1. Which Operating Decisions Need Legal Review?
A startup law firm checks operations, signing authority, and planned deals to identify the registrations, agreements, and approvals needed.
Separate Formation from Operating Requirements
Forming a Delaware corporation does not settle whether it needs to register in California. The review asks whether its activities amount to transacting intrastate business under state law, subject to statutory exceptions.
A review should identify:
- Where staff work and business decisions occur.
- Whether operations require foreign registration.
- Which state filings and local permits apply.
- Whether separate tax obligations arise.
Secretary of State registration and Franchise Tax Board obligations use different rules. A company can have tax duties even without registering.
An attorney can coordinate business entity filing with tax advisers and check ongoing reporting needs.
Confirm Founder Ownership and Approvals
A cap table tracks shares and other equity rights. Verify its entries against formation documents, required approvals, purchase agreements, and payment records.
Founder agreements should address voting, vesting, and departure terms. Vesting ties the right to keep shares or earn equity to time or agreed conditions. Departure may trigger contractual repurchase rights.
2. Hiring and Development Agreements That Fit the Team
Hiring creates workplace duties and ownership questions. Review worker status and IP rights separately. A developer cannot transfer rights they never owned.
Check Employee and Contractor Status
For many covered workers, Labor Code §2775 uses the ABC test to distinguish employees from independent contractors. The hiring business must establish that the worker:
- Works free from its control, both under the contract and in practice.
- Performs work outside its usual business.
- Operates an independently established business of that kind.
Exceptions may require another test. Federal employment laws use their own standards. A contractor label alone does not resolve status. Review actual duties and supervision before choosing contract terms.
Identify Which Technology the Company Owns
Labor Code §2870 limits clauses that require employees to transfer invention rights. It excludes qualifying inventions developed entirely on personal time without employer resources or trade secrets.
Exceptions cover certain inventions related to the employer’s business or research, or resulting from work for the employer.
Section 2872 requires notice of that exclusion when the employment agreement containing the assignment clause is made.
Check founder assignments, prior inventions, contractor terms, and third-party software licenses. Under federal copyright law, payment alone does not establish ownership.
Check work-made-for-hire rules and signed transfers. Missing rights may require an assignment or license.
3. Funding and Customer Agreements before Signing
A startup law firm serving California businesses reviews investment approvals, securities filings, and customer promises as separate legal tasks.
Match the Investment to the Filing Route
Shares, convertible notes, and SAFEs raise securities-law questions. A SAFE provides for possible future equity. A standard form does not establish a registration exemption.
Before an offering, identify:
- The instrument and required company approvals.
- Investor locations and eligibility.
- How investors will be approached.
- Federal and applicable state filings.
An offering relying on federal Rule 506(b) cannot use general solicitation. Form D is due to the SEC within 15 days after the first sale in that offering. State notice filings and fees may also apply.
California filing requirements need separate analysis. Preparing for corporate due diligence also means reconciling equity promises, signed documents, and approval records before investors review them.
Review Customer Promises and Data Use
A large customer’s contract may require services or liability beyond the startup’s budget.
Review commercial contracts for payment terms, service commitments, ownership, termination, and responsibility for third-party claims.
For data-driven products, compare the contract with actual data use. Identify what the product collects, why it collects it, and which vendors receive it.
Review coverage and exceptions under the California Consumer Privacy Act (CCPA) before selecting notices and contract terms. Other privacy laws and contract duties may apply even without CCPA coverage.
4. Practical Pitfalls and the Scope of Legal Work
Missing documents can change a deal’s scope and cost. Identify corrections, required approvals, and deadlines while preserving accurate records.
Address Gaps without Rewriting History
Check unsigned assignments, unapproved equity promises, and contracts naming the wrong entity. Preserve originals. Corrective documents should use accurate dates and explain the action taken.
Define the Work and Fee Arrangement
Before hiring a startup law firm in California, ask which documents, negotiations, and filings the fee covers. Defined tasks may use a flat fee. Ongoing advice or changing negotiations may use hourly billing.
Missing records and specialist work can affect the estimate. Confirm whether government filing fees and tax advice are separate.
5. Frequently Asked Questions
Clarify who the attorney represents and what a filing service provides before choosing legal support.
The company’s attorney does not automatically represent its founders personally. Equity and departure disputes can create conflicts. Confirm the named client and whether separate representation is needed.
A filing service may submit formation papers. Its scope may exclude tailored advice on founder rights, worker status, IP ownership, and financing. Compare the included work with the decisions your company needs to make.
6. Discuss Your Startup’s Next Legal Step
To discuss legal support, provide the formation records, cap table, key agreements, and next hiring or transaction date. Identify California operations and known deadlines. An attorney can review those materials and propose the documents, filings, or negotiations to address first.
09 Nov, 2026
