https://www.linkedin.com/pulse/my-lawyer-who-wasnt-why-due-diligence-matters-jesse-brown/ * Join now * Sign in My Lawyer who wasn't a Lawyer, or why Due Diligence matters Published on May 7, 2021May 7, 2021 * 1 Likes * 0 Comments * Report this post Jesse BrownFollow Founder, CEO - in stealth mode * Like1 * Comment0 * [ ]Share + LinkedIn + Facebook + Twitter 0 I was at Google for 13 years, and numerous companies of every size and shape before that - some sane, a couple not. Even at Google, I verified and did due diligence. I recently ran across a situation that reminded me how sheltered I have been and a key element I was missing from my checklist. I've discovered some unexpected things over the years - but this was different. As a Startup Founder, getting proper legal counsel is important. It's a complicated space, and something like a badly written set of contracts or poorly defined share classes could be the difference between getting investment (or not), or collapsing your company in a hail of lawsuits (or not). Along with about 1000 other things of course. When searching for a securities lawyer, I did about 90% of what I needed to do - ask for references, do my own research, ask hard questions and learn what I could about the different candidates experiences and what they could bring to the table. I didn't even realize I'd missed the other 10%. I picked the most capable sounding candidate, who also claimed extensive experience with seed and early round fund raising. She was referred to me by a trusted friend with extensive experience in corporate America. I read the blog post she wrote to a large investors club. It seemed solid, and aligned with what I knew about the space. I did some Google searches on her, and though I couldn't find much, I didn't find anything negative. She had tons of LinkedIn connections, many with folks in my circle, and experience there that lined up with what she was saying. Some things did seem a bit odd (no real profile picture, her website was made using a basic Squarespace template), but being late stage COVID times and this being Startup land, it wasn't the weirdest thing I'd even seen that day. All good right? Not so fast! It turns out, despite repeatedly stating she was a lawyer, representing herself as such to these investors, my friend, and I - and later signing a legal engagement agreement with me clearly saying she was providing services as a lawyer - she had not passed the Bar, and was not actually a licensed lawyer. Whoa! Isn't that illegal? You better believe it is! It's called Unauthorized Practice of Law here in California, and can be punished by up to a year in jail, among other penalties. Near as I can tell, all 50 states have laws against this. I'm no lawyer though, so check with someone who is for rules relevant for your jurisdiction. It's also incredibly dangerous for me and my company - I don't have any actual attorney client privilege with someone who isn't an attorney. I don't have the guarantees that someone is following the Rules of the Bar or of Professional Conduct, and I have no recourse like having their license revoked if they violate those rules - because they didn't have it to begin with! Not catching an issue like this could also put me in jeopardy for negligent hiring if they do something bad that a real lawyer would likely not have done. If they're preparing contracts or corporate structure documents, those have serious long term problems if not done properly - years or decades later even. I don't want to even think what would happen if they were involved in an investor funding round, something went south, and this then got found out. And that isn't even touching on the fact that the person who is supposed to be keeping me out of legal trouble and providing guidance on the proper defensible ways to do things is not only actively lying to me and others about their professional qualifications BUT ALSO committing a crime in the process to do so. I can't think of a more disqualifying action for a lawyer short of robbing me at gunpoint. Though I did get a reaction when I confronted her that almost counts! It also turns out, I appear to be the first person to figure this out. She was referring me to sizable banks, with senior leaders that recognized her as an attorney in the startup space and thought nothing of it. Some of these people had been working with her for over a year and a half in this capacity. My friend and the investors group had no idea she wasn't actually a licensed lawyer. She talked the talk well for sure - she claims she has worked for at least one VC firm, and has a JD, and it would certainly help with blending in. None of that adds up to a license to practice law, or call yourself a lawyer in California. Someone with that background would also most definitely know that, and the consequences. Luckily, I had the experience to recognize some 'something isn't right here' things when I had her start with some actual work. She wasn't tracking billable hours the way every attorney I've worked with has done. She wasn't starting billable work when she could (what lawyer doesn't pounce on easy billable hours?), and was messing up easy details that (well some licensed lawyers I've had to fire are bad at this too) were rather critical - like the name of the entity in the entity structure documents she was writing. This, combined with a frank conversation with a friend caused me to dig deeper. And I realized my Due Diligence checklist was missing a key element - checking with the Bar (only takes a few minutes), and/ or asking for her State Bar # and double checking that with the state. I'd honestly not even considered the possibility someone would be so public while not being a member of the Bar. Once I did that, the whole thing unraveled really quickly. Luckily for me, she admitted she wasn't a member of the Bar or a licensed lawyer in writing over email to me when I confronted her, and refunded all the funds I'd paid her (not much yet, since she hadn't actually accomplished much). So I was out my time, which is valuable, and certainly some peace of mind, but I caught it before any real rot could set in. Also, for those who don't have any legal background (or somehow slept through every crime drama ever made), writing a clear admission of guilt in an email to someone asking you if you're committing a crime is probably only SLIGHTLY less disqualifying for a lawyer than holding a client at gunpoint and robbing them. Probably. So, if you run across someone saying they are a lawyer, ask them for their Bar #, verify that it's valid, and the details match them. In California, you can perform a quick and easy search on the Bar website at https://www.calbar.ca.gov/ - it's the first form field under the header. Every state should have an equivalent, though it may require a phone call. If you run across someone presenting themselves as a lawyer that isn't licensed by the Bar, let the Bar know. My understanding is they frown quite severely at such shenanigans. They make it pretty easy - https://apps.calbar.ca.gov/complaint/upl/index Make sure you take screenshots of any evidence of them claiming they are a lawyer, print out emails to PDFs, etc. You can attach them to the complaint and it makes it much easier for the Bar to figure out what is going on. Being licensed by the Bar doesn't guarantee they are a good lawyer. But it does at least guarantee they are one at all! -J Published By Jesse Brown Founder, CEO - in stealth mode Follow Sounds obvious, but as I found out it isn't - always double check that anyone presenting themselves to you as a lawyer is actually a licensed lawyer in your state. Ask them for their State Bar # and check with the state Bar. California lets you look by Bar # or name at http://www.calbar.ca.gov/ (first thing on the page under the header). If you find someone pretending to be a lawyer, report them to the Bar! It is a crime. More about it in my article! # mylawyerwasnotalawyer #duediligence #startupfounders 0 comments article-comment__guest-image Sign in to leave your comment --------------------------------------------------------------------- More from Jesse Brown 1 article * LinkedIn(c) 2020 * About * Accessibility * User Agreement * Privacy Policy * Cookie Policy * Copyright Policy * Brand Policy * Guest Controls * Community Guidelines * + l`rby@ (Arabic) + Cestina (Czech) + Dansk (Danish) + Deutsch (German) + English (English) + Espanol (Spanish) + Francais (French) + Bahasa Indonesia (Bahasa Indonesia) + Italiano (Italian) + Ri Ben Yu (Japanese) + hangugeo (Korean) + Bahasa Malaysia (Malay) + Nederlands (Dutch) + Norsk (Norwegian) + Polski (Polish) + Portugues (Portuguese) + Romana (Romanian) + Russkii (Russian) + Svenska (Swedish) + phaasaaaithy (Thai) + Tagalog (Tagalog) + Turkce (Turkish) + Jian Ti Zhong Wen (Chinese (Simplified)) + Zheng Ti Zhong Wen (Chinese (Traditional)) Language