Most startups are built through trial and error. Founders build, test, then pivot. This process is essential to build breakthrough products. But it’s not the best way to approach legally. When it comes to legal matters, trial and error can get extremely expensive.

Below are the top five most common legal mistakes for startups and some tips on how to avoid them.

Splitting the Equity Up Front

A lot of founding teams avoid the hard conversation about individual contributions and commitments by splitting the equity evenly up front without a vesting schedule. This can lead to a number of problems and is how you get “Zombie Founders”—holders of significant equity in your startup that don’t contribute anything of value.

To avoid this, have that hard conversation with your co-founders up front and make sure everyone is on the same page. Work out the levels of contribution and commitment each founder can provide, and make absolutely sure that all founders’ shares are vesting with at least a 12-month cliff. This means if one of your co-founders can’t deliver value, can’t give up prior commitments or just loses interest before the year is out, you can let them go without having to buy out their equity, diluting the equity by issuing a ton of new shares or starting a new company.

Not Assigning Intellectual Property

Founders are often too preoccupied with developing their product to keep track of who wrote what code, or who came up with an idea or strategy. This can leave your startup...

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