Comments on: Lawyers are referees, not coaches

By: Acquisitions: Pulling Back The Covers – Part 2 | 500 Startups Blog

Acquisitions: Pulling Back The Covers – Part 2 | 500 Startups Blog — Sun, 10 Oct 2010 18:44:21 +0000

[...] I mentioned above the importance of assembling your team to help with negotiations. This basically boils down to lawyers and advisors. I first want to explain that lawyers and advisors are very different – you need to make sure you have both. To put it simply, lawyers are focused on minimizing risk. They will pore over the details of an agreement and make sure you aren’t exposing yourself to things that could come back to hurt you. They want to protect you. What lawyers generally won’t do is present you with creative ways to reach a better outcome. As an entrepreneur, you are not only interested in minimizing your risk, but also in maximizing the upside of the deal. This is where having experienced advisors is key. Hopefully your advisors have done a few deals in the past and have a few tricks up their sleeve that that can be used during negotiations. To give an example, one of our advisors was a very experienced tax accountant and figured out a way to structure the deal that helped us minimize the tax we would owe to the government. Venture Hacks explains this well in their article Lawyers are referees, not coaches. [...]

By: SKMurphy » Common Questions about Advisory Boards

SKMurphy » Common Questions about Advisory Boards — Thu, 17 Jul 2008 07:00:40 +0000

[...] Lawyers are referees, not coaches [...]

By: K. Srikrishna

K. Srikrishna — Fri, 04 Jul 2008 08:42:27 +0000

Nice article – timely reminder to all entrepreneurs that professionals, be they lawyers, accountants or others, are there to tell you what is doable, permissible and occasionally possible – but rarely will they necessarily tell you what is in your best interest or how to go about it. This is where a board of advisors or a mentor makes a lot of sense.

By: Anonymous

Anonymous — Fri, 20 Jun 2008 19:13:40 +0000

Any decent lawyer in this space would’ve spotted that CEO/board seat issue.

By: Michael F. Martin

Michael F. Martin — Fri, 13 Jun 2008 01:08:20 +0000

I completely agree that price and value are not always correlated (if that’s what you mean by “high end” lawyers not being necessary).

And creativity is not a virtue in law school, so everybody should keep that in mind (not just entrepreneurs) in consuming legal services.

By: Nivi

Nivi — Thu, 12 Jun 2008 22:27:06 +0000

Thanks for the thoughtful comment Michael. I agree that lawyers have information about market terms.

I’m not sure you need very high end lawyers to get it, just lawyers who do a lot of deals that are similar to yours.

I also find that many entrepreneurs just chase the vanilla terms that their lawyers suggest. That’s a mistake we try to get entrepreneurs to avoid.

By: Michael F. Martin

Michael F. Martin — Thu, 12 Jun 2008 19:31:32 +0000

This is probably an under-appreciated point for new entrepreneurs, so I understand completely why you’re making it for your audience at Venture Hacks.

I want to point out, however, that more sophisticated (and wealthy) consumers of legal services often do receive valuable non-legal information and advice from their outside counsel. Specifically, experienced outside counsel may have a better sense of what “the market” for various qualitative terms in an agreement. Whereas even experienced entrepreneurs (or venture capitalists) may have negotiated dozens of deals, experienced outside counsel have assisted with negotiating hundreds or thousands. That source of information about the market is definitely part of what you’re paying for with the most popular and expensive outside lawyers.