When you’re starting your own business, the last thing you want to focus on is legal matters. You’ve already got enough on your plate trying to develop your project, manage your expenses and not get into fights with your co-founders. That said, legalities are a necessary evil and you have no choice but to deal with them – however, you don’t have to go at it alone. Law firms like Pintó Ruiz & Del Valle in Barcelona are more than prepared to help entrepreneurs and young companies tackle the obstacles of Spanish bureaucracy and have their businesses set up in the least amount of time – and at the lowest level of stress – possible. We sat down with lawyers Nicole Santiago, Yago Vázquez and Jordi López to talk about what difficulties entrepreneurs have to face and why you should considering getting a team of experts on board.
Barcelona is increasingly seen as a great place to live and to start a new venture. It’s a preferred location for startup founders as well as foreign companies looking to set up satellite offices or tech centers. However, Spain has the reputation of a country with very heavy bureaucracy. How do you see that apparent contradiction? How does Spain compare to other European countries in terms of bureaucracy?
Yago: In terms of bureaucracy, it’s true that Spain is not the most business-friendly place because of the nature of our corporate and public law. It’s more formal than some other jurisdictions in Europe. But it depends on the country. If you compare it to the UK or Luxembourg, of course things will be more difficult and take more time here. But in this sense, Spain is not that different from France, for example. Nevertheless, once you know the path to the incorporation of a company, what you get at the end is a very secure legal position. It’s a system that provides a lot of certainty in the market.
Nicole: Even though it may seem like bureaucracy is an issue that entrepreneurs might not have to face in other countries, I do think that recent developments in the law have made progress, at a slow but steady pace, towards making it easier for entrepreneurs and small businesses to use Barcelona as a home base. In the next couple of years, we will probably see even more help from the government in order to try and create viable solutions. You can see that the Barcelona startup ecosystem is thriving, it’s doing very well despite all these bureaucratic challenges. And I think the country is on the right path.
Jordi: We have no doubt that politicians are willing to make things easier for entrepreneurs and investors. The problem is that law usually goes slower than reality. The expectations of entrepreneurs are reasonable: they just want to be able to move faster and have fewer obstacles in their way. One of the historical requests of entrepreneurs is the “ventanilla única”, to have one administration for everything to the extent possible, instead of having to be in contact with many of them. We will have to wait a bit longer for a simplification in this sense, but we’re moving in the right direction.
What are the main advantages of seeking legal council and working together with a law firm for entrepreneurs?
Yago: If you transfer the burden of dealing with legal processes to a law firm, then everything will be smooth. After all, it’s just a checklist of legal steps that you need to complete. The problems start to arise when someone tries to do it on their own without having listened to any legal advice.
Jordi: The service that we provide is aimed to help you forget about all of it, trust in us and know that we will do it for you. Just concentrate on the project, and we will take care of the formalities and your legal protection.
“Startups are always thinking of new ways of doing things, and sometimes the law doesn’t foresee these innovative approaches.”
Specifically what is it that you can help with? What are some of the typical issues that can come up?
Yago: One interesting example is the foreign identification number. Every entrepreneur coming from a different country needs one before they can start a business. If you request it through us, it’s one less thing to worry about and the process will normally be swift. Otherwise it could take weeks.
Nicole: There are many small challenges, for example, looking up your company name in the commercial registry to make sure that you’re not infringing on any names that have already been registered. That’s why it’s so important to rely on someone who knows the game and can take the load off your shoulders. When you’re trying to get your idea off the ground, it’ll make your life a lot easier if you can delegate the management of legal matters. The point is that you focus on the business, on what really makes sense for you.
You are also a great source of crucial advice that goes beyond simple legal services and has to do with the project as a whole.
Jordi: Apart from taking care of the formalities, what we try to do is provide added value. There are lots of things that entrepreneurs can learn on their own. But there are also many issues, especially those related to tax structure, labor rights, salary structure, compliance, IP, and so on, that are not that easy for lay people to understand. So we try to focus our advice on these specific areas, and in our experience, this is the service that our clients appreciate the most. We raise concerns that may not even have occurred to them, but could eventually result in them restructuring or rethinking certain aspects of their project, because they realize that it was not viable due to legal limitations.
Yago: Startups are always thinking of new ways of doing things, and sometimes the law doesn’t foresee these innovative approaches. So we have to talk about whether the idea is legally feasible at all. Maybe it’s in a regulated area, you need some kind of authorization, or for some reason the idea cannot be protected through IP in Spain. You have to make your idea compatible with the legal framework, and if we see any concerns, we tell you straight at the beginning.
“An entrepreneur should never have it in his or her mind that legal services are unobtainable.”
I think it’s important to dispel the misconception that legal services are not for small startups, that it’s something they can’t afford.
Nicole: In essence, an entrepreneur should never have it in his or her mind that legal services are unobtainable. If someone approaches us and it’s something that we believe in, we can be flexible. And if we believe in the project, we can help, we can add value.
Yago: For an individual who’s just starting to develop a project and doesn’t have a lot of resources, the legal part won’t seem like the most important thing to worry about. However, it is an essential part of the project, and without it, it’s impossible to get started.
Jordi: We may be ready, in specific cases, to adjust our prices, if we believe that the project is worth it.
Yago: Our approach to working with entrepreneurs and startups is different from how other law firms do it. We don’t offer standardized packages at low prices. We offer the same service that we would to one of our main clients, which means that the entrepreneurs will be dealing with partners – of course we will involve associates and junior lawyers too – and the service will be of the same quality. But this only makes sense when we believe in the company.
Jordi: We want to be a part of the project, so we can’t just offer standardized services. We look at the idea, look at the needs and concerns of the client, and then we build up a specific plan for them. Another thing that we can help with is to connect them with people from the areas that we’re most active in, for example healthcare or sports.
Yago: Another characteristic of our firm is that if a company is doing well and they want to expand in Europe, we can help them do it from here in Spain through our international networks of law firms. The entrepreneur will be very happy to have just one person of contact. Especially if they’re expanding to countries with complicated jurisdictions.
Let’s talk about the practical details. How long does it take to incorporate a company, how much does it cost and what are the differences between doing it by yourself an doing it with the help of a law firm?
Jordi: The process of incorporation and registration of a company in Barcelona takes three weeks, if you do things properly. That’s the entire process of getting the company name, opening a bank account, granting the company’s deed of incorporation, obtaining the Tax Identification Number (NIF), and having the company registered in the commercial registry. But you have to be very diligent to meet with this three-week deadline. Our experience is that normally the client is not that diligent, and does not provide us with the proper documentation straight away, especially foreign investors which are not familiar with the Spanish system. So we have to request more and more, and it may take a month or a month and a half. However, if you decide to do it by yourself, you have to contact the notary, you have to understand the tax formalities of starting the activity, and you may have problems in the registry… It could even take you two to three months. And if you have to face any specific difficulties without the assistance of a lawyer, it won’t be easy to complete the process.
That’s double the time. Add to that if the entrepreneur doesn’t speak Spanish…
Jordi: That would indeed be an added inconvenience, especially when dealing with some administrations and public entities, where the use of English is not extensive.
Yago: We can help with the language barrier. For instance, we can draft the incorporation documents (in particular, the bylaws of the company) in both Spanish and English, so that the entrepreneur understands perfectly the way the company will work.
Jordi: Concerning the costs: the cost of the notary and the registry will be fixed, that is to say, these will be have to be assumed by the entrepreneur anyway. If you hire a lawyer, you will have to pay certain legal fees. But contrasting that amount with the difficulties that you will have to face and the amount of extra time that it will take you to get the company registered if you go at it alone, I think it’s absolutely worth it.
What sort of companies make up your clientele? Is it mainly small startups? Do you deal with investors as well?
Jordi: We have family offices and big companies among our clients that are willing to invest in new projects. From this perspective, what we do is we advise investors. We provide them with sophisticated advice on the protection of their interests as investors, and we help them with finding a secure exit path.
Yago: On the other side, we help and assist entrepreneurs who are individuals and want to start off with a good idea. We get these kinds of clients from two sources. One is from abroad, because, as commented before, we are well connected through a network of lawyers called PLG International Lawyers. All of them are independent law firms of good size and quality. They are all our “partners” and friends, and we get a lot of referrals from them. There are two jurisdictions specifically that are very good at this: Israel and California. We also work with local entrepreneurs in Barcelona. We’ve had several success cases: a company that started with us years ago with just the two founders and nothing else has just announced that they are about to launch an IPO, and they’ve grown to 200 people. Of course there are plenty of examples of failures too. But in both cases, we believed in the idea. For us it’s important to understand the idea, to really form a part of the project and grow together with them. When you’ve been assisting an entrepreneur or a team since the very beginning, you have a lot of confidence between you, and you develop a very strong relationship.