Perspective: How the JOBS Act Has Changed Lawyering

Editor’s Note: The author of this post is CEO of a web company that aims to help lawyers prepare private placement documents and forms.

By Georgia Quinn, CEO & Co-Founder ofiDisclose

The passage of the JOBS Act not only revolutionized our country’s securities laws, but capital raising as we know (or knew) it. In this new era of finance, how can lawyers tap into emerging types of transactions and not get left behind as the capital markets continue to be democratized?

Gone are the days of clients blithely paying hourly-tabulated legal bills for obscure financing related services. With the veritable menu of capital-raising options that come with the JOBS Act, today’s crop of entrepreneurs have the same access to the regulations as lawyers do and have been squeezing blood from turnips; they are going to expect some real value from their attorney.

In addition to learning the actual rules, which is table stakes, any lawyer or law firm that wants to seize this monumental opportunity in the New Year should keep the following list in mind:

1. Think small

This is the age of the entrepreneur. Small businesses make up roughly 50 percent of both GDP and employment in the US, yet they rarely get the attention of big law firms. With larger companies squeezing margins of law firms and requesting additional services, it may be time to look further down the food chain. These smaller business may not move the needle for many big firms but for smaller and mid-market firms in aggregate they can be powerful. Importantly, some of these small businesses grow up to be big businesses — just ask Uber. The JOBS Act will now allow smaller companies to access the capital markets for the first time in new and unique ways, and they are going to need legal assistance to do so. Lawyers need to position themselves with services tailored to small and startup businesses such as incorporation, EIN filing and tax, corporate structure, corporate governance, IP, employment law, etc.

• 2. Put on your entrepreneur shoes and walk

It is time for lawyers to start thinking like entrepreneurs. It will not suffice to merely spot issues – lawyers must also solve them. Small business owners are busy running their businesses and don’t have dedicated legal staff. This is where experienced outside counsel has a real advantage, since they have seen the issues entrepreneurs face before and can anticipate them. Now is an exciting time to be practicing law, as lawyers could experience the rebirth of the role of the consigliere, or the true counselor who provides not just legal assistance but sound business advice as well. Frankly, this is why people went to law school, not to provide forms and empty legal opinions.

• 3. Apply technology

The legal profession is one of the last industries to embrace technology, but the day has come. There are many tools out there to streamline the drafting and diligence process and the administration of deals. In fact, there are completely virtual law firms. Today’s entrepreneurs are comfortable using technology and moreover, they have come to expect it. In addition to being able to access the black letter of the law themselves, they often use online resources to drill down into nuanced legal issues they face. Clients are looking for efficiency and do not want to pay for things they can do themselves. It is essential for attorneys to use technology to save time and money if they intend to cater to the start-up community. Clients will not take kindly to “old school” methods such as prolonged drafting sessions or written correspondence.

• 4. Throw the billable model out the window

The writing is on the wall. The billable hours model is dead. Small businesses need to be able to budget expenses and not live in fear of every fifteen-minute phone call with a lawyer. Project-based fees are going to be required with certain arrangements for unexpected issues. The true story of a young entrepreneur unwittingly paying $4 million in legal, accounting and underwriting fees for a $7 million IPO will not do in the eyes of today’s entrepreneur; lawyers need to transparently break down legal tasks into chunks with associated costs and allow companies to select the services they need. In addition, lawyers need to empower entrepreneurs to perform certain tasks themselves, especially routine items or things that do not require legal knowledge. It’s important for lawyers to remember that entrepreneurs know the most about their business and are often in the best position to review documents, take a crack at a first draft of a provision or negotiate a term.

The new era of finance in 2016 will be an incredibly exciting time to be an attorney. The challenge will be embracing the changes brought forth by the JOBS Act while still remembering the fundamentals of problem solving, quality work product and client service.