Do any lawyers work for potential future ownership in a startup or payoff at first funding stage?
We need to structure our banking relationships. We have a model we think would work well (developed by another group), but really we need to explore a little bit more how we can best build our model.
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The answer is yes, in some cases. Our firm certainly does, subject to both getting to know the clients and their business model. Would be happy to discuss further with you.
Bob Smith
Managing Director
Woodvale Partners, LLC
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Rimon PC often works out alternative payment arrangements with clients including equity stakes.
Here is Rimon Law Group's Startup Package - entity formation, employee agreements, trademarks, and patents. http://bit.ly/emXsPT (opens pdf).
It includes useful legal information for early-stage companies and also basic information flat fees and estimates for patent preparation and filings.
Regards, John Boyd
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I am looking over your document. I had a phone conversation with the first lawyer on this list and he will be sending me a document sometime in the next day or two. I will be taking my time choosing who to work with because your talent and expertise is so very important.
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What's the connection between the question (in bold) and the explanation below it? While lawyers have exchanged their legal services for equity interests in start-ups, how does that fact relate to "banking relationships"?
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The banking relationships was worded badly. What I mean is, as part of the concept we are developing we will have to use banks. Part of the process for the startup involves transferring of money for third parties to be invested in projects and then later collecting payments. It is this banking that will be needed.
For isntance, do we need to be a bank? Or can we establish a relationship with a current bank? What would be more logical - a national footprint or a state footprint?
Better?
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The answer is yes, in some cases. Our firm certainly does, subject to both getting to know the clients and their business model. Would be happy to discuss further with you.
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Yes, fee arrangements are always up for discussion. It is certainly possible to have a fee arrangement where part of the purchase price is paid in equity. It all very much depends on the given situation.
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The bigger question is whether this arrangement makes sense? Is it worth diluting your ownership for $10,000 to $20,000 of legal fees handling an angel round? Moreover, do you want to have a long-term partner just because that partner provided a one-time service? Many businesses go through different lawyers over their lifespan. In this case, the lawyer would be around for a long time. I suggest working out a cash payment arrangement, even if it requires payment over time.
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Good points, Clint, but he's also suggesting working, basically, for contingency paid out presumably in cash at the angel round. That seems feasible, though the angel investors may have some questions about where their money is going. The asker should also consider the quality of the legal service. A good lawyer knows his or her worth. Legal service premised on a future and uncertain payout should be paid at a premium to a normal service-for-cash transaction.