Anil Advani, founder and managing partner at Inventus Law and founding member and legal advisor at Excelerate talks about choosing the legal support that best suits your startup. We compare pricing of small and big law firms and some automated software that can help startups avoid working with lawyers altogether. Anil also talked about how lawyers should be open to working with such software and supporting startup founders even when things go south.
Anil's LinkedIn: https://www.linkedin.com/in/anadvani/
Inventus Law: https://www.inventuslaw.com/
Other episodes of Fundraising Radio related to law: https://www.fundraisingradio.com/category/legal/
And today's a guest speaker will have on your calendar and managing partner at inventor's law.
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And this app is a we'll talk about legal issues that startup founders face, especially early stage startup founders, especially 1st time openers.
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And we'll talk about hiring lawyers versus using some automation tools and when you should actually go towards along.
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Professionals and when you go, so let's kick it out by you're giving us some background on yourself and on inventor's lot.
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Oh, yeah, thanks for having me. It's obviously excited to be here.
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I described myself that easily.
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Very, simply I should say, I am unlimited money and my startup lawyer, and I ran a law firm invented stop.
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Startup law firm, that's all we do, right? I mean, we do, we are lawyers for startup so, for starters, we do everything from.
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Starting out through the life cycle, and we can go into details as we go along.
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And we don't do anything else. So if you have a real estate client, then we would before you to somebody else if you are going through a divorce don't call me.
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But if you're a startup founders and looking to build the next big thing, and you're passionate about it, you hopefully full time, given up everything else and.
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Maybe you have sold your house, or it's ready to go.
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Uh, we are the law firm and the fire for, you.
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Nice yeah, thanks for clarifying that. Divorce is not quite your thing. People please do not reach out about that. So let's talk about big firms versus smaller firms.
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So, law is relatively small firm.
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How do you compare yourself to bigger firms? So, you know, what's the major difference between a smaller firm like yours and huge firm? You know, that has 1000 employees.
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Yeah, yeah, and I'm obviously bias that out there and so we can then have a full discussion about.
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Um, on the other hand, I'm although I'm biased. I'm also probably the best person to speak about this because I've been on both sides of it. I, I worked at big firms.
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Fields, which is a British foam, and it's called a magic circle form.
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I worked at Cooley, got word and 2 really big technology forms in Silicon Valley.
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I've seen what they do, and they've obviously some good parts, and they've done things. Well, which is why they're there in a way. Otherwise competitive.
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No market legal service for startup. That is.
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So, I will talk about, you know, the reason I started my own firm.
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Is really because I saw a gap, right? In the sense that.
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On 1 hand, you know, investors, VC firms.
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They had great relation with these law firms, these megaphones, these forms coli in the early late twenties, early 2000. S.
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Really form most of these venture fund. The large portion of the venture funds were founded in.
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So guess what, you know, these guys with the and the, the managers.
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The gp's the, and the lawyers are truly the fine formation lawyers, and all knew each other. Right? So, when they were in thinking companies.
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And most people on the radio should probably seen the, the, the TV show, Silicon Valley.
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No, they would defer you as a founder to go and work with their lawyer right?
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And as a, as a founder, you didn't have access to good quality council because, I mean, good quality.
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Biased independent counsel, so you would be going to quarterly or audit, or any of these large firms.
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But that also represented investors, right?
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So, I started in mentors with 1 of the goals 1st, to fill the gap where.
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We really almost always to present the founders. No. So, and that's something that so was selling a badge of honor for me if you will.
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That we will be always the founder law firm, and almost all of our work actually comes from referrals from other founders. So so so we probably, I would like to say, we probably only.
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Technology startup law firm, at least in Silicon Valley, at least that I know of.
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That represents found a, as a.
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Focus and that knows what they're doing. I mean, there are other lawyers there that might be the planning founders, but that's.
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As I said, they could be diverse lawyer helping on founders, and then try to help on the venture side.
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But a startup legal focusing.
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Exclusively are almost exclusively on founders, so that's we have 1 of the really the only ones that I know of, as I said.
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Uh, the other part is really, and we call ourselves the global technology law firm.
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So, the other gap I saw in the market, and I don't want to sound like visionary, but it just played itself out as well. But I saw in the this gap in the market where.
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There are large law firms, like fresh fields of the world with not just a 1000, but 3 4000 lawyers, lawyers, not even employees right across the world.
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And in case catalog, large, New York phones.
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That are good and 1B dollar, and I say 1B dollars was 99 2000. it's probably much bigger numbers, but 1B dollar infrastructure projects right? So if you're a.
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If you are a ball bank and investing a 1B dollars in the next power project, and.
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Those would be great firms to hire. Right but if you're a startup, that's not the form for you.
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And then there were, they are the big, very base success, good rebel, run Silicon Valley based off firms and believe it or not. There's still 5 or 6, you know, that not that many.
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High quality law firms, right cool. Some of the form that worked and some of the other firms I've interacted with.
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But those forms have a look, they are.
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Because the whole universe just like ours, as I explained earlier this.
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And at least the, you know, when I started 2009 until that time.
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Almost all the investments were made in startups and value. Right? So these lawyers, these partners, these big firms.
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Exclusively focused on representing PCs, or startups in Silicon Valley and I'd like to I would hit saying it, but.
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It's true I had no idea all in most cases interest in looking outside Silicon Valley. Forget about the rest of the world.
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So, I can know this whole thing we call technology startup this whole ecosystem Silicon Valley was set to blow up because.
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You know, the smart kids graduating from Saint James schools in India or Singapore or Turkey, or Croatia, or Russia.
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They were not now working for the g of the world. They were starting to build their own. Right? So I saw that.
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They would need help, right? And there was an opportunity of.
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Becoming thankfully the only global technology law firm, and we have a trademarks and nobody else can call themselves that, you know.
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Uh, and think about this, these big firms didn't even think about trade marketing, something, which I believe is very valuable and and that's what we position ourselves, right?
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We, we distinguish ourselves from big firms.
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In 2 ways, 1, 3 ways or 4 ways, but suddenly.
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The 1st is really that we're focused on planning founders and that's where most of our work comes our loyalty. If you will remains with really the, technically and legally and ethically. We represent the companies, but.
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The interest of the founders, as they set up those businesses.
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Secondly, we are much more global and 3rd, obviously, that's the key part for a lot of founder fees and how we operate and arrangement.
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I've had 2 calls this morning with founders that were also talking to big firms and I sort of this I'm fully prepared for this.
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In that, uh, the good thing is at big forums, you know.
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There are models of working and you have to if you are changing that model.
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You have to go all the way up to the management committee. You know, if you're a part that a big firm.
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There's only so much flexibility you have with me, if you're a founder and we like each other or if you referred by a founder I will, and there's some background.
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It's whatever you and I agree or, you know, we, we have coffee, we used to have coffee now on zoom coffee.
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Wherever you agree on, you say, hey, to do this, and how much will cause we can do a flat fees, we can do field referrals.
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I come in with some equity sometimes many, many times, you know, if I like the company.
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So that's and and it's not something that we say, okay, you know, play games. It's.
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Everything on the table, if you like, it can be like each other. We can sign up very quickly and be.
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With the focus of building the company, right? Not playing games. So.
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That's the 3rd and 4th is we're really all very good people. I'm not saying that other big phones are not good, but we are good people in the sense that.
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And I say that to my team from time to time, but, you know, if.
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If you don't understand what it takes to build a startup, a founder that's given up all the for sometimes Silicon Valley or 2530400 dollars. Okay. Jobs.
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To build the startup, right? They're, they're putting they're buying their futures on this and if they're working.
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And if you don't appreciate that, and if you can't support it, you shouldn't be a startup. You know, there are lots of good things to do.
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As a lawyer, you can change the world, you can do other things you can make a lot of money outside.
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But if you are raising your hand to be a startup lawyer, you need to be committed to the founders and understanding the passion and the stress and everything that goes into building a startup. And you want to support that process not.
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Bring your egos or your own personal issues in there, you know, so we are very good people. We have a founder focused and.
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Passionate about helping our client build it. Nice. That was.
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A lot of focus was on the more of a world. Let me let me rephrase the question from the financial perspective, who is better for a 1st, time founder who's better for beginner founder is a small firm.
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Do they do guys charge less than bigger firms or is it reversed? Actually.
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Yeah, I think I would rephrase that question in the sense that.
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It's so it's a mistake for founders to focus on that because.
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I think there are either startup law firms or there there are no start. So, I think.
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I would say earlier there are 5 or 6 really high quality law firm that focused on start ups and can do really well for those startups.
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So, founder should look at them, probably should look at us and that should be the universe start with right?
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And there isn't a whole lot of difference between them and us, in terms of.
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Financial to be in 1 stone speaking sort of against myself and that, but we sure.
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Costs should not be the decision maker, right? It should be the lawyer and the person that you trust because.
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Founders don't realize when they start, you know, the relation with the lawyer, your startup lawyer is 1 of the most important.
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Relationships, you know, when, uh, you know, this whole journey of being a startup founders is difficult. It's lonely.
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You need people that you can trust and also pick up the phone and chat about.
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No, 1, 1, founder I'm working with and he's selling his company for quite a bit of money.
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We've been chatting with Kevin, and then yesterday we were talking about smoothies, so I send him a picture of something else that I would just someone you can really be connecting with right as a founder you need that around, you.
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I'm not kidding, you know, I haven't found a thing in my house. He's visiting from India, and he's staying here in my house right now. Nice. Yeah, so that's actually that's very cool. No, I'm not selling that as founders. I don't charge. It's just that we build in.
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So, I, I would say back to the original question, it's about, who do you trust as the person that you will pick up the phone?
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And you'll get the right answer for the right reason, not because you're paying them more or they are being referred, you'll be referred by ABC. All of those other things that go on the background. The cost is important.
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And I think you, as a founder you want to make because there's so many horror stories you read Google, you talk to other founders and.
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You get concern, but I would say any good lawyer at any of these big firms and our form is equally good.
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So, they've been doing this for 5, 7, 8 years no legal work for start. Ups is not complicated. So they should be able to handle your work.
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Because it's fairly straightforward, and a lot of it is streamline.
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It should not be a lot of money, so, for those reasons, don't focus on the money part of it because it is solved for itself. If you work with the right.
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Startup lawyer look for the person that you can connect with most right that you can trust that in.
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When things are not working well, that this person on the stand up, if you're not able to raise funding, I, you know, if we.
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Last year we I mean, I have a small form and I'm not financially necessarily, but.
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1 of our clients, we will be okay. We'll do all the work for 2020 and.
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This 2 weeks ago, you know, he sent an email saying we're shutting down and we wrote off that time and said, okay, we'll come back when you start again and he will so that's we put back in the system.
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So, I don't know when chips are down, who are the firms? Big phones will start fighting clients and then when the returns.
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They stop responding, they'll, they'll send you invoices. Don't pay them. They'll fire you. They'll say go don't they'll just not do the work.
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And we don't do that. I mean, we don't go and change those clients. We don't want that are not paying necessarily.
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But if you are our client, we are not just running away, just because you're not making, you know, it's not the best time for you at that time. You know so there is certainly.
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A relationship that you have to think about when I work with the founder, not just thinking about, I am thinking about how much I can learn from there.
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And sometimes I make investments, so that's really a part of the decision.
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But also the fact that, you know, that found has been pulled by another founder. So there's a few relationships to state.
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And that founder is very likely, they're starting a company that's connected to at least 5 or 10 of the founders that over the next 510 years will start company.
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And that's a prospective client for the client sort of channel for me. So that's very important for me, you know, because it's my phone.
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I'm not doing any for the next 1040 years, so I have to continue to invest. Right? And my credibility my name.
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More than a few 1000 dollars right? So I'm always taking that longer term perspective. Nice. I love that approach. Long time. Perspective is generally the 1 that's working. So great work there love hearing this.
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But yeah, let's take a look as from the financial perspective.
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There is always an alternative to the lawyers being Google,
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any other search engine,
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or actually an automation tool like the tool that allows you to basically create your company from 0T to pretty much structuring your.
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1st round those tools, allow you to do the entire process for, like, I would say, 150 bucks. So who do you think should go that way? And how do you think should actually go through an actual real lawyer?
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Yeah, if you allow me, you know, I've obviously encountered these questions before and I've got a sort of a flip, but it's a short it's a little long but my favorite book and show, and sort of the whole story is godfather and Godfather.
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There's a, there's a clip where the godfather's lying in the hospital.
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And his son, Michael, is there it is that people are coming to kill him and Michael says, hey, are you scared? I'm going fast because I don't want to take up too much focus on the main part. But Michael says, I are you scared? And the father says.
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People bad people have been coming to kill me since I was 12. so so that's how I feel about technology and all the alternatives. They've been coming to kill the legal practice for a long time.
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If you know what you're doing, and you're providing the value and advice that's critical.
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You will do well as a start up lawyer if if your whole purpose is that I'm a startup lawyer, because the best form, that better technology you will fail. Right? So, I see technology as in the name, the enablement enablement of what we do.
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So, I think, and I'll answer your specific question of how far let's look at, but I'm more philosophical now.
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We, we like technology, right? If I don't have to spend the time to do things that technology can do.
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That's better for me because I, I can do more right? And there's no shortage of clients.
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I can do more and I can spend less time doing that. Right? And everyone's happy.
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So, I think this, that now, as founders, you have to be careful, right? I mean, so, and I say this to founders that if you want, I can give you all our forms, you pay me 10 dollars, and you can have access to all our forms. It's, it's.
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coolie many other firms actually outsource open source. It.
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You can go online to the website and download and I'm maybe marketing Cory, but that's fine. It's a good phone. So it's not about the forms that you can the filing itself that you can go on the state website and file it yourself by paid.
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Legal room 500 dollars for that. So, uh, so so the question is, what is it that you're doing right?
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If you wake up in the of the night and say, I want to start a company, and you're very furiously thinking of. I have to because I'm not asleep. Sure. Go online and file the file the company. And that's fine. And then go to, because you have a company.
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If you're going to give up all that, you have like, the 30400000 dollar job at Google.
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Next building next, you know, use the next 3. 4th, put your credibility on the line.
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Are you really doing that to say a few 1000 dollars? Right? That would be the question.
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Right, because the assumption is part of that answer that.
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It's like any other professional service, right? A doctor.
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Would you go to them empty when you have a heart attack because the, your, your cardiology going to charge? A lot of you should not right?
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Even a plumber, right? I mean, I can fix most things in my house, but when the water is leaking and fix it.
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I'll probably base more time because I will keep looking I just would know right at some point, I'm wasting money.
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Because there's water leak it, but I'm thinking I've solved the problem and I've saved 200 dollars for the plumber to fix it. You know, that's really how how they should be thinking about.
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It is, and again I'm biased, but I've been doing this for 21 years with over 3000. founders.
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And I can see the 1st that understand and get it. Yeah.
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And sometimes we say fine, no, I'm not changing your if you, if you want to go online and spend 500 dollars that's on, you.
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In fact, I offer that 500 dollars that beautiful brand. You know, the binder you get from legal zone.
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All of that work, I can do for free or 10 dollars literally, because there's no value.
00:18:11.939 --> 00:18:21.989
So, the question is, why do, why do we exist if technology can technology technology just to enable us and lawyers should use it as much as possible to become efficient.
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We exist as lawyers, because we want to be able to bring the right advice or experience or how to.
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How to set things up right? In the last 21 years I've seen all sorts of things. Right? So so, and.
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And the other part is, I've seen lots of things and.
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That is the value we should be providing and if you don't believe me, then maybe there are lots of good lawyers who will provide that.
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But find a good lawyer that you trust and has the experience to help you.
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And because we've all seen a lot of these over hundreds and hundreds of thousands of transactions.
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There's nothing magical about this anymore. Right? There's nothing complicate about it. Therefore it doesn't take that much.
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And therefore do not pass it. So you might think you're saving.
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It it will cost tens of 1000 dollars if that's not right, but whatever it does and whatever you're paying your lawyer.
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As long as you trust, and they have the right experience is worth it and technology cannot solve that. You know unfortunately.
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Unfortunately for us, yes. Yeah. I'll give sorry I didn't mean to.
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Just realized atrium came out, right? This company, which was going to blow up there is 15080. the founder of CO, founder of Twitch started it.
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Say, oh, we're going to hire you.
00:19:33.989 --> 00:19:40.078
And we can get now the shutdown, and we keep getting calls from a client saying, hey, can you help.
00:19:40.078 --> 00:19:45.568
And I don't want to put atrium down and then, but any of these, and then we bring them that.
00:19:45.568 --> 00:19:51.269
Client over, when we see there, there are pretty significant gaps in basic things that.
00:19:51.269 --> 00:19:56.753
As a lawyer, I can identify in 15 minutes, you know, so is looking right?
00:19:57.054 --> 00:20:06.624
And, as I said, it's like the analogy with the number you have a leaky, you know, and you don't know until it's sometimes very late because there's a legal issue.
00:20:06.624 --> 00:20:12.114
And we'll probably talk about that, but if you, if you didn't find the tax election or or.
00:20:12.388 --> 00:20:18.959
Co, founder was fully vested and now there's a con conflict with the CO founder, and he's walking he or she is fully vested shares.
00:20:18.959 --> 00:20:23.788
Simple stuff, so it shouldn't cost too much, but you miss it like the water leak at some point.
00:20:23.788 --> 00:20:28.348
Your baseline is going to be flooding, so you have to be careful about what you're choosing there.
00:20:28.554 --> 00:20:39.713
Sure, well, let's actually talk a little more about the basement flooding so I've seen some founders on early stages when they're just starting their companies, or when they're just starting to raise their 1st round.
00:20:40.074 --> 00:20:47.723
They're spending tons and tons of time, and sometimes money and researching all the legal questions and figuring out all the legal details and.
00:20:48.028 --> 00:20:58.074
Sometimes, I just don't understand it because, you know, like, what sort of mistake can you make early on that will lead to college traffic events but there are some that certainly can do that.
00:20:58.074 --> 00:21:09.023
So, in your experience, what's the major mistake that an early stage founder can do early on that will that's mildly to horrible, horrible consequences like 2 or 3 years later.
00:21:09.298 --> 00:21:20.519
Yeah, and good fences make good neighbors. Right? So, that's what I see all the time. You put a good fence in the sense that have a proper legal agreement between founders right?
00:21:20.519 --> 00:21:25.378
Between your tire between your angel investor between your.
00:21:25.378 --> 00:21:30.088
Between your developer, right? Any of these. And again very simple to do.
00:21:30.088 --> 00:21:33.659
But to miss any of these, each of these could cause.
00:21:33.659 --> 00:21:36.749
A significant painful process.
00:21:36.749 --> 00:21:40.888
And sometimes shutting down, you know, especially if the 2 founders are fighting.
00:21:40.888 --> 00:21:47.638
You know, it's just that you could reach a point where.
00:21:47.638 --> 00:21:52.469
I and again, I do a lot of this right? So, clients call me again, not a client, but.
00:21:52.469 --> 00:21:59.038
Some other founder said, hey, I have, we have dispute, I look at the agreements and they both 50, 50 both are on the board.
00:21:59.038 --> 00:22:04.439
Hopefully vested, there's no way out. Right? And frankly, unfortunately, maybe the only option is.
00:22:04.439 --> 00:22:11.459
I'm trying to mediate with them and explain that, you know, there's no point and but they weren't the only option might be to split the company.
00:22:11.459 --> 00:22:20.219
This is the end of the business because how do you split 1 technology into 2 businesses so so basics like that right? Having good fences written agreements.
00:22:20.219 --> 00:22:25.229
If you have an advisor photo developer and you have shaken hands.
00:22:25.229 --> 00:22:29.459
That that's fine. We'll deal with your will pay you when you raise funding.
00:22:29.459 --> 00:22:33.269
And as soon as you do a series, a, and there's 5M dollars coming in.
00:22:33.269 --> 00:22:39.118
That contractor developer can make a claim for 5% of the company 10% of the equity. No.
00:22:39.118 --> 00:22:42.388
And who decides that, right once they make that claim.
00:22:42.388 --> 00:22:48.689
As the founder you come to me and say, I have this background I'm like, okay, but there's no written agreement, right?
00:22:48.689 --> 00:22:55.439
And the courts will have now decide what the value of their contribution and there are obviously corporations and all that.
00:22:55.439 --> 00:23:02.999
But you really have to go to a court process, right? That's 6 months, 12 months, hundreds of 1000 dollars legal fees.
00:23:02.999 --> 00:23:09.989
And guess what your investors are going to, right? So, something that you could have done very easily, which is to get that piece of paper.
00:23:09.989 --> 00:23:13.288
You've blown it, you know, in in, in the sense of.
00:23:13.288 --> 00:23:20.308
No, that legal issue, uh, to give you sort of make it more interesting than just being a basic legal stuff.
00:23:20.308 --> 00:23:24.148
Now, 1 of the most famous cases is Facebook, right?
00:23:24.148 --> 00:23:27.749
And how it was formed was litigation at the founders.
00:23:27.749 --> 00:23:37.679
And I used to do a lot that I started my own form, and I had to market I was going out and speaking about these things. And when I talked about Facebook and was pretty low at that time right? And also some of it is captured in the movie.
00:23:37.679 --> 00:23:47.429
Accurately inaccurately, I guess we leave it for the fact, but I will talk about Facebook and some smart Alec with Joe. No, no, no. It worked out really well for March, right?
00:23:47.429 --> 00:23:51.148
Which is true, but I can say that.
00:23:51.148 --> 00:23:59.759
It worked out very well for work, but we have 3 guys the 2, uh, brothers and the 3rd guy.
00:23:59.759 --> 00:24:02.909
Who will go to the grave right? Believing.
00:24:02.909 --> 00:24:10.439
That they were founders, they found it, and they were basically looking to hire mark to build the technology, the platform for them. You know.
00:24:10.439 --> 00:24:21.358
Which, in my opinion is true, but guess, what the difference between there being founders and owning Facebook and having more build it for whatever percentage, is that piece of paper that they didn't get them to sign.
00:24:21.358 --> 00:24:25.348
Yep, so if you, if you're building the next Facebook.
00:24:25.348 --> 00:24:33.959
If you believe you are billing on Facebook and but on the other hand, you want to take the risk that saving 2000 dollars will will will, is the right way to do it?
00:24:33.959 --> 00:24:37.648
Maybe I don't want to look maybe you need to rethink that.
00:24:37.648 --> 00:24:44.909
So, again, I don't want to say that you don't you need a lawyer for everything a lot of information. There's no magic information is there.
00:24:44.909 --> 00:24:49.798
But because of that, also, the process itself is so easy. Just get a good lawyer.
00:24:49.798 --> 00:24:55.618
Follow what they're asking you to do ask the question ask your friends who are successful entrepreneurs who have done it before.
00:24:55.618 --> 00:24:59.638
Ask the right question, make sure your lawyer permission something, because they could be some unique.
00:24:59.638 --> 00:25:02.999
And your integration issue, for example, if you put that, right?
00:25:02.999 --> 00:25:10.679
But other than that, as I started, as we've seen it all right, there's nothing you are doing that we haven't seen in terms of the legal structuring.
00:25:10.679 --> 00:25:17.278
That, you know, we need to worry about too much or or charge a lot of money to put together.
00:25:18.443 --> 00:25:28.644
So let's talk a little bit more about this phrase that you said good fences, make good neighbors personally never heard of it and absolutely. Love it to be honest. So let's talk just a little more about this.
00:25:28.644 --> 00:25:37.433
So, if you're working with your Co founder or just want to get someone as a Co, founder, how bout something written, but not as much of a legal.
00:25:37.433 --> 00:25:49.884
So, let's see, I sent my friend an email saying, take this as a legal kind of paper, legal email. I know how they call it, but basically the email is going to be saying that we're going to be working on 50% 50%.
00:25:51.388 --> 00:25:55.469
Do you agree to this? And then he or she responds he has.
00:25:55.469 --> 00:25:59.548
Does this count as a legally bonding document?
00:25:59.548 --> 00:26:03.479
Yeah, so, you know, now I like my analogy of the plumber even more.
00:26:03.834 --> 00:26:12.114
Because I can play on that, you know, it's asking the plumber that my tap is leaking. I don't I don't pay you 200 dollars. Can I just put a band aid on it? Right? So, right.
00:26:13.614 --> 00:26:19.763
I mean, I don't know how good quality that is and whether the water will keep leaking the short of it is if it's a written agreement.
00:26:20.608 --> 00:26:24.749
Right again, I just want to make sure that you don't need a lawyer necessarily for that.
00:26:24.749 --> 00:26:28.409
If it's a written agreement and the key elements are.
00:26:28.409 --> 00:26:38.548
Properly drafted sure. You know, it's possible any, anything in writing for adequate consideration where the terms are fairly clear and you didn't put a gun on someone's head.
00:26:38.548 --> 00:26:52.288
Is legally binding, so, if you don't have a, it's not, nobody will go to court and say this agreement is not valid, because a Lloyd and drafted, right? No code will allow for that. Right? The question is what who's drafting it? What are you is? It is it clear.
00:26:52.288 --> 00:26:55.979
And a lot of times, you know, um.
00:26:55.979 --> 00:26:59.098
Founders say percentage equity that's that's a little bit.
00:26:59.098 --> 00:27:05.729
You know, incorrect, because the percentages may move. So founders, you know, the 2 founders getting together, think 50, 50 may be. Okay.
00:27:05.729 --> 00:27:13.169
But if you are having an advisor, and you say 1%, equity, 2% equity, which most do want to save the piece.
00:27:13.169 --> 00:27:22.378
What does that mean? Because 2 founders may have issued themselves, say 50, 50 and there's 2% of that but then they set up another often pool.
00:27:22.378 --> 00:27:29.699
Maybe there is money and now from 10M, you have 20M shares. So, is it 1% of 10M or? 1% of.
00:27:29.699 --> 00:27:33.028
20M, that's basic things like that.
00:27:33.028 --> 00:27:40.469
Could get lost, right? And that's a significant 1% just in that example. Difference between what you think you were saying.
00:27:40.469 --> 00:27:47.159
And what the other person, and that's why good fences make good neighbors because that's a fence. That's everything is on paper.
00:27:47.159 --> 00:27:53.638
And if they don't agree, that's fine. That's the the best time to have this is when you're starting out, right? So that.
00:27:53.638 --> 00:28:06.209
At least everything's clear, you're saying, hey, founder, I think I'm going to be the CEO. I will have 60%. You will have 40% or 30% 10 whatever it is that you're thinking, and whatever he or she is thinking your Co founder.
00:28:06.209 --> 00:28:19.229
Put on paper, put it on the table, put on paper and move on from there as long as clear. Right. That's the point whether that paper is well drafted or not. I don't know because that's like the analogy of, I don't know whether that's financial.
00:29:08.398 --> 00:29:20.848
So, yeah, quarterly firms have, I think, dot com, well, lawyers, we've all got together and done a lot of good quality work to make the process simple.
00:29:20.848 --> 00:29:26.489
So, and he or she has all the venture capital cities, investment documents.
00:29:26.489 --> 00:29:34.528
Thanks and I would know I would not recommend that any founders start drafting it. These are somewhat complex, very important sort of implications, you know, the terms.
00:29:34.528 --> 00:29:38.969
But those are good documents with not a footnote. So you'll give you a lot of learning if you will, you know.
00:29:38.969 --> 00:29:45.269
But if you're starting out and you actually has a, an online platform.
00:29:45.269 --> 00:29:51.749
You can basically download all the formation documents. Your fax founders talk agreements, your initial board consent everything else you can download.
00:29:51.749 --> 00:29:57.568
And you should, and they're, they are, they're not a difference. That's what he uses for.
00:29:57.568 --> 00:30:08.699
Paying client, you know, again, any lawyer that's charging for that is the wrong lawyer. The lawyer should be the advice and the experience and get making sure it's done properly.
00:30:10.048 --> 00:30:23.128
Perfect yeah, I'll make sure to follow up with Daniel to make sure to include all those resources in the description of this episode to you, people can check it out. And this note we're moving on to the last question of today's episode. So.
00:30:23.128 --> 00:30:29.009
Neil, would you want to listen to you as soon as the episode is over? So what do you want them?
00:30:29.009 --> 00:30:34.739
You right now, basically, especially in terms of legal, legal structure of their company.
00:30:34.739 --> 00:30:40.949
Yeah, so I guess 2 things 1, I will the short answer, the legal structure of the company.
00:30:40.949 --> 00:30:51.628
Do it right? And I'm repeating myself, but get a good lawyer that has the right experience and anyone that has done this in Silicon Valley, for example, or wherever else they've, they've had the right experience.
00:30:51.628 --> 00:30:56.159
Get that lawyer and make sure you trust that person.
00:30:56.159 --> 00:31:01.588
Uh, and obviously negotiate the fees upfront like anything else.
00:31:01.588 --> 00:31:06.388
And then trust that process, right? It's been done before there's nothing. I mean, you want to be creative.
00:31:06.388 --> 00:31:10.618
Be creative in your, how you build the product how do you market the product how you.
00:31:10.618 --> 00:31:14.729
Sell how you create a presentation that you want to build raise money.
00:31:14.729 --> 00:31:19.199
But I don't try to be creative in the legal for the startup. It's all been done before.
00:31:19.199 --> 00:31:29.249
And I keep asking founders or tell me what is the reason for you to try to do this crazy stuff and there isn't so, keep it keep it simple.
00:31:29.249 --> 00:31:36.298
The other thing I would say more philosophically legal is, as I said earlier as being a founder is a lonely journey. You are the CEO.
00:31:36.298 --> 00:31:40.259
If there are issues with your Co founder or your customer, or your investor.
00:31:40.259 --> 00:31:47.009
You can't go and to your employees. You can't sometimes talk to your Co founder. You suddenly can't talk to your investors.
00:31:47.009 --> 00:31:51.959
Or, or if sometimes legally are required to disclose to them, but before that, you have to figure out how to disclose.
00:31:51.959 --> 00:31:57.388
Your lawyer at that time, becomes that confidant, right? That you can say, what do you think about it? And.
00:31:57.388 --> 00:32:02.338
As lawyers, we see more transactions and these kind of the truth and anybody else because.
00:32:02.338 --> 00:32:08.848
You know, the best export, the best angel investors, the best species would invest 510 companies a year.
00:32:08.848 --> 00:32:15.719
We represent more than a 100 a year, so a lot more of this. So so just know.
00:32:15.719 --> 00:32:21.118
Used your lawyer as that in that position as well as a trusted advisor more than a paper pusher necessarily.
00:32:22.013 --> 00:32:33.743
100% of fairly accurate advice. Love. It's my call to action is going to be go to the description of this episodes. I'll leave a bunch of links. That's my bad Neil called snail.
00:32:33.743 --> 00:32:41.453
It's very close to Neil, and I was just that I knew was going to share with me after the episode.
00:32:41.453 --> 00:32:52.824
So, yes, if you're having some legal issues, check it out, I'll make sure to leave links to as well and also linked to inventors law. Of course. So, check it out.
00:32:54.088 --> 00:32:58.439
Don't do legal mistakes, you have other problems to take care of so.
00:32:58.439 --> 00:33:06.778
Be careful waste too much of your time, but at the same time, do you not make stupid mistakes so do that and is usually have a good date.