Today’s topic is something everyone has to deal with- everyone who’s ever incorporated a company with cofounders, that is. The topic is finalizing your operating agreement. And no, this isn’t about agreeing on terms with your cofounders. It’s about what happens after you and your cofounders have everything figured out. It’s about finding the right lawyer to help you create your own agreement. Because, really, it doesn’t matter if you all agree if you can’t get it in writing.
My cofounders and I have been working on this operating agreement for months. MONTHS. For one agreement. It has been a major pain in our heads for the longest time. We thought we would find any lawyer, get help and be good to go. We thought it would be easy to have our agreement finalized because we are all on the same page. We didn’t have to argue or deliberate on anything! All we needed to do was write it down and put it on paper. Well, we were wrong. Really wrong.
We originally had a lawyer write our agreement for us. We didn’t do any background research into his previous work. He offered us a really great rate so we used him for the agreement. This totally backfired. He sent us the agreement. When we went over it, there were a ton of errors! We couldn’t even doctor the agreement to use in the future. A mentor told us that we would be better off using LegalZoom. He was right.
LegalZoom was really great for us! Really, really great. We received our document in less than two days. It was ten times better than the agreement that we had paid double for from the lawyer. The document worked a great structure for our agreement. All we did was add in a couple of provisions. Finally, we were ready to finalize our agreement!
We sought out a lawyer mentor that we have previously met with through Chapman University’s student incubator, Andy Gale. His specialty with startup incorporation assured us that he would be direct and helpful. I shot him an email, heard back from him immediately and set up a meeting! I couldn’t believe how easy it was! After our previous experiences, I assumed we would spend another month figuring this thing out. Working with Andy was amazing. We only met twice and finished our agreement. He went over our entire document with us and told us what we are missing and what we should take out. Finally: clarity. After months of hard work, we finally got it done.
So here’s the lesson: find a lawyer you can work with who has been validated. Don’t waste your time. Find someone who you know is reliable and get it done right the first time. Better yet, ask someone who has been through it you have been through before. But whatever you do, make sure your lawyer wrote the right agreement before you sign it!
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