How to Leave Law and Raise $1.3Million for Your Startup

How to Leave Law and Raise $1.3Million for Your Startup

Many lawyers dream of starting a business and I met a lot of them while working with Escape the City, which was an early-stage startup itself when I joined. While startups were often seen as the Katy Perry of companies, I knew from experience that they were just as (if not more so) challenging and stressful than the big companies where a lot of our members were working.

This is why I would cringe whenever I heard about a member feeling unspeakably excited by well-known entrepreneurial manifesto The 4 Hour Work Week. While inspiring, the danger of that particular book is that it can over-simplify a task that is actually very difficult. Reading that book then assuming you're ready to launch a business is like watching Rocky and deciding to become a boxer.

A couple of years ago, Daniel van Binsbergen was a Senior Associate and read that very book.

"I made a bold plan to come into work the next week, quit, get my hands on an Aston Martin, start a better version of Facebook and execute various other killer plans," he explains. "I was going to live the dream. But as you may have guessed, a couple of years later, I was still at the law firm."

Lawyers' mental barriers to career change fascinated me so much that I ended up writing a book on the topic (Leaving Law: How Others Did It & How You Can Too).

As renowned psychologist Dr Martin Seligman outlines in his book Authentic Happiness, lawyers tend to have a pessimistic explanatory style, meaning that the causes of negative events tend to be seen as persistent, uncontrollable and pervasive.

While pessimistic thinking is unhelpful in most areas of life, pessimists do better at law: perceiving troubles as pervasive and permanent is part of what constitutes prudence.

Prudence helps a lawyer to spot every possible problem that might arise in any transaction. This ability helps the practicing lawyer who, by spotting what the non-lawyer might not see, can help his clients defend against far-fetched possibilities.

Another psychological factor that tends to plague lawyers, especially junior ones, is the limited choices one believes that one has (also known as low decision latitude) in high-stress situations. The loss of control over one's time, not to mention work flow and responsibilities, can reduce morale.

The combination of those factors mean that when a lawyer decides to start a business, they need to adjust their pessimistic explanatory style with entrepreneurialism and also learn how to determine their own schedule.

It took van Binsbergen several attempts to gather up the courage to walk into his boss's office to resign. The first couple of times, he jokes that he "pussied out and decided to make a blank copy on the copy machine right outside his office".

Last year, he founded startup Lexoo which has just raised $1.3 million. Lexoo connects small and medium enterprises (SMEs) with pre-vetted and hand-picked lawyers, aiming to save customers an average of 46% off of their legal bills.

I interviewed van Binsbergen for Leaving Law and noticed several factors that differentiated him from various Escape members. Many members were as well-educated, ambitious, and humble as he, but few others had been as well-prepared for startup life. Before leaving law, he had built up a financial cushion.

"Even as a junior lawyer you earn quite a bit more than some of your peers, plus every year you get a raise. So I decided early on that my junior lawyer salary should be sufficient for the next couple of years," he explains. "My idea was that whenever I would get a raise, I would just increase the standing order to my savings account by the same amount."

This meant that over the years he never gave myself more spending money than he had as a junior lawyer, but the amount he was able to save monthly would increase significantly every year.

To raise any kind of investment, a startup needs demonstrated traction. To get to early revenues and an active customer base, the entrepreneur needs to commit to testing and validating an idea. This becomes much easier to do when there is a pre-existing financial runway.

van Binsbergen extended Lexoo's runway even further by staying on to work with his firm instead of quitting overnight. By staying on as a flexible associate instead of a full-time employee, he significantly decreased the anxiety that can come with leaving full-time employment to start a business.

"When I submitted my notice the firm asked me to reconsider and indicated they would love to keep me on board. I then indicated I would also appreciate not severing ties completely, and suggested I continue to work for them on an ad hoc/contractor basis," he says. "The firm was fine with this, and so I was able to continue to work on some small files, usually from home."

Of course, numerous other factors have led to Lexoo's success. Yet as I noticed van Binsbergen's unwillingness to succumb to the golden handcuffs cursing other lawyers, I thought of a quote by entrepreneur Tim O'Reilly: "Money is like gasoline during a road trip. You don't want to run out of gas on your trip, but you're not doing a tour of gas stations."

Read more about "Leaving Law: How Others Did It & How You Can Too" here.


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