After spending a considerable amount of time scouring the scene for startup-oriented law firms in New York City, I think I’ve picked up some solid intel for fellow founders.
- There’s A LOT of lawyers/firms out there marketing themselves as “startup saavy.” Most of these people are full of shit. The NYC startup scene is booming and Wall Street is contracting. Hence, lots of lawyers are re-focusing their efforts towards nascent startups. This does not mean they know what they’re talking about. BUYER BEWARE.
- Read Chris Dixon & Fred Wilson’s blog posts on how much legal fees should run in first round financing. Answer: $10k max. Drill this into your head, then drill it into your lawyer’s head. Print out both posts and take them to whatever lawyer you hire. Great negotiating tactic. Hard to argue w Fred Wilson. BONUS: Capture the look on their faces when you bust out the printouts with that “$10k” figure underlined/circled/highlighted. Priceless.
- While my search was not exhaustive, I did talk to a lot of firms. Based on my search, there’s only 3 firms in NYC I’d recommend…
Wilson Sonsini––talk to Selim Day firstname.lastname@example.org
Gunderson Dettmer––talk to Steve Baglio email@example.com
Buhler Miles––talk to Heather Miles firstname.lastname@example.org (ex- Gunderson, super-friendly and cheap!)
UPDATE: Heather’s practice has been acquired by Wilson Sonsini. You can now email her at email@example.com. See I told you she was awesome.
- One firm to avoid: Lowenstein Sandler. They had come to me highly recommended and had some seemingly strong credentials. However, when we talked, they wanted to charge me $20-60k for a first round financing and then told me I absolutely, positively could not me raise $$ from non-“accredited” investors. Nice guys, but #FAIL (There are legit reasons for why you’d want to avoid/limit avoid non-accredited investors, but the blanket prohibition is stupid––this was from a senior parner, btw, not an associate.)
- As a general rule, assume that most firms in NYC are totally fucking clueless when it comes to startups. DO NOT ASSUME COMPETENCE. Be skeptical. This is not the West Coast. As one lawyer told me (who we subsequently hired): it’s a difference in mindset––Risk Mitigation (East Coast) versus Wealth Maximization (West Coast). You want a lawyer and a firm whose focus is the latter, not the former.
- Many lawyers will ask for a piece of equity in return for deferring fees: JUST SAY NO. Or you can say be polite: “Sure, how much $$$ would you like to invest? I’d love your support!”
- Remember, people will expect you to be the stupid, clueless first-time founder who hasn’t done his homework and who can be bilked for all you’re worth. This is ESPECIALLY TRUE OF PATENT LAWYERS, although they may in fact be just technologically clueless, in which case they’re not trying to bilk you, but are doing so as a default position. Haven’t quite figured that one out…
- Special Note on Patent Lawyers: I highly recommend: C. Andrew Im formerly of Fulbright & Jaworski. He told us our invention probably wasn’t patentable, then offered to file a provisional patent for cheap, which we we would write mostly write ourselves and he would edit. This is WAY cheaper than what anyone else offered. One quality dude. And smart as fuck too. Everyone else tried to bilk and bullshit us. <---UPDATED: Andrew has since left Fulbright and started his own firm, IM IP Law LLC. You can reach him by email at firstname.lastname@example.org
- Let the firms know you’re “lawyer shopping.” (I literally told them that in emails.) This will cause them to sell themselves more, kiss your ass a little, and talk shit on the competition. The result will be good intel for you. Interestingly, they will also sometimes say nice things about the competition, more accurately, they’ll explain to you who the real competition is (or at least should be). Interesting tidbit: Neither Wilson Sonsini nor Gunderson talked much shit about each other. In fact, they both said the other one “Gets it.”
- The more competent the lawyer, the cheaper they are. This is a result of economies of scale––i.e. a lawyer who writes Convertible Notes 24×7 will spit one out in his/her sleep versus one who has to spend 4 hours doing research, looking stuff up, etc. This does not mean they’re cheaper on an hourly basis, but it’s even more reason to shop around and hire a true expert rather than the first lawyer you meet.
- The more lawyers you talk to, the more you’ll realize how opaque the market is and how easy it is to end up totally hosed and not even know it. This is all the more reason to Do the Lawyer Hop!
Just a reminder, all the usual caveats apply to this post: I am (mostly) just a clueless, self-promoting hack––not an expert on legal matters. Any actual knowledge or insight contained in this post is entirely incidental….in all seriousness, I really am just learning and making stuff up as I go along, so please be skeptical of my advice. I am a newbie founder trying to make my startup work, not a guru or industry veteran. BUYER BEWARE.