The legal solution framework

taking risks the smart way life is full of risks building a startup is full of risks you cannot eliminate risk, but you can manage it solving legal problems is all about managing the risks involved you need to understand the risk (am i driving through a pedestrian zone at 100km/h, or am i walking across a red light?); understand the cost of mitigating the risk (do i really need to drive that fast?); and balance the two risk / cost high cost to mitigate low cost to mitigate high risk typically mitigate the risk always mitigate the risk low risk take the risk typically mitigate the risk step 1 understand and quantify the risks the most dangerous risks are the ones you are not aware of especially if you are new to the business world, it is important to familiarize yourself with the real risks to your business by talking to as many other founders, vcs and experts as possible a few important guidelines only the paranoid survive as management legend andy grove put it, it is crucial that you have an almost paranoid obsession with understanding risk only then will you be able to anticipate and mitigate the risks that matter, and ignore the countless negligible risks that only distract from your business quantify the risk always ask yourself before you make a decision what is the worst thing that could happen? what is the probability of that happening? keep it simple and avoid complexity every layer of complexity adds sources of risk and makes risk assessment more difficult stick to industry best practices such as the lexr standard and avoid reinventing the wheel consultants and lawyers will often exaggerate a risk a privacy lawyer makes a living off your fear of hefty privacy fines, so make sure you validate the real risks with peers and independent third parties before hiring expensive consultants step 2 understand and quantify the costs of mitigation the cost of mitigating a legal risk typically depends on two factors complexity the more complex the legal problem, the higher the cost frequency the more frequently a legal problem arises, the lower the cost even a very complex matter such as a standard employee participation plan is fairly inexpensive to set up if are not reinventing the wheel and stick to what others have done before you again, talk to experts and service providers to understand the approximate cost of mitigating legal risks (e g , implementing a privacy policy) below we have summarized the different levels of complexity of legal problems and how to approach them legal complexity approaches high no automation / standardization possible, experts needed e g , patent applications, court proceedings, specific regulatory questions 5 10% of legal work (but much more of the cost) save money by avoiding work (especially disputes) and asking the right questions to the right experts! (and/or insure the risk) medium frequent legal work that requires some degree of customization and expertise general legal know how sufficient e g , standard contracts, simple financing rounds, data protection 20 30% of legal work do not re invent the wheel! rely on best practice and standards for tested quality and lower cost low epetitive simple matters with high volumes that can be automated or completed without legal know how e g , contract management, sales agreements, standard hr matters junior legal or general legal affinity is sufficient automate it! use standardization and technology to improve quality and speed strategic legal (‘get me an expert’) the rare ‘bet the company’ questions where there is no room for error examples high stakes business disputes, government investigations, patent applications how to solve it because strategic legal issues tend to be expensive to resolve, the approach is twofold first, avoid legal issues if possible (in particular, business disputes and regulatory inquiries are often just a symptom of neglected day to day legal operations) where it is unavoidable (such as patent applications), talk to experts early on the experience of an expert in dealing with these issues can make or break your company how we solve it at lexr we have experts in most areas of law on our team, and where we don’t have the expertise, we tap into our network of lawyers and help you ask the right questions to keep costs down legal projects (‘solved by others before’) there are legal tasks that your company may face only once or a few times, but that many other companies have solved before you examples financing rounds, setting up an esop, becoming gdpr compliant how to solve it don't reinvent the wheel stick to what has worked for others rely on best practices and established standards how we solve it at lexr with our flat fee legal solutions, we have distilled the experience of hundreds of cases into a best practice standard that we tailor to your specific needs legal operations (‘daily business’) these are the day to day legal processes and questions your business faces examples reviewing sales agreements, appointing a new board member, hiring a new employee how to solve it automate and standardize solid processes and good templates are key to keeping day to day legal work from becoming a major problem invest in a solid setup and train the people on the front line(sales, procurement, hr) how we solve it at lexr we can manage this for you on a subscription basis or help you set up your processes internally step 3 take action with the risk balance the hard part is quantifying the risk and the costs to mitigate it once you have the answer, the action plan is usually obvious here are a few examples should we have a privacy policy on the website? risk while the risk of an actual fine is low, not having a privacy policy gives a very unprofessional impression to your customers and investors cost of mitigation a privacy policy is not rocket science, and since this is such a common problem, there are many very inexpensive ways to create at least a basic privacy policy solution mitigate the risk should we review our subscription agreement for coffee capsules? risk given the very low cost and likely standard terms, the risk is negligible cost of mitigation such a contract can be quite complex from a legal perspective and reviewing it can quickly exceed the total cost of your annual subscription solution take the risk and sign the agreement without legal review check our master checklist ( lexr standard master checklist docid\ gucunxir7gv4js4ogalcs ) to get a good idea of what risks you really need to be concerned about