An overlooked part of entrepreneurial ecosystems? The lawyers

In 1735, just one year after launching his newspaper, New York City printer and journalist John Peter Zenger was put on trial for publishing essays critical of the colonial governor. His lead attorney was Andrew Hamilton, who traveled in from Philadelphia.

Hamilton’s improbable victory set a foundational precedent: truth is a defense against libel. 

Hamilton was the canonical example of what became “the Philadelphia lawyer,” a long treasured term for an especially cunning attorney. Perhaps it’s fitting the phrase got its start backing what was essentially a startup.

If most attorney jokes hinge on the punchline that they’re expensive, the startup lawyer could be seen as a strange speciality. Most startups fail, and a good many new businesses don’t grow much. 

But in an era of ​​accelerating returns, those few startups that last tend to grow very big.

Hence many big law firms pay surprising attention to quite small companies. Good thing, because many startup ecosystems rely on service providers — for organizing, insight and sponsorship dollars. It’s wise for anyone concerned with startup clusters to consider where the startup lawyers are.

From service provider to advisor, an evolving role

“Twenty or thirty years ago, lawyers were primarily sought out for contracts — the actual piece of paper needed to close a deal,” said Kim Klayman. She’s a partner at Ballard Spahr, a 600-person mid-sized law firm with 15 offices, including headquarters in Center City Philadelphia, where the firm was founded in 1885. 

Klayman focuses on startups, venture capital and arcade-game basketball — which, for the record, I eventually beat her in at Technical.ly’s Builders Conference back in May. She writes a tech-startup focused monthly column for us.

“Today, I think of lawyers as executioners,” Klayman said. “We’re here to help you get the deal done, to move you from point A to point Z with as little friction as possible.”

An array of online tools have cut into standard document preparation — from publicly-traded LegalZoom to new startups like CommonPaper and a cavalcade of generative AI-powered alternatives. 

Around the country, shrewd law firms have made the same switch most professional services have: from outputs (documents) to outcomes (strategy).

Years back, I remember a Baltimore-based law firm’s business development lead telling me he wasn’t selling expensive legal services, he was selling affordable executives for startups who need expertise that complements their own. 

Klayman is a natural inheritor of the best of a modernized Philadelphia lawyer archetype. A focus on startups is no natural outcome though, especially in an otherwise traditional regional city like Philly. Many credit the late Steve Goodman, who did a strange thing for a respected guy at an elite law firm in the 1990s: He bet his career on fledgling tech and internet companies. In 2017, before he died, we called him the “fairy godfather of Philadelphia startups.” 

Goodman’s former firm Morgan Lewis is one of the country’s largest, serving a majority of the Fortune 100 with 2,200 legal professionals and 31 offices, including its own new splashy headquarters in Philly, where it was founded in 1873 by a Civil War veteran. In contrast, startups could seem like kid stuff. Yet Goodman lended legitimacy to the specialty, which let his firm successors like Jeff Bodle and Doug Kingston — and Klayman too — enjoy prestige in the role.

Just about any active startup ecosystem I know has someone like Goodman (who first led a legal heavyweight into the volatile tech entrepreneurial world) and people like Klayman (an attorney whose expertise is as much contract law as it is how startup ecosystems work). 

In DC, entrepreneur Anthony Millin is building a legal startup within mid-sized law firm Shulman Rogers, and Baltimore’s boutique law firm Nemphos Braue has focused on building a startup practice. Quietly, these service providers are part of the infrastructure of an entrepreneurial ecosystem, which commercializes technology and tussles over mergers and acquisitions.

As digital marketing has gotten more expensive for law firms to win business, more traditional tools have reemerged. Thought leadership, public speaking, hosting and sponsoring local entrepreneur events and referral networks all look like good business tactics — and help build startup ecosystems.

“We’re part of a community,” Klayman said.

They’ve all taught me a pattern: Eager startup organizers, smart founders and curious business journalists ought to know who the serious startup attorneys are in town. But just like tech talent, experienced lawyers aren’t distributed evenly in all places. 

So where are all the startup lawyers?

I’ve done no exhaustive analysis, but I assume every region of a certain size has some number of startup lawyers who have worked corporate structures, intellectual property, venture capital, mergers and acquisitions in technology and the sciences. Attorneys develop expertise with the help of referrals — one founder introduces the next. More established tech hubs then tend to have more experienced service providers. But because leaders like Goodman developed early startup practices at big prestigious firms, the densest legal services regions are the same today as they were a half century ago.

For example, look at the world’s most important heart of commercialized technology.

The headquarters of Silicon Valley giants like Google and Meta are closer to bigger San Jose than older San Francisco. But San Francisco has the larger legal community — with nearly 10,000 lawyers working in city limits — and more big tech veterans. For one small example, both companies have used boutique firm Keker Van Nest, which is based a few blocks from the Embarcadero. Likewise, East Coast law firms in DC, New York, Philadelphia and Delaware (given its influential state court system), have all worked their antitrust cases.

Other tech hubs that have grown in recent years within regions with younger business climates have surprisingly small legal communities, according to a Technical.ly analysis. One helpful metric for this kind of analysis is employment concentration, which economists use to demonstrate how common a job is in a given place. Any number above 1 is over the national average relative to population size, and anything under 1 is below the average.

So regional economic powerhouses like San Jose and Seattle (0.84 and 0.9 respectively) have relatively fewer lawyers. Big fast-growing regions like San Antonio (0.93), Nashville (0.86) and Phoenix (0.83)  do too.

Even Atlanta, Austin and Boston, all economic stars in their own right, don’t have especially dense legal communities.

So what regions are the densest hubs? No surprise Washington DC (1.76) and New York City (1.82) are tops, with Philadelphia (1.59) and Chicago (1.33) not so far behind.

One surprise might be South Florida, which leads Technical.ly’s analysis of 20 regions with an industry employment concentration of 2.14 in the Miami-Fort Lauderdale area. Many old Midwestern cities with established footprints like Cleveland and Pittsburgh also show up on the list.

Nuance comes when you look at the city level rather than the broad region. 

The three densest big cities for legal services in the United States are New York, Washington DC and Philadelphia — a list that is relatively unchanged from 50 years ago. Most of those lawyers aren’t working on startups. But many more are than before, even after higher interest rates cooled the frenzied cheap-money-fueled startup boom of the 2010s.

That won’t change the focus many firms have on startups.

 “We’re always betting on exits, and an exit doesn’t need to mean the unicorn exit,” said Klayman, of Ballard Spahr. “Even a smaller transaction, like a $50 million sale, can be a significant win for a law firm, especially if you’ve been involved from the beginning.”

It’s never lost on me that colonial-era Hamilton earned his Philadelphia lawyer legacy for backstopping a startup founder (a 30-something publisher-entrepreneur at that).

Law evokes nobility when it conjures justice. Not all law is glamorous, nor celebrated. Misused patent farms and anti-competitive practices are not entrepreneurial. Like law, journalism and entrepreneurship both can be misused and misguided. At their best, though, they’re some of the oldest foundations of American life. 

Hamilton’s legal world-famous closing remarks include a phrase as evocative to daring startup founders as they are to outspoken journalists. We must protect, Hamilton said, “a liberty both of exposing and opposing tyrannical power by speaking and writing truth.”