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TAG: Lawyers

295
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Lawyers

TheFunded.com Advice

Posted by blackfish on 2007-06-22

Tags: TheFunded.com Lawyers

PUBLIC:

The Funded should create a section of the site dedicated to which venture lawyers to use and which to avoid. As the company is paying for both their counsel and the VC's counsel, it would be nice to have a resource to find out what you're in for.

[Comment from TheFunded.com] Not a bad idea. If we get over 50 agreements with this post, we will work to add such a section. [End Comment]

PRIVATE: Members Only (309 Characters)

25
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0
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Industry Standard

TheFunded.com Advice

Posted by Anonymous on 2007-05-03

Tags: Negotiation Terms Lawyers

PUBLIC:

When you hear the comment that this term sheet / shareholder agreement is an industry standard you should be very cautious. There are no standards. The phrase means that there are clauses that even the VC feels a bit uncomfortable presenting (or don't think that you will approve them).

PRIVATE: Members Only (155 Characters)

11
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1
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Avoid an Llc for VC

TheFunded.com Advice

Posted by Anonymous on 2007-12-05

Tags: Preparation Corporate Structure Lawyers

PUBLIC:

I feel like I have been suckered into starting LLC's by law firms over and over again, and here is what happens every time: (1) it costs twice as much to get all of the papers done, (2) we start growing and need to layer in complex partnership concepts for the equivalent of employee options, (3) we have to convert to a C Corporation to take any real external financing, and (4) the conversion costs twice as much as you expect since you need to transform a convoluted partnership structure into an equity structure.

Using an LLC structure for a fast growing start-up seems like a trick play to generate ten or twenty times the legal fees. My next company is going to be a corporation, starting with an S corp for preferential tax treatment and migrating to a C corp when the business starts to scale. Any other thoughts on this strategy are welcomed in the feedback.

PRIVATE: Members Only

7
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Start Up Attorney: Getting It Right From the Start

TheFunded.com Discussion

Posted by Anonymous on 2008-08-15

Tags: Preparation Lawyers

7
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0
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Venture Legal: a Conflict of Interest and a Complicated Mess

TheFunded.com Advice

Posted by Anonymous on 2007-12-23

Tags: Preparation Lawyers

PUBLIC:

With the average venture closing costing more than $50,000 and with the bills being paid for all parties by the investors, there appears to be a conflict of interest. AND, there is. A number of my entrepreneur friends have commented how they feel under-represented when it comes to the many issues relating to a closing. A common complaint is that their lawyers cave on important yet small issues that come back to haunt them months or years later. So, what is actually going on"

First, it's important to keep in mind that any competent venture lawyer makes a lot more from venture capitalists than from any one company, especially in the early stages. If a venture lawyer really fought for your interests, they would risk being blackballed by VCs from doing other venture deals. Imagine a VC saying that will not work with your lawyer. What would you do" Fire them, of course. Hmmm. Second, there is always a rush to get the deal done these days after a cumbersome diligence process, which forces the company to compromise. Lastly, every point that you fight as a company costs you double, since the bill for everyone comes out of the fundraising proceeds. It's like losing a full time employee, a marketing campaign, and nicer offices to make the terms reasonable. Ouch!

The best you can do as an entrepreneur is to come to the table prepared with your eyes open, and this takes a decent amount of tedious research BEFORE you get your first terms. Terms that appear harmless on paper, like a mandatory cumulative dividend, can eat away at your returns as a founder and make your life much more complicated as you do later rounds. You need to know what the terms mean in good times and in bad, and you need to be prepared to lead the fight directly during the term sheet negotiation. Don't rely on your advisors, as that is a craps shoot.

Fortunately, there are resources to help. The best overview that I have found is a tediously long document by the law firm of Fenwick and West, outlining all of the terms, sample outcomes, historical data, and even sample term sheets. Here is a link to the 70-add page document:

Basics_of_Early_Stage_Legal_Issues_-_Guide_for_Entrepreneurs

For a quick primer, you can take a look at an article from VenutreHacks below:

http://www.venturehacks.com/articles/...

It is far too common for entrepreneurs, whether they are seasoned or inexperienced, to get nailed by some unexpected term. It's the unbridled optimism that nails the seasoned guys, thinking that they can beat the 3x clearing for participation, for example. I certainly have been nailed. Does any other Members have some resources or opinions to share"

PRIVATE: Members Only

5
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Attorney's and Start Ups

TheFunded.com Discussion

Posted by Anonymous on 2009-01-13

Tags: Preparation Lawyers

3
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0
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In Demand: Free Early Stage Start Up Legal Library

TheFunded.com Advice

Posted by KipMcC on 2009-08-28

Tags: Operations Lawyers NDA Legal Incorporating Agreements

PUBLIC:

The next time you talk to your law firm, let them know they should pioneer (be the first, take credit) the following concept:

Early-stage, cash-efficient start-ups increasingly require an equally efficient supply chain in order to make it work. Take for example Capital Factory, Y-combinator or even micro-style investments from more traditional VCs. A start-up raising $20k – $250k simply cant afford traditional legal costs associated with:

* incorporating,
* equity and option plans,
* option grants,
* convertible debt agreements,
* all docs associated with being INITIALLY funded (term sheets, standardized series-A docs),
* NDAs,
* separation agreements and release paperwork,
* contractor agreements, and so on.

I propose the following: forward-thinking law firms should create a FREE legal library that includes AT LEAST the items listed above. The should GIVE this library to start-ups that agree to become clients after a funding event of a particular size…maybe $250k or more. To be clear: I’m suggesting that law firms loss-lead with this free legal library and win clients that may become the next Google (or, realistically, may also go out of business). It’s time for the supply chain to evolve. we're starting to see some standardization of termsheets...now let's continue the thought.

http://kipmcc.wordpress.com/

PRIVATE: Members Only

3
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3
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Have a Lawyer That's a Friend

TheFunded.com Advice

Posted by RichieBlueEyes on 2007-12-14

Tags: Preparation Lawyers Friends

PUBLIC:

Lawyers are great - when they are on your side. They are horrible when you are just a toad in their collection of clients. Find an honest lawyer and become friends. You need someone on your side. At the end of the day, the term sheet will come down to negotiation, I would rather have a shark of a lawyer who has my interest at heart negotiating the terms then me. Why" He can get away with being an ass and I can't. Pretty simple, eh"

PRIVATE: Members Only (288 Characters)

2
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Legal and Tax Implications of Founders' Equity Splits

TheFunded.com Advice

Posted by fnazeeri on 2009-04-06

Tags: Operations Lawyers Taxes

PUBLIC:

Great post from Prof. Noam Wasserman at HBS on the legal and tax issues of splitting equity.

PRIVATE: Members Only

2
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Close Quicker with a Smaller Cap on Legal Fees

TheFunded.com Advice

Posted by Anonymous on 2008-09-07

Tags: Closing Strategy Lawyers

PUBLIC:

By diligently negotiating the cap on investor legal fees, you will dramatically accelerate both the diligence and the closing timeline. Most investors will easily agree to a cap of $25,000 to $50,000, and you can be sure that all of this money (and time) get chewed through on both sides. Factoring in your own legal costs, you could be looking at a $50,000 to $100,000 deal that takes between two and four months to close.

However, negotiate hard when you get a term sheet to cap the investor legal expenses at $10,000. With fees at this level, all of the work needs to go into drafting documents versus negotiating detailed terms. The lawyers themselves will feel pressure to close faster, rather than work endlessly to reach the agreed cap level. All in all, you will be looking at a cleaner deal that closes in two weeks to one month.

PRIVATE: Members Only

2
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Venture Lawyers in Central Florida" (Orlando)

TheFunded.com Discussion

Posted by Anonymous on 2008-07-16

Tags: Preparation Lawyers

2
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0
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Which Lawyer and Bookkeeper to Pick in the Valley?

TheFunded.com Discussion

Posted by Anonymous on 2008-05-14

Tags: Preparation Lawyers Accountants

1
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0
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Experience with Law Pivot.Com

TheFunded.com Discussion

Posted by Anonymous on 2011-02-17

Tags: Legal Lawyers

1
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0
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Can You Recommend an Attorney Specializing in Healthcare Service?

TheFunded.com Discussion

Posted by Anonymous on 2009-01-09

Tags: Operations Lawyers Healthcare Regulations

1
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0
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Legal Hacks for Zero Cost Services?

TheFunded.com Discussion

Posted by Anonymous on 2009-01-04

Tags: Operations Lawyers

1
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0
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Sv Law Firms Without Conflict?

TheFunded.com Discussion

Posted by Anonymous on 2008-10-30

Tags: Preparation Lawyers

1
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0
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Anyone Ever Capped Your Counsel's Legal Fees in a Financing Round?

TheFunded.com Discussion

Posted by Anonymous on 2008-08-18

Tags: Negotiation Lawyers Fees Capilization

1
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0
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Startup Lawyers?

TheFunded.com Discussion

Posted by Anonymous on 2008-08-10

Tags: Preparation Lawyers

0
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0
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Ip Lawyers and Ethics

TheFunded.com Discussion

Posted by Anonymous on 2011-07-29

Tags: Lawyers IP

0
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0
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Do Top 5 Law Firms Unethically Collect Proprietary Information?

TheFunded.com Discussion

Posted by Anonymous on 2011-04-14

Tags: Lawyers

0
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0
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Lawyer Engagement Letter Key Items?

TheFunded.com Discussion

Posted by Anonymous on 2011-02-15

Tags: Lawyers

0
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0
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Need Recommendations for Founder Friendly Lawyers

TheFunded.com Discussion

Posted by Anonymous on 2010-06-02

Tags: Operations Recommendations Lawyers

0
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0
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Need Pointers to Good Startup Law Firm

TheFunded.com Discussion

Posted by Anonymous on 2009-09-23

Tags: Operations Lawyers Rates

0
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0
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Good Trademark Agent in Sf Bay Area?

TheFunded.com Discussion

Posted by Anonymous on 2009-07-09

Tags: Operations Trademarks Lawyers

0
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0
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How Much Equity to Give an Attorney in a Startup ?

TheFunded.com Discussion

Posted by Anonymous on 2009-06-22

Tags: Operations Lawyers Equity