Guide
Startup Lawyer Sydney: What You Actually Need in Year One
A founder's guide to the legal work that actually matters in year one — and what it should cost.
Every Sydney startup founder eventually asks the same question: do I actually need a lawyer yet? The honest answer is that most of the legal work that matters happens in year one — and the cost of getting it wrong is almost always paid at your first capital raise, when a diligence lawyer finds the mess and the round stalls.
The Year-One Legal Stack
There are six things a Sydney startup should have in place before it takes external money or signs a paying customer. In order of priority:
- A Pty Ltd company — registered with ASIC, ABN and TFN active, business bank account open
- Founders' agreement / shareholders' agreement — who owns what, what happens if a founder leaves
- IP assignment deeds — every founder and early contractor transfers IP to the company
- Standard commercial contract — the master agreement you send customers
- Website terms and privacy policy — non-negotiable if you collect any user data
- Employment / contractor templates — the moment you hire anyone
None of this is dramatic. All of it is cheap to do at day one and painful to fix at day 400.
1. Getting the Structure Right
Ninety-nine percent of Sydney startups should be a proprietary limited company (Pty Ltd). Sole trader is fine for a side project; a trust is fine if you already understand why you want one. For anything you plan to raise capital into, hire employees through, or eventually sell, it is a Pty Ltd.
See our guide on Pty Ltd vs Sole Trader if you are still weighing it up.
2. The Founders' / Shareholders' Agreement
This is the single most valuable document in year one. It answers questions that co-founders are too polite to ask each other over coffee but that a lawyer will make you answer:
- Who owns what percentage — and does that vest over time?
- What happens if a co-founder wants to leave in month 8?
- Who can bind the company? Sign contracts? Approve spending?
- What happens if one founder wants to sell to a competitor?
- Drag-along, tag-along, pre-emptive rights on new share issues
Founder vesting alone — usually 4 years with a 1-year cliff — is what stops the "50/50 co-founder who left in month 4" scenario from destroying your cap table. Read more on our shareholders' agreement page.
3. IP Assignment
Here is the trap: intellectual property created by a founder before incorporation, or by a contractor without a written agreement, is not automatically owned by the company. It is owned by the person who created it. A diligence lawyer will spot this in an afternoon; your Series A term sheet then requires you to go back and get every one of those people to sign a retrospective assignment. Some of them will use that leverage.
The fix is a short IP assignment deed signed by every founder at incorporation, and a proper contractor agreement (with IP assignment) for every non-employee who touches the codebase or design.
4. Your Commercial Template
You will send this document to every early customer. If you are B2B SaaS, it is a subscription agreement or master services agreement. If you sell to consumers, it is website terms plus a privacy policy. See our guides on subscription contracts and website terms and conditions.
The value of getting this drafted once, properly, is that every subsequent customer is a copy-paste. Trying to negotiate a new agreement per customer will eat your founder time.
5. When You Take Money
Pre-seed and seed rounds in Australia are almost always done via a SAFE (Simple Agreement for Future Equity) or a convertible note. Both defer the "what is this company worth" question to your next priced round. Both need to be drafted so they do not blow up your cap table when they convert.
Read our guides: SAFE vs Convertible Note and Raising Capital in Australia.
6. Employment and ESOP
The first hire is where most founders discover Australia's employment law. Fair Work minimums, superannuation, correct classification (employee vs contractor — get this wrong and you owe backpay). If you want to grant equity to employees, you need an Employee Share Option Plan (ESOP).
What It Should Cost
| Package | Typical fixed fee | What's included |
|---|---|---|
| Solo founder starter | $1,500–$2,500 + GST | Company setup, IP assignment, website terms, privacy policy |
| Co-founder starter | $3,500–$5,500 + GST | All of the above + shareholders' agreement + founder vesting |
| Ready to raise | $5,500–$8,500 + GST | All of the above + SAFE / convertible note template + ESOP |
Choosing a Startup Lawyer in Sydney
Three things to look for:
- They quote fixed fees. If the answer to "how much?" is "it depends", walk away. Founders need budget certainty.
- They have done cap tables before. Ask how many SAFEs and priced rounds they closed last year. If it is a small number, keep looking.
- They will pick up the phone. Founders make decisions in hours, not weeks. Big firms cannot match that speed.
Frequently Asked Questions
How much does a startup lawyer in Sydney cost?
Expect $2,500–$8,000 + GST for a full year-one legal setup (incorporation, founders' agreement, IP assignment, standard commercial contracts). Fixed-fee packages are common and preferable to hourly billing for first-time founders.
Do I need a lawyer to incorporate a Pty Ltd?
No — you can register a company through ASIC yourself for $597. But 'incorporation' is the easy part. The value of a startup lawyer is in what comes next: shareholders' agreement, founder vesting, IP assignment from founders to the company, and templated commercial documents.
When should a Sydney startup hire a lawyer?
Before you take money from anyone — investor, co-founder, or paying customer. Fixing structural mistakes (unallocated equity, un-assigned IP, no vesting) after a raise is 10–20x more expensive than getting it right at day one.
What's the difference between a startup lawyer and a general commercial lawyer?
Startup lawyers work with cap tables, SAFEs, convertible notes, ESOPs, founder vesting, and priced rounds every week. A general commercial lawyer may see one of these a year. For anything involving equity or investors, use a specialist.
Next Step
See our Startup Legals service page for fixed-fee packages, or book a 15-minute discovery call to talk through your setup.
Talk to us
Ready to talk it through?
Send us a note about what you're working on. We'll respond within one business day and, if we're a fit, book a free 15-minute consultation with a senior lawyer.