Behind Every Good Entrepreneur Is a Great Lawyer

by Ash Kumra

This chapter is a free excerpt from Confessions from an Entrepreneur (Volume 1).

Perry Viscounty: Partner, Latham Watkins LLP

This is by no means a shameless attempt to self-aggrandize or overstate the value of my chosen profession. I merely hope to share with you my personal insights, drawn from decades of representing a wide variety of entrepreneurs and observing the client-attorney dynamic in action. Lawyers and entrepreneurs make for strange bedfellows. It is the psychology of the folks who comprise these professions that has captivated my interest.

Whether by nature or nurture, self-selection, or training, corporate lawyers are a highly risk-averse breed. Not only is the decision to go to law school, assuming pre-recessionary employment practices, an overtly conservative one, legal services exist in large part to minimize or at the very least “manage” risk. Moreover, even if one sets out to pursue a legal career based on considerations other than inherent risk aversion, no decent legal training program is complete without a hefty dose of fear mongering. Fear of risk, that is, of course.

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Perry Viscounty: Partner, Latham Watkins LLP

This is by no means a shameless attempt to self-aggrandize or overstate the value of my chosen profession. I merely hope to share with you my personal insights, drawn from decades of representing a wide variety of entrepreneurs and observing the client-attorney dynamic in action. Lawyers and entrepreneurs make for strange bedfellows. It is the psychology of the folks who comprise these professions that has captivated my interest.

Whether by nature or nurture, self-selection, or training, corporate lawyers are a highly risk-averse breed. Not only is the decision to go to law school, assuming pre-recessionary employment practices, an overtly conservative one, legal services exist in large part to minimize or at the very least “manage” risk. Moreover, even if one sets out to pursue a legal career based on considerations other than inherent risk aversion, no decent legal training program is complete without a hefty dose of fear mongering. Fear of risk, that is, of course.

Entrepreneurship, in stark contrast, starts with risk tolerance. In fact, “tolerance” understates it.

A successful entrepreneur doesn’t just tolerate risk, one embraces it. If the vast majority of small business ventures ultimately fail, and if statistical estimates of this failure rate are widely publicized, it follows that rational entrepreneurs must be risk-loving. I don’t mean to suggest that the risks they embrace aren’t calculated ones. Regardless, generally speaking, the failure rate is dismal: 80% in the first three years. There are an endless number of failure-producing factors a business owner can neither predict nor control—fluctuations in the overall economy or specific industry in which he seeks to operate, the target audience’s response to his product or service, the ever capricious human dimension of professional relationships etc.

Moreover, often a business founder is actively choosing these unknowns over the security of a tried and true career path. He is throwing himself at the mercy of chance, willfully sacrificing stability and certainty for the statistically unlikely possibility of achieving something more. For a career entrepreneur, intermittent failure is the cost of doing business. In a sense, when the odds are stacked against you to begin with, only a true risk-taker will choose to play the game anyway. And repeatedly.

Therein lies the irony. To succeed as an entrepreneur, one must be prone to (even perhaps enjoy) taking risks. Yet uncurbed risk-taking can lead to failure. Attorneys serve to mitigate the universe of risks—by ensuring favorable contract drafting and regulatory compliance, negotiating with lenders, suppliers, and customers, and protecting intellectual property. Interestingly then, entrepreneurs and lawyers are complementary professions given their opposing approaches to risk. Taken a step further, I would even make a case for some level of symbiosis. A propensity for risk-taking and high tolerance for failure might cause even the most brilliant entrepreneurs to self-destruct were they not savvy enough to engage the services of a risk-fearing attorney. Yet we lawyers win here too. Were entrepreneurs more risk averse, they wouldn’t get very far, and we’d be out of a job.

Unfortunately, the reality of an entrepreneur and attorney working together to create a company is hardly that simple or seamless. There are two truly divergent mindsets to be bridged. An entrepreneur ready to execute his vision is enthusiastic and eager to move forward. A good attorney sees his role in this process as working to minimize the chance of anything major going wrong—his primary focus is on potential problems, not just the growth of the venture. It is an obvious and unsurprising disconnect given the psychological differences between the two groups. A great lawyer understands this inevitable tension and resists the impulse to be overly conservative. His vast experience in the business world has taught him that risk-taking is a vital ingredient in entrepreneurial success, that risks are to be managed, not avoided. His proper role is not to micromanage and over-lawyer but to provide a honest and constructive sounding board for the starry-eyed client. He’s not a buzzkill but a trusty confidante.

Because only a delicate balance between embracing risk and managing it will allow business ventures to grow and prosper. The unlikely pairing of entrepreneurs and lawyers fosters the ideal environment for such balance to be struck. Of course if an entrepreneur and his lawyer are truly great, it’s not so unlikely.

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Perry Viscounty is Chair of the Latham Watkins LLP’s Global Intellectual Property Litigation Practice and the former Chair of the Orange County office's Litigation Department. Mr. Viscounty is a member of the International Trademark Association and an arbitrator for the World Intellectual Property Organization. Mr. Viscounty has spoken on topics including trademarks, social media, and IP licensing disputes, and has written extensively on intellectual property and technology issues.
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