Should Your Startup Lawyer Get a Finder's Fee?
Heck no. Your lawyer should not get a contingent finder’s fee for introducing you to investors or potential acquirers. I think taking a finder’s fee would be a greater conflict than sitting on your startup’s board of directors.
I’ve always felt introductions, whether to an accountant, potential co-founder, or investor is just part of the benefit of hiring a startup lawyer. And while I heart FINRA, I’m not sure I want to register with them or the Texas State Securities Board.
If you want to hook your lawyer up for an introduction, send him a box of your startup’s t-shirts. Even better, rave about him or her to your network. And if you are an investor (angel or VC) and happen to read this blog, reach out to me so I can increase my electronic rolodex and get more t-shirts.
About the Author
Ryan Roberts is a startup lawyer and represents technology companies through all phases of the startup process, including incorporation, seed & venture financings, and exit transactions. Click here to learn more about his practice.
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Please consider subscribing to The Startup Lawyer, following @startuplawyer on Twitter, or contact Ryan directly.5 Responses
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SV lawyer says:
I have worked with start-ups in Northern California for years and I have never heard of a law firm taking a “finder’s fee”. As you mention that would require registration and no law firm is going to do that. What I think you are really talking about is the practice of taking an ownership interest in a company in lieu of legal fees or a retainer. That is different from a finders fee but I doubt many of your readers would realize the difference between the two if it was not pointed out.
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[...] Roberts, The Startup Lawyer, asks ‘Should your startup lawyer get a fingers fee?‘ He quickly suggests, ‘Heck no.’ I agree, but it is refreshing for a lawyer [...]
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SV lawyer: There are a few lawyers/firms that take finder’s fees similar to say a placement agent. I view the stock for fees/stock for deferral as a separate issue.
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Kate says:
What if an angel investor finds additional capital for the start-up (beyond his or her own investment)? How should the angel approach the start-up for additional shares? How can the angel possibly benefit (beyond seeing his/her initial investment expand) once the two parties – the start-up and the new venture capital – begin negotiations?
OK, is the story here you not wanting to get a finders fee when you line up investors? or are you starting a T-Shirt Retail business on the side?