Legal Representation; Two Schools of Thought

So you’re starting up a technology company, bootstrapping it, and you think that someday you might take on additional capital. Which lawfirm in Austin should you use?

This is the dilemma facing many young companies these days. I thought it would be interesting to throw some ideas out there in this post, and then see if we can get some replies and start a little dialog going. I think there are two schools of thought here. One says go with the big known law firm that does these kinds of deals all the time. The other says find a solid attorney who is more willing to go “toe to toe” with potential investors on term sheets.

First, I thought I would list some of the law firms that have tech practices. There’s some kind of order in this list from bigger/more relevant to smaller (this will surely generate¬†flames in the comments).

  • DLA Piper (formerly Gray Cary)
  • Wilson Sonsini
  • Andrews & Kurth
  • Fish & Richardson
  • Vinson & Elkins
  • Winstead
  • Baker & Botts

The Proven
One school of thought says to go with the big law firm that knows tech, has a solid IP practice, and can handle any possible need you might have from incorporation, through IPO. For startups, many law firms will have a “tech startup package” that will defer fees till funding, profitability, or 1 year. These firms work with the local VC firms on a daily basis, and know them all. There also may be a certain credibility to be had in the finance community by saying that you’re represented by one of these big firms.

The Scrappy
There could be some benefits to working with an attorney who is the opposite of everything I listed above. These large firms have certainly “graduated” some outstanding individuals who are now practicing on their own. Along with lower billing rates, an “outsider” might be more willing to really fight for you at the bargaining table. When negotiating financing, every term and condition is negotiable. A larger firm might be used to having clients give up full ratchet anti-dilution provisions because “that’s the way these investments work” whereas your scrappy attorney might be more willing to negotiate hard for you.

The point here is not to endorse one way or the other. Both routes have had success for different people. But perhaps this could open up the comments for additional ideas and viewpoints from readers.

About Bryan Menell

Bryan is the Managing Editor for AustinStartup and the CEO of Mahana. He is a co-founder of Capital Factory, an investor and advisor, and runs the popular Austin Tech Happy Hour with his wife.

Comments

  1. If you’re looking for the scrappy startup entrepreneurial friendly lawyer that can get your startup from initial incorporation to the point where you’re selling it to someone else, you should talk to Brian Spross. He just hung up his own shingle after working at AMD, Trilogy, Skylist, and other Austin based firms. He’s also helped countless people start their own business. Brian is not just a lawyer, but a smart business guy too.

    http://www.sprosslaw.com/ <- his blog
    http://www.brianspross.com/ <- his linked in profile

  2. Mine’s not on your list, but I’m very happy with them.

Trackbacks

  1. [...] for startups. Last week we wrote about the debate between hiring the tried and true, large, and well known law firm vs. the scrappy attorney at a smaller firm. We found a great article by Jason Mendelson titled Why Startup [...]