Posted by RichieBlueEyes on 2007-12-14
Tags: Preparation Lawyers Friends
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)
Posted by Anonymous on 2009-01-13
Tags: Preparation Lawyers
Posted by Anonymous on 2008-12-17
Tags: Preparation Lawyers Fees
Posted by Anonymous on 2008-09-07
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
Posted by Anonymous on 2007-12-05
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
Posted by Anonymous on 2011-07-29
Posted by Anonymous on 2011-04-14
Posted by Anonymous on 2011-02-17
Posted by Anonymous on 2011-02-15
Posted by Anonymous on 2010-06-02
Tags: Operations Recommendations Lawyers
Posted by Anonymous on 2009-09-23
Tags: Operations Lawyers Rates
Posted by KipMcC on 2009-08-28
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:
* equity and option plans,
* option grants,
* convertible debt agreements,
* all docs associated with being INITIALLY funded (term sheets, standardized series-A docs),
* 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.
Posted by Anonymous on 2009-07-09
Tags: Operations Trademarks Lawyers
Posted by Anonymous on 2009-06-22
Tags: Operations Lawyers Equity
Posted by Anonymous on 2009-06-13
Tags: Operations Lawyers
Posted by fnazeeri on 2009-04-06
Tags: Operations Lawyers Taxes
Great post from Prof. Noam Wasserman at HBS on the legal and tax issues of splitting equity.PRIVATE: Members Only
Posted by RichieBlueEyes on 2009-03-28
Tags: Operations Lawyers
This is a repost from a blog that is going live on Monday morning on Bootstrapper.com, I figured I would post it here first...
So today's post is about a topic near and to everyone in our community, The "inlaws". By that I mean the inherent conflict of interest that tends to occur within the legal community in relation to the venture community. I've gotten to know a number of lawyers in the community quite well over the last few years and have a lot of respect for them and are friends with a number of lawyers, however it is a small community and an interesting thing that occurs is that the same law firm can and often does represent both sides in a transaction (either directly or indirectly). What do I mean? Well, a law firm can represent a fund in one deal and the entrepreneur in another and both be going on simultaneously. It creates a confusing situation.
Outside of the venture sphere, the situation could be seen as a conflict of interest but given our world, it is standard practice. Often times the lawyer may be the one that introduced the company to the investor which is great for both parties but further complicates the question of representation.
The founding member of The Funded always likes to say that the lawyers work for the fund not for you and that the second $ is closed, it is no longer your counsel.
Given that the fund represents (generally) infinitely more business than a single entrepreneur, there is a point in there. On a technical level corporate counsel represent the controlling shareholder or bloc of shareholders but on a practical level it's something to think about.
Overall, it's usually good to have a venture law firm for your company because they do tend to know how to raise money and the process, however it may make sense to have a personal counsel review everything for how it looks from your perspective as the entrepreneur because you want someone looking at your docs that is representing you personally, not your company.
To conclude: Cover Your Ass no matter what you do - I've been screwed out of vesting and know many entrepreneurs who have as well. Protect yourself and make sure you have protections in place.PRIVATE: Members Only