The Legal Playbook for Scrappy Startups

Creating your first legal documents doesn’t have to be expensive or hard.

When you are signing your first customer, you probably don’t have time or money for fancy legal docs.

Speed, simplicity, and survival are the goals.

If you have funding or lots of customers, yes, by all means, get a good, startup-friendly lawyer.

But on day 1? You’re just trying to see if customers will pay you to solve this problem!

Here’s what I’ve seen real startups do to get off the ground with their legal documents!

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Disclaimer: I’m not a lawyer blah blah blah. If for some reason you take this as legal advice, that is a terrible idea by you and you are reading the wrong blog. I’m just a startup operator trying to help founders be scrappy!

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Your First Terms of Service & Privacy Policy

1. Find a large company with a similar business model.

2. Use their Terms of Service and Privacy Policy as a blueprint.

3. Update with your company name, location, pricing, etc.

4. Skim to make sure everything sounds reasonable.

We used Salesforce’s Terms of Service as our blueprint at Pardot for hundreds of customers and several years — until we were actually acquired by Salesforce!

Surprise bonus: it was easy to switch customers over to the new Terms of Service 😉

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Your First Contract

1. Add your logo (or company name in a professional font) to a Google Doc

2. Add a table with a package and/or line items (e.g. what’s included)

3. Summarize pricing and contract term at the bottom

4. Reference your Terms of Service as a link

5. Save as PDF

6. BONUS: Send via DocuSign or other e-sign tool for easy signature.

We used proposals and contracts made in Google Docs for 5+ years at Pardot and Rigor.

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Your First Investment

1. Use a YCombinator SAFE. (Simple Agreement for Future Equity)

2. All YCombinator founders and many others use these. Like the name says, it’s a simple investment vehicle for your first investors — angels, family and friends, pre-seed VCs.

3. No need to reinvent the wheel. Focus on growing your business instead!

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Your First Patents, Trademarks, and IP

Okay, legit disclaimer here: I know B2B SaaS. Where trademarks, IP, and patents are not a factor in the early days.

Everything about your business, product, and messaging is changing constantly. You’re figuring things out and spending time with customers — not on legal filings!

Eventually, yes, when you’re “big” (however you define this), you’ll want to have some legal protections in place for your brand and technology.

I think it’s different in other areas — biotech, deep tech, higher ed scientific research, inventing rockets and shit. But I’ve never built a rocket or invented a cancer drug so I can’t speak to that.

In software, it’s likely that other people will be building in the space too. They will see what you’re building and if it’s good, they’ll copy it. Or they’ll already have the same idea because it’s a big market with a lot of demand to solve the problem.

You can’t worry if a competitor copies something. One feature or pricing package or marketing campaign is not your competitive advantage. It’s ALLLL the things you’re doing as a business that make your boat rise — how you sell, who you target, what you prioritize, culture and talent.

If you’re in the right market, there will be multiple winners! And once you have the initial market, it’s all about execution.

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Founder Agreements

1. Clarify what % ownership everyone has up front in writing.

2. Include vesting — e.g. must be at the company at least 1 year and vests over 4 years.

3. You don’t need to get a lawyer involved but be clear and no 50/50 splits!

4. Every business needs a clear “tie-breaker” and CEO (aka 51/49 split).

Don’t kick the can on this! If you can’t talk about it with your co-founder, you’re not ready to start a business together. (True for marriage and finances too! I digress…)

If you wait, the discussion is 10x harder and previous conversations are more likely to be misremembered or misinterpreted.

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Employee Agreements

1. Find a template online.

2. Or not. You can also have employees sign agreements later. I’ve signed updated employee paperwork well after a start date.

3. If you have 2 contractors or 2 friends working for free, wait until you have some traction before spending time on this!

4. Stock option agreements included here too. (Great primer from Fred Wilson)

These agreements include things that are important but don’t come up that often: the code you write belongs to the company, you can’t leave and start a competitor, no selling state secrets or we have to kill you, etc.

If you have 100s of employees, you definitely want these!

If you are still small and mighty, you’re better off spending time getting customers.

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Other Business Docs

Go Cooley is a legal template tool that was recommended to me by a lawyer friend (BUT DOES NOT CONSTITUTE LEGAL ADVICE! ← I’m supposed to add that disclaimer 😁).

Other founders are also a good source of templates. Most folks are happy to share their policies or legal docs as a baseline.

If you’re part of an accelerator or other startup group, they’ll probably have some boilerplate docs.

AI is changing things quickly and legal AI is a great use case. For now, it also hallucinates which is why I’d still check anything against a similar, real world document produced by a corporate lawyer whenever you can!

Any other favorite tools? I’d love to hear!

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High Class Problems

Here’s your friendly reminder that legal issues people (especially lawyers 😉) warn you about…fall into the “good problems to have” bucket!

• If someone copies everything you do, GREAT! That means you’re onto something and totally crushing it.

• A fight about money? That means you’ve created something of value! People don’t engage lawyers over something worth zero dollars.

• On the flip side, if a customer is unhappy and wants to leave, an airtight contract forcing them to stay is not the answer.

Most importantly, people who are busy winning don’t have time to launch legal battles. Even if they can afford it, it’s not worth the energy or distraction!

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Lawyers Are Awesome

I want to be very, very clear.

If your company is growing and doing well, you should have a lawyer. I’ve worked with many awesome lawyers who have been tremendously helpful.

All the things I said to hack together? Once you get traction, you want a lawyer to review those hacky docs!

Doing enterprise contracts regularly? You’ll definitely need a lawyer on retainer.

If you have investors, they will probably want you to have your legal ducks (mostly) in a row. The larger the fundraise, the tighter legal needs to be.

But when you’re getting started?? Don’t make “I need a lawyer before I can XYZ…” a hurdle!

The best way to get started is to get started. Find that authentic demand!

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Any favorite resources, templates, or legal AI resources to share? What’s your best money or time saving legal tip??