consider lawyers who have a threshold of specific knowledge needed to perform the task and otherwise evaluate on cost. You can gauge baseline specific knowledge by seeing if the lawyer has had several years of experience performing the task you need them to accomplish and confirm they do not have a history of malpractice. After that, you should confirm there are no other red flags (e.g., no empathy, no responsiveness) and then evaluate on cost. The point of seeking the carpenter is to avoid paying rates comparable to what you pay the architect to perform rudimentary legal tasks.


The other category of carpenter you will need is the specialist. Some areas of the law are inaccessible to most lawyers, particularly tax, intellectual property, enforcement and niche regulatory matters. A strong architect will know when you need advice in these disciplines, but you should not expect the architect to have a precise view of the substance of the legal analysis. By analogy to medicine, legal specialists are like anesthesiologists: they do not perform the surgery, but no surgery goes well without them. Specialists will be more expensive on an hourly basis than other carpenters, but they should perform tasks efficiently by virtue of having deep specific knowledge in their area of expertise.

You know you should discuss the need for a specialist with your architect when you need execution or analysis of matters in clear niche areas of the law. If you are not certain when you are facing a specialist situation, look for times when your architect says they would have to consult a specific type of counsel. For example, “I think this is the right way to structure this transaction, but to be sure I would have to ask tax counsel.” If many of the law firms you review in your research have dedicated practice areas in the specific area of need, that is another signal that you may need a specialist.

You should work with your architect to identify strong specialists for your tasks. You should evaluate specialists rigorously, but you should care about fewer evaluative criteria for specialists than for architects. While you should care about a baseline fit with the specialist attorney, you do not have to be best friends: make sure there are clear lines of communication and an expectation of honesty. As to skills, what matters is baseline specific knowledge. Ability to learn is not irrelevant, but it carries less weight for a non-architect specialist, because you are paying for access to specific knowledge that your architect would otherwise need to learn. Depending on whether the task at hand is repeatable (i.e., has happened many times), there may be a threshold of specific knowledge and competence beyond which you will get diminishing returns, at which point you should be more price sensitive. If you are looking at a novel question that bears significant consequence for your company, you should be less price sensitive. You should not spend much time looking at general knowledge, other than for baseline competence.

Depending on the situation, creativity can be irrelevant or highly valued in a specialist. If you are looking for an answer to a discrete question, creativity is less useful; if you are looking at how to deal with complex, new regulations, creativity can be a boon. You can use the same creativity questions to evaluate the specialist as you use for vetting an architect. As with any representation, time capacity is still a gating item.

When you are looking for a carpenter, keep in mind how their services fit into your overall strategy. You want to make sure that your legal service providers are coordinated in their efforts. There is a cost to piecing together a legal team from many different firms instead of using the same firm to perform these tasks. You need to have an open dialogue with your architect about how much time a given carpenter task will take. If you are looking at a one-hour matter, you may be better off, from an efficiency perspective, having an attorney at your architect’s firm (who is almost certain to be more expensive) handle the matter than to search for counsel to handle the matter. If you are looking at a forty-hour project, you may save significant cost by sourcing another attorney.


Finding appropriate counsel is a rigorous process. Founders overlook this difficulty because legal work is often seen as a black box service: they do not know the intricacies of the legal questions you face, but they find comfort in delegating to service providers who specialize in handling legal matters. In mature industries as well as in lower-risk environments, taking an approach of delegating and forgetting can be a beneficial way of freeing up mental space to build. In Web3, the legal process is part of the building, and must be managed more proactively. The lessons in this article are intended to help founders identify candidates for counsel and filter according to their product design and execution needs. There are many lessons to learn beyond the scope of this discussion and we will continue to share what we learn to promote founders’ interests.

Subscribe to Dane Lund
Receive the latest updates directly to your inbox.
This entry has been permanently stored onchain and signed by its creator.