Three ways startups can cut legal fees in half

20 Oct

Often, after launching up the companies, the starters will be getting killed with the legal fees. Of course, legal fees can add up fast, particularly for a startup just getting off the ground.

There are several ways to keep the legal fees under control. Of them, here are.three suggestions:


Inform the partner about the problem with the fees. Partners at big firms have the right to drop the hourly billing rates for startups of even to cut the bill. As a negotiating tactic, one can excite their partners saying about their venture that there are interesting, fat work down the road. One can also push to have one lawyer (preferably the partner) handle all their work going forward, not three. The more time the lawyers bill, the better their sales numbers. This business enterprise results in inefficiency and troublesome as one increase the number of lawyers to their project.

One can avoid junior associates handling their work and should inform this to their partners. With junior associates, you’re basically paying for their on-the-job training. This includes an extraordinary pressure on associates to deal with annual billable hour thresholds and bonus targets.


Big firms are great for huge, complicated corporate projects — like an initial public offering, a tender offer or a public company merger. These types of projects require a large team of lawyers (often with different specialties).

On the other view, most of the legal work for startups, either it be financing or partnering agreement, can be handled by one experienced lawyer. There are many good startup lawyers with ten to fifteen years of experience who can process the work at the same billable rates as junior associates at the big companies.

If you’re uncomfortable not using a brand name law firm, or if your investors push back, you can keep your big law firm for the big stuff, and use the startup lawyer to handle the day-to-day things.


Lastly, Consider about requesting fixed fees for the legal projects so that one can align the law firm’s interests with their company’s. Big firms hate to agree this, still, many innovative law firms are disrupting the profession as mentioned.

This is such an smart solution: No more incentive for the law firm to be inefficient; no more overstaffing of projects; no more associates banging the file to meet their annual minimum billing requirements or bonus targets; and the best part is no more surprises at the end of the month when the invoice arrives.

Imagine if one had negotiated a fixed fee for their convertible note financing (which is quite reasonable); one could have cut their legal fees in half.

Source: venturebeat

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