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Is it normal for a startup law firm to ask for a nominal amount of stock in exchange for deferring fees?

Chris Barsness,

startup, finance, law, and tech nerd

When dealing with startup businesses, some lawyers realize that they can make more from equity in the company that the actual fees in cash (not to mention the fact that many startups start out cash poor so they'll try to do legal work themselves).  It shows the attorney's commitment to the success of the company, not just to do a transaction and add them to their list of clients, but to take this equity in the company.  The firm that agrees to this arrangement understands that the risk of actually making a profit from selling the stock are pretty high. 

I feel that deferring fees and equity, flat fee, or other more flexible fee arrangements show the attorney's devotion to helping the business succeed.  The conflict of interest and other problems making most attorneys shy away from these deals is discussed in the following article of mine:

http://siliconvalleystartupattor…

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