Posted Apr 23, 2009 05:36 pm CDT
On Wednesday, Palo Alto, Calif.-based Wilson Sonsini Goodrich & Rosati launched a free online tool that drafts term sheets—documents that outline the terms and conditions of a business contract—for preferred stock financing.
According to Wilson Sonsini’s website, the tool is a modified version of one its lawyers use internally. Users answer a series of questions and then generate the term sheet, “which is intended to be useful in deal discussions between entrepreneurs and investors and in crafting a final, customized term sheet with the help of attorneys,” according to a firm statement (PDF).
Legal bloggers can’t help but question whether a law firm will lose billables with a move like this one. “Where I’d have concerns are those situations in which other lawyers are using the tool, then billing their own clients for work they created for free,” Carolyn Elefant writes on Legal Blog Watch.
But consultant and law professor Ken Adams writes on his blog, AdamsDrafting, that he thinks those who use the term sheet generator will be inclined to hire Wilson Sonsini, and points out that London-based Linklaters has offered a similar tool for a number of years.
The possible client benefits of a trend like this are cheered.
Ron Friedmann, a lawyer and senior vice president of marketing at outsourcing company Integreon, wrote on his blog, Strategic Legal Technology, that he thinks entrepreneurs will find the tool useful.
“My most successful entrepreneur friend is not a lawyer but has a deep understanding of the legal framework of start-ups,” Friedmann wrote. “He’s complained bitterly about legal fees and BigLaw associates who know less about deal docs than he does.” A tool like this would let entrepreneurs do the initial legwork and allow them to focus “on those aspects of the deal or docs that really need advice or hand-crafting” while the law firm has the clock running.