Timestamps:

6:32 - How can lawyers help entrepreneurs?

13:55 - The cost of legal services: hourly rates vs. success fees

23:40 - Essential contracts for startups: what founders must know

40:10 - Understanding term sheets and key negotiations

50:56 - Personal liability and risk management

This episode was co-produced by EO Zürich. Check out their upcoming event, Entrepreneurs Summit 2025.

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About Stefan Kirchhofer:

Stefan Kirchhofer is the Founding Partner of ADROIT Attorneys, and the owner of the Hooters restaurant chain in Switzerland. He holds a Masters of Laws from the University of Bern and has worked for Credit Suisse First Boston, the Zurich District Court and Homburger.

During his chat with us, Stefan delved into the intersection of law and entrepreneurship, exploring the unique challenges and perspectives that lawyers bring to the business world. He discussed the cautious nature of lawyers, the importance of calculated risks, and the essential role of legal professionals in business transactions. The conversation also covered the complexities of legal fees, the necessity of contracts for startups, and the strategic considerations around equity distribution among founders. 

Here are some of the main takeaways:

• Shares
• Successful partnerships require commitment from all shareholders, so giving shares away for free is often unwise.
• Founders should avoid giving away shares too early: startups should focus on revenue and growth before equity distribution.
• Small shareholders may not find shares valuable.
• Phantom stock options can be a fair way to engage employees.
• Working with lawyers
• Most lawyers are not trained to be entrepreneurs, and therefore are much more risk-averse. However, this attitude can be a useful counterbalance to entrepreneurial daring, as calculated risks are essential for business success. 
• When looking for the best legal team to work with, take into account that a good transactional team includes various specialists, and that smaller law firms can often provide better value. 
• When assessing a legal team, consider the importance of fair billing practices, and the clarity and conciseness of essential contracts like shareholder agreements and client contracts.
• Founders should always be cautious about what they commit to. The most obvious aspect of this is that term sheets should be reviewed carefully before signing. It’s also worth noting that legal assessments are crucial when facing lawsuits, and that personal liability can be mitigated with careful documentation.

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