Business attorneys have been trained to operate in a traditional business environment. However, that environment is quickly changing. Cutting edge businesses today are oriented towards staying lean – in terms of their operations, their business models, and even their budgets for legal services. It’s crucial that the practice of law evolves to meet the needs of these businesses. A growing divide between business practice and business law will only increase costs and stifle innovation. This post is an attempt to define the lean startup methodology and explore how it relates to the practice of business law.
One of the more influential business books in recent memory is Eric Ries’ The Lean Startup. Ries compares the traditional model of business with the new “lean” or “agile” model. Ries didn’t invent the fundamental ideas underlying this strategy, but his book serves as a good starting point for this discussion.
The Lean Startup Methodology
A traditional (as opposed to “lean”) business works like I was taught back in business school. There’s a hierarchical management structure. The bosses at the top figure out what they think their customer wants. Each department works on their area of expertise. At some point (or points) in the development of a new project, the company clears the plans with their legal advisors. Eventually the product or service goes public, with an expensive launch event and an ad campaign to match.
Ries suggests that this approach wastes a lot of time and money finding out what customers really want. The core idea of the lean startup model is to get the product in front of the customers as quickly as possible.
Rather than taking their time to craft something that’s perfect – at least in the sense of perfectly executing the business plan – lean companies create a Minimum Viable Product. The MVP is almost always going to be flawed, but as long as some customers can engage with it, the company will start to learn from them right away about what will work and what won’t.
Once the company discovers that a particular approach isn’t connecting with customers, they may decide to “pivot.” A pivot isn’t just a random change of direction. It’s appropriate to pivot when one approach hasn’t worked out, but the business believes that there is still a viable product in there to be discovered. So they quickly retool the concept and push out the next iteration.
The lean framework is an ongoing three-step process: Build-Measure-Learn. Quickly build your product and put it in front of customers. Measure the results with data – not just what you want to hear, but what customers really do. And learn from that data so you can start building all over again.
This might look great to an entrepreneur – it’s a way to either succeed quickly or fail quickly. And the only thing worse than failing quickly is failing slowly – and not learning anything from the experience.
Lean Startup Law: Oh No, Here Come the Lawyers
To a seasoned business lawyer, however, this approach can look like chaos. How am I supposed to advise a business if I don’t know what their long-term plans are? If they come to me to review their branding strategy for trademark issues, for example, and a few weeks or even days later, they might be looking at a whole new customer base or a different approach to the product, it’ll be hard for me to keep up, let alone to offer solid, timely, and cost-effective legal advice.
The first step is for business attorneys to communicate to the lean startup community that we understand their working processes and want to have an ongoing dialogue with them as to how to best suit my legal service offerings to their business needs. I’ve seen some law firms using the term “Lean Law.” That’s fine, but it’s important to avoid just grabbing a few buzzwords or throwing around the phrase Lean Law and assuming that solves the problem. Lawyers need to look at lean startups as valued clients rather than fringe mavericks, and entrepreneurs need to recognize the importance of legal advice (even if that advice isn’t always taken).
Business attorneys need to dig into the details of each client’s working process and understand how and when they intend to apply the lean startup strategies. Only then can we tailor our services in a way that’s cost-effective and meets the clients’ most pressing needs. This process will be time consuming, and sometimes challenging to monetize, especially when we’re dealing with early-stage startups.
The problem, of course, is that attorneys can’t work for free. We need to keep the lights on. Law school student loans, professional liability insurance, and the many other costs of running a firm need to be taken into account. My sense is that the best way to expedite this process – and make it more financially viable for clients and attorneys – is to put the time into understanding the lean startup process in general. This will make it faster and easier to understand how each individual client is applying the lean model to their unique business challenges.
Contracts are one area of legal practice that can evolve with this approach. I often find that contracts need to be rewritten from scratch when the underlying business plan changes. Wherever possible, attorneys working with lean-oriented clients should draft contracts with future changes and amendments in mind. Open dialogue between attorneys and clients will make this more feasible.
It’s a bit more challenging when it comes to trademark law, which is a significant portion of my legal practice. Trademarks require due diligence, and applications before the US Patent and Trademark Office must identify specifically how the proposed trademark is (or will be) used. Goods and services must be accurately identified. Today’s businesses might see the value of an agile strategy, but the USPTO will take a while to get there.
Where Do We Go From Here?
Business is evolving, and lawyers and other business support service providers need to adapt as well. The lean startup methodology allows businesses and organizations of all sizes to better meet the needs of the marketplace. This type of disruption can be challenging for a naturally conservative profession like the law. A better understanding of the lean approach will allow attorneys to better serve their clients in a changing environment. I don’t have all the answers, and I hope this post is the beginning of a conversation with entrepreneurs, my legal peers, and others in the startup ecosystem.
For more on the lean startup model, check out The Lean Brand, a new book by San Diego’s own Jeremiah Gardner and Brant Cooper. I feel as though a disclaimer is in order here. I’m not advocating every word of these books. I’m not suggesting that the lean model is better or worse than any other way of doing business. Rather, I’m suggesting that, since businesses are adopting these approaches, it’s important for their legal advisors to (a) understand what’s happening, and (b) work with the clients to meet their needs given the prevailing business environment. The alternative my way or the highway approach isn’t in anybody’s best interest.