Attorneys are vendors they are not investors, partners or employees and their interests are not aligned with your interests. The interest of an attorney on an early stage deal (generally an associate) is not necessarily the interest of yours. The interests of the entrepreneur should be to get the deal done correctly in a way that sets the business up for success.
I bring this up as lately we have seen many deals where they attorneys are dictating the terms / structure of the deal, not the founders. This issue seems to be rampant in seed rounds with first time / young entrepreneurs.
Here are a few pointers for working attorneys:
- Leverage your attorneys for information and an understanding of both sides of any term / structure, than make a business decision and tell them what you want.
- Understand every term of the agreement and its application, this will allow you to determine what matters and what doesn’t for your company.
- Use senior members at firms for education and advice, use junior members for drafting and administrative work.
- Pay your attorneys; don’t ask them to defer to future rounds. Negotiate a fixed fee ahead of time.
Don’t get me wrong, there are some incredible attorneys out there and from what we have found these are typically the attorneys that view their job as providing information rather than making decisions.Tweet