
A Challenge To Startup Lawyers - Straubiz
http://www.avc.com/a_vc/2011/03/a-challenge-to-startup-lawyers.html
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fourply
I'm a "startup lawyer" in a different sense - I am a sole practitioner in the
worst legal job market in our country's history that has been forced to get
out there and find my way without a map. It's tough, but just like any other
startup you get out of it what you put in - hard work in school and hard work
on the ground have put me in a position where I can get by and probably pay my
student loans off in 30 years or so.

Let me say that again. I will probably be able to pay my student loans off in
30 years or so. I have an LL.M. in tax and am hustling for every dime I can
get.

The lawyers you're working with in a transaction like this are doubtless
badasses. They work for a big firm, in a tall shiny building, with sexy
secretaries and bookish paralegals. They have continuously updated libraries,
and conference rooms, and expensive subscriptions to LexisNexis and Westlaw.
They wear $1000 suits and fly to meetings on a private jet. These things cost
money... lots of it.

As a VC investing in startups, you know you have the choice in which companies
you trust. The same can be said for attorneys. If you choose flash over
substance, you're going to end up paying big bucks every time.

Should it cost $17,000 for a transaction that probably didn't take more than a
few hours of an attorney's time? Nope. Whose fault is it that it did? As with
any product, the lawyers you've selected are charging what the market will
bear and billing you what they know you'll pay.

Spend some time finding an attorney that you can trust that cares more about
doing quality work than a fancy office. In NYC, there are some really amazing
LL.M. programs - find a recent grad from a tax program. They're certainly able
to put together a 'standard' deal and incorporation, and are better equipped
to help a startup plan intelligently anyway. They'd be thrilled to have the
business and the experience, and you'd get much better service at a reasonable
price.

And if you ever decide to invest in an Indiana company.... look me up.

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fredwilson
i don't entirely agree fourply. there are benefits that come from working with
startup lawyers who are part of the "system". they can help a young company in
many ways. but they need to figure out how to work more efficiently at the
startup phase.

~~~
fourply
I'm certain that's right - someone unfamiliar with the process will have to
invest more time with the first few clients and might stumble a bit at first,
but not in ways that would prejudice anyone's interests. The networking
advantages a "connected" lawyer can provide to a startup are huge, but a VC
like yourself could bring a new lawyer into that world if you wanted to invest
the time. I think that investment could pay as many or more dividends than
your cash injections to new tech companies.

I don't see the excessive billing as a matter of efficiency, but then again
I'm not seeing the billable hour statements you get. I see it as a symptom of
the bloat that has created a huge crash in the legal marketplace, but I may be
wrong.

I think you have the power to create the change you're looking for, perhaps
just by starting this dialogue - but I know you could do it by finding a young
lawyer to engage with personally as well.

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jmm
I like this retort, fourply. Fred is basically complaining into the void here
if he's not willing to put real pressure on the shiny law firms by considering
going elsewhere if they don't shape up. Kinda weird actually that he showed
his hand here...

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thinkcomp
Over the past few years I've come to the conclusion that the vast majority of
law firms actually commit legitimized fraud on a daily basis. There are a few
honest lawyers who actually take pride in their work (but who probably still
charge more than their time is really worth), but there are many, many lawyers
who are simply well-dressed scam artists.

New company documents should cost $0. Each VC firm should purchase the rights
to the document templates up-front (or hire a general counsel full-time and
draft their own!) and use them again and again.

Would this put a lot of lawyers out of work? Yes. Do they have loans to pay?
Probably. Is that your problem as an entrepreneur or a VC? No.

Maybe this kind of system would encourage Americans to actually build things,
instead of going to law school.

I actually feel so strongly about this that I'd be willing to contribute my
knowledge (mostly in the trademark realm) to a group of pro bono non-lawyer
entrepreneurs who have dealt with all of this stuff before. There's a lot you
can do without actually being a lawyer. I even have a name and domain picked
out for the group. Feel free to get in touch if you're interested.

~~~
kovar
To that end, a VC friend of mine pointed me to this collection of legal and
funding documents for startups -

[http://www.orrick.com/practices/corporate/emergingCompanies/...](http://www.orrick.com/practices/corporate/emergingCompanies/startup/index.asp)

I've used Nolo Press to set up several companies and non-profits. You really
can do it yourself, at least for the simple organizations. And templates, such
as the above, help with the more complex cases.

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j2d2j2d2
Brooklyn Law Incubator & Policy Clinic (BLIP) offers a full-service, pro bono
law firm for NYC tech startups and policy initiatives.

* [http://www.brooklaw.edu/academics/clinicalprogram/theblipcln...](http://www.brooklaw.edu/academics/clinicalprogram/theblipclnic.aspx)

~~~
fourply
now you're talking.

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AndrewJones12
I was privy to several buy-sell transactions and it certainly seemed to me
that attorneys regularly use "shelf" documents to frame the deal and have
their legal secretary just change the names of the entities from past
transactions and then tweak a few clauses. Lots of work on the schedules but
just drafting deal documents should not cost $15K. I even had one lawyer
comment when sent an asset purchase agreement that he was the original drafter
of the document several years previously. He literally said,"Hey that's my
APA".

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bfe
I do the majority of my legal work for Fortune 100 companies, and do some work
with tech startups, which I approach very differently than any other work: a
lot of the time and effort I spend on them, probably the majority, I don't
bill for. I just consider that part of the deal, knowing they need a lot more
time and basic advice and have very little budget. I consider it part of the
trade-off for establishing a relationship with a new client that might really
grow and turn into a steady new source of business, though that's not usually
the case; but aside from that, it's made up for by the unique excitement of
working with a startup

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joshuaheard
Legal fees are negotiable. Next time ask them to do it for a flat fee of
$5,000!

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dclaysmith
Question for YC folk, it says in the application "After you're accepted, we'll
immediately get to work helping you set up your company, if it isn't already."

What does this cost or do you provide it as part of the package?

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jnovek
We didn't pay a dime for any of the legal help that YC gave us.

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dave1619
I'm looking for a good and reasonably-priced lawyer in the San Diego area to
help us with software IP for a startup.

