Legal Services for Startups in Lithuania

AT A GLANCE

Startups need legal foundations in place before growth makes them expensive to rebuild — shareholder agreements, IP ownership, and employment contracts are the three areas where gaps create the most damage.
We provide legal services to Lithuanian startups at fixed fees — no open-ended hourly retainers, no billing by the email.
All legal documents are prepared in English, with Lithuanian versions provided for statutory filings where required by law.
Our legal team works with startups at every stage — from pre-incorporation structure design through to investment round documentation and ongoing commercial contracts.
Legal work done correctly at incorporation is significantly cheaper than restructuring, dispute resolution, or due diligence remediation under investor deadline pressure.

Legal services for Lithuanian startups cover the documents and structures that protect the company, its founders, and its intellectual property from the moment of incorporation. The most critical areas are the shareholder agreement between co-founders, IP assignment to the company, employment contracts with the right clauses, and commercial agreements with clients and suppliers. We prepare all of these at fixed fees, in English, with Lithuanian versions where required. For startups approaching investment, we also review term sheets, prepare investment documentation, and ensure the cap table and corporate structure are clean before due diligence begins.

Why Legal Foundations Matter More at the Start

Legal problems in startups are almost always structural — they originate in decisions made (or avoided) at the very beginning and become visible only when the company is under pressure. A co-founder leaving without a vesting schedule. A product built on IP that was never assigned to the company. An employee who turns out to be legally an employee despite a contractor agreement. These are not unusual situations — they are the predictable result of starting fast without the right legal infrastructure.

The timing matters for cost reasons as much as legal ones. A shareholder agreement drafted before a co-founder joins costs a fraction of what dispute resolution costs after the relationship breaks down. An IP assignment executed at incorporation is a one-page document. An IP assignment negotiated after a seed round, when the founder holds leverage, is a transaction with commercial consequences. Employment contracts drafted at hire are standard procedure. Reclassifying a contractor as an employee after 18 months involves back-payments of social contributions, personal income tax, and potential fines.

We work with startups at the point where legal work is most cost-effective — before the company is under commercial pressure, investor scrutiny, or employment dispute. The legal documents we prepare in the first weeks of a company’s existence are the ones that determine how cleanly it scales, how smoothly it raises capital, and how it handles the inevitable complications that come with growth.

Legal Services We Provide for Startups

Our startup legal services are organised around the documents and structures that matter most at each stage of the company’s development. Below is a full breakdown of each service area.

Shareholder Agreements
A shareholder agreement is the contract between the founders of a company — defining how ownership is structured, how decisions are made, what happens when a founder leaves, and how disputes are resolved. It is the single most important legal document a multi-founder startup can have, and the one most commonly skipped at incorporation because the founders trust each other. That trust is not the problem. The absence of a documented framework for when trust breaks down is.

Founder share structure — class of shares, ownership percentages, and any preference provisions
Vesting schedules — standard 4-year vesting with 1-year cliff, or customised to your situation
Good leaver / bad leaver provisions — what happens to unvested shares when a founder exits
Transfer restrictions — pre-emption rights, tag-along and drag-along rights, consent requirements
Reserved matters — decisions that require unanimous shareholder approval rather than a majority
Non-compete and non-solicitation provisions — scope, duration, and enforceability under Lithuanian law
Deadlock resolution — what happens when 50/50 shareholders cannot agree on a reserved matter
Dividend policy — how and when profits are distributed

Without a shareholder agreement

In the absence of a shareholder agreement, the Lithuanian Law on Companies governs all shareholder decisions. It sets a 50% threshold for ordinary resolutions and a 75% threshold for major decisions. For a 50/50 company, every ordinary decision requires both shareholders to agree — and every major decision also requires both. There is no deadlock mechanism, no forced exit mechanism, and no vesting mechanism. The law was not written for startups. A shareholder agreement fills the gaps.

IP Assignment Agreements
Intellectual property is the primary asset of most startups — code, design, algorithms, brand, content, and data. Owning that IP correctly is not automatic. Code written by a founder before the company is incorporated is legally owned by that founder as an individual. Work done by a contractor is owned by the contractor unless explicitly assigned. Getting the IP chain right from the start is one of the highest-value legal actions a startup can take — and one of the lowest-cost when done at the right time.

Pre-incorporation IP assignment — assigning founder-created IP to the company at registration
Contractor IP assignment agreements — ensuring all work commissioned from freelancers belongs to the company
Employee IP clauses — correctly worded IP assignment provisions in employment contracts
Work-for-hire agreements — for specific development projects with external agencies or developers
IP ownership audit — reviewing the chain of ownership for existing IP and identifying any gaps
Software development agreements — with clear IP ownership, acceptance criteria, and warranty terms
Open source compliance — identifying open source licences in your codebase and assessing compliance obligations

Lithuanian law on employee IP

Under the Lithuanian Law on Copyright, work created by an employee in the course of their employment belongs to the employer — provided the employment contract or a separate written agreement specifies this. The key phrase is ‘in the course of employment’ — work created outside working hours, on personal equipment, and outside the scope of the employee’s role is not automatically owned by the employer. A well-drafted employment contract with a clear IP scope clause removes this ambiguity entirely.

Employment Contracts
Lithuanian employment law is governed by the Labour Code (Darbo kodeksas), which sets mandatory minimum terms that apply to every employment relationship regardless of what the contract says. Non-compliant contracts default to the statutory minimum — which is almost always more favourable to the employee than what the parties intended. We draft employment contracts that are fully compliant, clearly structured, and written to protect the company’s legitimate interests within the boundaries the law permits.

Standard employment contracts — indefinite and fixed-term, in English and Lithuanian
Probationary period provisions — up to 3 months for standard employees; 6 months for senior roles
IP assignment clauses — correctly scoped to cover work done in the employee’s role
Confidentiality and non-disclosure provisions — enforceable under Lithuanian law
Non-compete clauses — drafted within the statutory limits (up to 2 years; reasonable geographic scope; compensation required)
Remote work arrangements — for Lithuanian employees working from outside the company’s premises
Part-time and flexible working contracts — including job sharing and project-based arrangements
Director service agreements — for company directors receiving remuneration from the company

Non-compete enforceability in Lithuania

Lithuanian Labour Code permits non-compete clauses in employment contracts, subject to specific conditions: the clause must be time-limited (maximum 2 years after termination), geographically reasonable, and — critically — the employer must pay compensation to the employee during the non-compete period, at minimum 40% of the employee’s average monthly salary. Non-compete clauses that do not include compensation are unenforceable. We draft non-compete provisions that are enforceable and commercially proportionate.

Contractor and Freelancer Agreements
The boundary between an employee and an independent contractor is defined by the substance of the working relationship — not by what the contract is called. Lithuanian labour inspectors and VMI apply a multi-factor test to assess whether a contractor arrangement is genuinely independent or is, in substance, employment. The consequences of misclassification are significant: retrospective social contributions, personal income tax, and fines calculated from the start of the relationship. We draft contractor agreements that reflect genuine independent contractor relationships and advise on whether your specific arrangement passes the classification test.

Independent contractor agreements — clearly establishing the non-employment nature of the relationship
IP assignment provisions — ensuring all deliverables belong to the company
Scope of work definitions — specific deliverables, timelines, and acceptance criteria
Confidentiality and non-disclosure obligations
Payment terms and invoicing requirements — including VAT treatment for Lithuanian and foreign contractors
Termination provisions — notice periods, deliverable acceptance, and handover obligations
Contractor classification assessment — advising whether your specific arrangement is genuinely non-employment

Commercial Contracts and Client Agreements
Every commercial relationship your startup enters should be governed by a written agreement that reflects Lithuanian law and protects your interests. General terms of service are not a substitute for a properly drafted contract with a significant client or supplier. We prepare the contract templates and specific agreements that a startup needs to operate commercially — drafted for enforceability, not just for appearance.

SaaS subscription agreements — governing access to software on a subscription basis, including SLA, data terms, and liability caps
Service agreements — for professional services delivered to business clients
Non-disclosure agreements (NDAs) — mutual and one-way, for commercial discussions and partnerships
Software development agreements — for commissioning development work from external providers
Reseller and distribution agreements — for startups building indirect sales channels
Partnership and collaboration agreements — defining joint activities, revenue sharing, and IP ownership
Terms and conditions and privacy policies — GDPR-compliant, enforceable consumer-facing documentation
Letter of intent and heads of terms — for commercial negotiations before final contracts are signed

Investment Documentation and Round Preparation
Preparing for external investment — whether angel, seed, or institutional — requires your legal house to be in order before due diligence begins. Investors examine corporate structure, IP ownership, employment arrangements, existing contracts, and financial records. Gaps, inconsistencies, or missing documents found during due diligence slow the process, reduce valuation, or become conditions attached to closing. We prepare startups for investment by reviewing the legal documentation, identifying and filling gaps, and preparing the investment round documents.

Pre-investment legal audit — reviewing corporate documents, IP, employment, and contracts for investor-readiness
Cap table clean-up — ensuring the share register accurately reflects current ownership
Term sheet review — identifying founder-unfriendly provisions before negotiation closes
Shareholders’ agreement amendment — updating founder agreements to accommodate investor rights
Investment agreement review — subscription agreements, SHA, and any ancillary transaction documents
Convertible note and SAFE agreements — for pre-seed and angel round financing instruments
Data room preparation — organising and structuring the legal documents investors will review
Condition precedent management — tracking and satisfying the legal conditions attached to investment closing

What investors find most often

The three legal issues most commonly found by investors in startup due diligence are: (1) IP not assigned to the company — code or designs owned by founders personally; (2) no shareholder agreement or an agreement that is inconsistent with the current cap table; and (3) employment arrangements that may be misclassified as contractor relationships. All three are straightforward to fix before due diligence begins. All three are more complex and more expensive to fix once investors are at the table.

Legal Documents by Growth Stage

The legal documents a startup needs change as the company grows. The table below maps the key legal documents to the stage of the company at which they become most relevant — and most cost-effective to prepare.

Pre-incorporation
Before you register

The structural decisions made before the company is registered determine the legal framework for everything that follows.

→ Entity selection advice — UAB vs. other structures; whether a holding layer is needed
→ Founder share structure design — class of shares, vesting schedule, good/bad leaver framework
→ IP ownership plan — identifying what IP exists and how it will be assigned to the company
→ Co-founder alignment — ensuring all founders understand and agree on the governance framework before registration

Incorporation
Day 1–30

Immediately after registration, the foundational legal documents must be in place before any commercial activity begins.

→ Shareholder agreement — between all founding shareholders
→ IP assignment agreements — assigning pre-incorporation IP from founders to the company
→ Director service agreement — governing the director’s relationship with the company
→ First employment contracts — for any immediate hires, including the founders if taking salaries
→ NDA template — for early commercial discussions with potential clients and partners

Early operations
Month 1–12

As the company begins trading, client agreements, contractor arrangements, and IP protections become active priorities.

→ Client contract template — governing the company’s commercial relationships with paying customers
→ Contractor agreements — for freelancers, agencies, and external developers
→ Terms of service and privacy policy — for any product or service delivered to end users
→ GDPR documentation — privacy policy, data processing agreements, records of processing
→ Software licensing agreements — if the company is licensing third-party software or data

Pre-investment
Before round closes

Before investors conduct due diligence, the legal documentation must be reviewed and any gaps filled.

→ Pre-investment legal audit — reviewing all existing documents for investor-readiness
→ Cap table verification — confirming the share register matches the intended ownership structure
→ Employment and contractor review — confirming all arrangements are correctly documented
→ IP ownership verification — confirming clean chain of ownership for all company IP
→ Data room organisation — structuring legal documents for investor review

Investment round
During and after

Active round — term sheets, investment agreements, and the documents that govern the investor relationship.

→ Term sheet review and negotiation support
→ Investment agreement and SHA review — subscription agreement, shareholders’ agreement
→ Option pool establishment — ESOP or VSOP structure and grant documentation
→ Board structure documentation — observer rights, information rights, board composition
→ Condition precedent management — ensuring closing conditions are satisfied on time

With and Without Proper Legal Documentation

The practical difference between a legally well-prepared startup and one that deferred legal work becomes visible at specific moments: when a co-founder leaves, when an investor conducts due diligence, when a key employee is terminated, or when a client dispute escalates. The table below sets out what each situation looks like depending on whether the legal foundations are in place.

Situation	With proper legal documentation	Without proper legal documentation
Co-founder leaves at 18 months	Vesting schedule kicks in. Unvested shares return to the pool per the SHA. Clean exit.	No SHA. Departing founder retains 100% of shares. Company and remaining founders have no recourse.
Investor conducts due diligence	Clean data room. IP assigned. Contracts in order. Due diligence closes in 2 weeks.	IP gaps found. Missing employment contracts. SHA inconsistent with cap table. Round delayed or conditions added.
Key employee terminated	Notice period and termination procedure followed. Non-compete applies with statutory compensation.	Improper termination procedure. Non-compete unenforceable. Risk of unfair dismissal claim.
Contractor claims ownership of code	IP assignment agreement signed at engagement. Company has clear written ownership.	No IP assignment. Contractor has a credible ownership claim. Negotiation under duress.
Client refuses to pay	Written contract with clear payment terms and dispute resolution clause. Legal action viable.	Oral agreement or email chain. Unclear terms. Expensive to pursue. Likely written off.
Acquirer conducts M&A due diligence	All documents in order. Transaction proceeds to agreed timeline.	Structural issues require remediation. Transaction delayed. Price adjusted downward.

How We Work with Startup Clients

Startup legal work moves at startup speed. We do not bill by the hour, do not require minimum retainer commitments, and do not make founders wait two weeks for a standard NDA. Our engagement model is designed around the reality of how early-stage companies operate.

Our working model

Fixed fees on every engagement — quoted before we start
Response within 24 business hours on all instructions
English-language documents throughout
Lithuanian versions provided for any required statutory filing
No minimum retainer or minimum spend requirements
Engaged per document or on an ongoing advisory basis — your choice
One legal contact who knows your company’s full structure

What we do not do

Bill by the hour for standard startup documents
Charge for email correspondence or routine questions
Require a retainer before accepting an instruction
Use generic templates without tailoring to your situation
Produce Lithuanian-only documents without English translation
Take weeks to deliver a standard NDA or employment contract

Frequently Asked Questions

No — a shareholder agreement is a contract between multiple shareholders. A sole-founder startup does not need one. What a sole founder does need is a director service agreement (governing the founder’s relationship with the company as director, including remuneration and IP ownership), and clearly documented IP assignment agreements for any IP brought into the company at incorporation or created by contractors. If additional co-founders or investors join later, a shareholder agreement should be prepared at that point before they receive shares.

For the lowest-stakes documents — a basic NDA for a routine commercial discussion, for example — a well-drafted template may be adequate. For the documents that actually matter — shareholder agreements, employment contracts with IP clauses, investment round documents — generic templates carry real risk. A shareholder agreement drafted for English law does not work under Lithuanian law. An employment contract that does not include the mandatory Labour Code provisions is unenforceable in its non-compliant parts. IP assignment clauses drafted without understanding Lithuanian copyright law may not achieve the intended transfer. We prepare documents for Lithuanian law specifically, in English, at fixed fees that are competitive with the cost of fixing template-based problems later.

A standard shareholder agreement for a two or three-founder startup, with standard vesting, transfer restrictions, reserved matters, and deadlock provisions, takes 3–5 business days from instruction to first draft. Reviewing and negotiating the draft with the founders typically adds another 2–5 business days depending on how many issues require discussion. The total timeline from instruction to signed agreement is typically 1–2 weeks.

Lithuanian law requires the employment contract to be accessible to the employee. In practice, this means the contract must be in a language the employee understands. For Lithuanian employees, a Lithuanian version is required. For foreign employees who do not speak Lithuanian, an English version is sufficient, provided the employee acknowledges they understand the contract. We provide employment contracts in English as the primary document and in Lithuanian where required — ensuring both the company and the employee have a version they can rely on.

Vesting is a mechanism by which a co-founder earns their shares over time rather than owning them outright from day one. A typical vesting schedule is four years with a one-year cliff — meaning a founder who leaves before 12 months receives no shares, and a founder who stays earns shares monthly over the remaining three years. Vesting protects the company and the remaining founders against a scenario where an early-departing co-founder retains a large ownership stake. Lithuanian company law does not include vesting as a default mechanism — it must be explicitly built into the shareholder agreement using share buy-back rights or conditional transfer provisions.

A SAFE (Simple Agreement for Future Equity) is a US investment instrument developed by Y Combinator that gives an investor the right to receive equity in a future financing round, in exchange for immediate capital. It is not a Lithuanian legal instrument — it is a contractual arrangement that can be adapted for use in Lithuanian companies, but the legal mechanics work differently from a US context. We advise on the most appropriate pre-seed financing instrument for Lithuanian startups — including convertible notes, SAFEs adapted for Lithuanian law, and simple forward subscription agreements — based on the investor’s expectations and the company’s structure.

Any Lithuanian company that processes personal data of EU users — which includes virtually every startup with a website, app, or customer database — needs at minimum: a privacy policy (published on the website or app), a cookie policy (if the website uses cookies), records of processing activities (an internal document), a data breach notification procedure, and data processing agreements with any third-party processors (e.g., cloud providers, analytics tools). For SaaS companies that sell to business clients, the terms of service must include a data processing agreement (DPA) as an exhibit. We prepare the full GDPR documentation package at a fixed fee.

The best time to establish an option pool is before the company has significant value — and before the first external investment round. Once investors arrive, the option pool is typically established or expanded as part of the investment terms, and the dilution is shared between existing shareholders. Establishing an ESOP before investment means the pool comes from the founders’ shares rather than from a post-investment dilution that affects both founders and investors. We advise on option pool sizing and ESOP structure as part of our pre-investment legal service.

Ready to get your legal foundations in place?

Contact us to discuss your startup’s current stage and the documents you need. We will confirm what is most urgent, provide fixed-fee quotes, and begin drafting within 24 hours of your instruction. No retainer required — we work on a per-engagement basis until you decide you want ongoing legal support.