During a talk today with Dave Felman at UF’s Law School (Professor Danny Sokol‘s class), a student asked what I look for in venture capital counsel. It was a good question, and the answer for me is similar to what I’d recommend for entrepreneurs vetting company counsel.
Although good lawyers come in many packages, there are really four main things I look for:
1) Experience doing venture capital deals: There is no substitute for firms who have done venture captial deals before. Don’t let them spin “corporate law” into “venture or startup law” because the issues involved can be quite different — not to mention entrepreneurs are unique customers that take getting used to.
2) Business-minded, not legal theory: The best venture lawyers operate like business partners, not lawyers. They identify and highlight risk, but they know when to trade-off corner-case risk for getting a deal done. The best I’ve used lay out what can happen and how likely it is to happen, and put it into context against other deal points being negotiated. Counsel that argues small, corner-case points will cost you more money and possibly cost you closing a deal — with little ultimate risk-reduction upside.
3) Experience on both sides of the table: This isn’t critical, but I like counsel who have done company-side work and fund-side work. It brings an understanding and an ability to communicate to the other side why particular points are important.
4) Overall style/persuasiveness: This relates to being business-minded, but the best lawyers speak in terms of partnering and win-win; rather than creating conflict by digging their heels in. The win-win lawyer can still be tough on the important points, but the tone of discussion makes a big difference.