Post Dot-com Crash, Silicon Valley Law Firms Still Want Start-Up Clients, But Take New View on Fees
Back in the late 1990s, when Silicon Valley start-ups were booming, law firms eager to obtain their business often agreed to perform work for simply an equity share in the company.
But the subsequent dot-com crash made many rethink this arrangement, as the value of client companies plummeted. Now a number are deferring legal fees rather than forgoing payment, but still taking stock in the client company, the Wall Street Journal reports.
“I charge a small retainer, and then defer billing,” founding partner Antone Johnson of the one-man Bottom Line Law Group tells the newspaper. In addition, he notes, “I’ll charge a special rate for start-ups, and in return I’ll ask for equity of about 1 percent.”