Venture Law Lines:
From time to time, we search for lawyers to expand our practice. Those discussions almost always end up focused on what it means to be a lawyer for entrepreneurs. Here are what I’ve come to believe are the fundamental requirements:
1. You can represent VCs or their portfolio companies, but not both. It is theoretically possible to work with both VCs and startups, but the economics incent lawyers to please VCs first. A staggering amount of money is made by lawyers when a VC raises a fund. By contrast, portfolio companies represent an average of $100 – $60,000 a year in legal fees for much of their pre-exit years. Can a lawyer be aggressive enough on behalf of a startup client if in so doing he might upset the sensibilities of a VC client worth significantly more in revenue? (Of course he can, but will he?) It’s a dilemma that is only growing in size in the current cycle, as more and more entrepreneurs deal with conflicts arising with investors that are winding down their funds. As a startup lawyer, you need to pick a side and stick with it. You can maintain just as much goodwill with the VC community by being a member of Her Majesty’s Loyal Opposition.
2. It’s never just business. It’s ALWAYS personal. You relationship with an entrepreneur will last through several companies, and well beyond the time he/she hits a home run. His/her personal goals and needs for each business must be at the forefront of everything you do for the corporation, unless and until those goals and needs clearly diverge with those of the business.
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