Many of my readers have seen my “Five-minute General Counsel” blog post series.
The idea is to give readers an informed opinion that, while not specific to their situation, highlights some of the major issues involved in various decisions, such as whether to form an LLC or corporation for your tech startup. (Hint: read this first.)
What is free advice all about?
To some, these posts look like free advice, which makes no sense for a lawyer who gets paid for giving advice. But that’s only half-right at most. From the lawyer’s perspective, only specific advice is worthwhile — after all, you can learn lots of general stuff about incorporation, venture financing documents, and even (although rarely) about venture math from lawyers, VCs, and entrepreneurs (who are now VCs).
What I tell prospective clients is this: you need advice that is competent, focused, reliable, and dedicated. These other writers all fall short on one or more of these factors, and even my own posts have the fault, necessary though it may be, of not being specific to your exact situation. Even something as otherwise “standard” as the Delaware C-corp will not apply to certain tech startups depending on the business model, the resources available to the founders, and even the actual nature of the underlying business. Could I lay out some examples here? Sure, but even then you wouldn’t necessarily be sure that your situation fell within the general guidelines. And you wouldn’t know whether there is some other fact in your situation that would change everything, like a substantial spendthrift trust for your living expenses. Trust me: no VC is worried about that issue from your perspective.
If I can’t ever get “real” advice, am I wasting my time?
So why do I write if I’m ultimately doomed to fail by my own standards? Well, first, I think there’s no harm in having high standards. Second, my real goal isn’t, and can’t be, to give you THE answer. Third, what I can do is tell you most of the questions, point you to many of the factors, and most importantly, show you how I approach the issues and structure my advice.
Because what you need, what you come to me for, is trusted advice. I show you that I’m trustworthy by showing (not telling) you that I know what I’m talking about and by giving you lots of evidence of my mindset so that you can see what sort of service, experience, and advice you’re getting.
And that makes a difference for different types of work: putting a typical venture deal together requires a classic Silicon Valley approach: focus on the high payoff terms, put everything else within the zone of reason, and get the parties moving forward; on the other hand, negotiating debt with strict operating covenants and a gulp personal guarantee requires a classic New York City approach: no stone unturned, every phrase — representation, covenant, and condition — examined and pushed in your direction.
Please share any examples of when you got the “wrong” type of lawyer for work you needed. What do you expect from a lawyer — what’s just the price of admission and what closes the deal?