Startup founders, take note: Legal missteps can cost you equity, momentum and even your mission.
Having a lawyer to call is essential for founders, and they shouldn't wait until legal problems arise to establish that relationship.
That theme underscored much of the 'Legal Trouble: Avoiding Common Startup Pitfalls' panel at the 2025 Technical.ly Builders Conference. Moderated by startup attorney Jeffrey Bodle of Morgan Lewis, the panel featured cautionary tales and practical advice from Baltimore-area founders Matthew Hayes and Shari Bailey of Unmanned Propulsion Development and Laila's Gift, respectively.
'Think of building a business like building a home,' Bailey said. 'If you skip inspections until the end, you might have to tear out the foundation. Do things right and tight up front.'
Both founders stressed the long-term costs of early legal shortcuts. Hayes recounted how, in the absence of experienced startup attorneys in the rural Maryland area where he used to work, he leaned on a family member who practiced real estate law. It didn't go well because they didn't focus on startup law.
'On the business side, specialists help; generalists don't,' he said.
Bailey agreed, especially for anyone navigating both for-profit and nonprofit structures, as she does. Laila's Gift throws birthday parties for children with special needs while also developing a tech product to support the same community.
Her guiding principle? Document everything. She referenced a GMP (good manufacturing process) term, 'document control,' that she believes transcends any industry.
'Keep records of everything, with revision control,' she said. 'Meeting minutes, decisions, training — store them in a central repository everyone can access so the history doesn't live in one person's head.'
Match your legal partner to your growth trajectory
Even if they're not ready to retain a lawyer, entrepreneurs have options for services and platforms that can provide some guidance, even if they don't replace the expertise of a skilled attorney.
'If you have funding, hire an attorney,' Bailey said. 'If not, services like Rocket Lawyer can help … volunteers can help nonprofits; ChatGPT is a great starter — not a finisher.'
Hayes said much of his early legal documentation was taken from other firms' NDAs.
'All my NDAs were basically copied from other companies, nobody's going to sue over that,' he said.
Plus, if you want legal protection that scales with your business, be sure to think long-term.
'You don't necessarily have to pick one firm forever,' Morgan Lewis' Bodle said, 'but if you expect to grow like a weed, choose a firm that can scale. Businesses evolve. Keep a few candidates in mind and revisit as you grow.'
Attorneys in the audience added practical tips: avoid hourly billing in favor of modest retainers plus success fees; keep documentation simple but tight; and vet your lawyer as thoroughly as you would a cofounder.
Bodle urged founders to use tools like AngelList's Stripe Atlas, Clerky or Gust for standard startup documents, and to approach legal work incrementally.
'Term sheets also keep costs low: Until you agree on key terms, nobody wastes time drafting the rest,' he said.
The panel closed with a reminder from Hayes that even in the face of adversity, founders can still shape their outcomes. During the pandemic, he co-founded a nonprofit — Southern Maryland Loves You — and worked with local volunteers to create an FDA-authorized mask-sanitizing system that hospitals clamored to use.
But it was 'messy,' per Hayes. His congressional representative allegedly leaked his FDA support letter to a competitor's lobbyist, so he quickly learned to operate more discreetly.
Key lessons from that experience?
'Have a lawyer you can call; keep communication open; be someone people don't want to sue,' Hayes said, 'and don't work with people who sue.'
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Technical.ly
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Technical.ly
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