$4,824.13 for Legal Fees

The most common question about by Truemors post (besides “How could you be so dumb as to think this could be a real business?”), was about what I got for $4,824.13 in legal fees. The fees covered the following:

• Trademarking Truemors

• Drafting a Terms of Use

• Discussion of copyright, liability, infringement, IP, and insurance issues

• Organizational resolutions and bylaws

• Stock purchase agreements

You could do less legal work and do it cheaper, but if you ever want to raise venture capital much less go public or get acquired for more than scrap value, this is not the place to save a few thousand bucks. If you’re negotiating an investment or a liquidity event, you want someone who worked at Brobeck, Baker & McKenzie, and Wilson, Sonsini, Goodrich & Rosati—as opposed to your uncle the divorce lawyer from Penny, Wise, & Pound Foolish or myinstantincorporation4less.com—not only for her expertise but to show opposing counsel that you’re not clueless.

If you don’t use a law firm that’s “in the know” at the very start, you will probably have to undo or redo a lot of things. However, this time, you’ll be using $500/hour lawyers, so the couple of thousand bucks that you saved in the beginning is going to look mighty expensive. Lawyers are like oil filters: You can pay now or you can pay later.

---

By the way, you will enjoy this is a comment on the Truemors site regarding how I over-spent on the design of Truemors:

Yup, I am a webdesigner! I got a computer for my birthday and it has Frontpage and everything. I can design any page you need! Just leave me your mail and I will write you!

Comments

[Jon]

Thanks for breaking down your "legal fees" but in all honesty, you got nothing to prove nor justify to anybody (including those criticizing your idea). Your public persona is a success in every meaning of the word... we should all be this lucky! I really look forward to seeing how this goes!

Jon

[Marc Duchesne]

Guy : please continue to share with us your own " Art-Of-The-Start-In-The-Web2.0-Age-Per-The-Book " feedback.
This Truemors Experiment is a an incredible piece of real-world/hands-on experience for every ' Web 2.0 ' entrepreneur.
Pretty interesting : how you put yourself into Average Joe's shoes (e.g. the logo) whilst in the meantime leveraging on your own * VC kind of matter * experience (e.g. the legal stuff).

BTW : aren't you also the guy behind FSJ Fake Steve Jobs ?...

[Rik]

Guy, I think it's heartening to see the (apparent) ease with which you deal with all the criticism about truemors. It'll be really interesting where this non-business business of yours is going, which would probably be the point of the whole exercise.

Good luck, and you know what they say: 'seek criticism, not praise.'

[Catdaddy]

I don't agree with your justification here, Guy. I've been on the acquiring side of a few deals within a very large tech company - we've seen a lot of ugly legal agreements put together by less than spectacular attorneys hired by the acquired.

It doesn't matter. Most of those things get handled in the integration process. Very rarely do these things block deals, at least in my experience.

[sabat]

"Trademarking Truemors"

Not really necessary. You have prior use.

"Drafting a Terms of Use"

Huh? That's lawyer-speak for "I just said some big words; gimme yer money."

"Discussion of copyright, liability, infringement, IP, and insurance issues"

Unnecessary discussion. Blogga, PLEASE.

"Organizational resolutions and bylaws"

Whahh? the company corporation, $100

"Stock purchase agreements"

Blogga, PLEASE. You're not going public. I don't care what happens, you are NOT going public. And a purchase by another company surely does not require a stock purchase agreement other than boiler-plate bullshit.

To summarize: blogga, PLEASE.

[Bodenseepeter]

I agree to all points but this one, because it seems to apply only in the US.

[Hooshyar Naraghi]

Guy, congratulations on your first web site launch. Even though Truemors.com is a simple web site by your own yardstick of "DICE," hopefully you now get a realistic feeling what the real DICE-operated start-ups go through. I love people who are courageous enough to put themselves in the other one's shoes for a change.

I like to comment that for what you got, you paid less for legal fees than what I paid for our start-up. We paid 5K+ just to cover bullets 4 and 5 in a reasonably solid way. Our law firm is not in the WSGR tier, but an experienced one in Palo Alto, yet he is not an expert in bullets 1 through 3, which I intend to cover through another law firm on a deferred fees basis.

My only reaction about your relatively inexpensive, earth-shattering, paradigm-shift-moving, changing-the-world Web site is that some Web 2.0 start-ups do require 1 million dollars in order to be viable in the space they intend to survive and flourish. Some projects, however, don't need that much money. Based on what I have seen so far on the truemors.com Web site, $12K was about the right amount of money, of course with the exception of the logo that could be designed by Joe in one hour and all that coding that could be done by Jack in one or two days!

PS. That "!" is for the humor-impaired.

[Nate Klaiber]

That last quote pretty much sums up your whole Truemors venture. Trying to get in on something you know very little about. But hey - you have a computer, cheap logo, cheap developers, and a name you made for yourself 20 years ago. You are now Web2.0!

[Stavanger]

Any advise for recoveries if you haven't done this yet, but your 2.0 site isn't so big as of now? Is it possible to do the legal stuff after you launched your site for some times?

[Sam Davidson]

I agree with Guy on the legal fees. The one thing we haven't cut corners on in starting CoolPeopleCare has been what we've paid the lawyers to trademark everything and get our documents in place. Well worth it.

[Andrew Fife]

I agree that Skimping legal fees is a really bad idea, but most of the top firms will defer fees until after the first funding event. All of the firms that you mentioned will do this for bootstrapped companies that they believe have a reasonable chance of raising capital. In fact, I think the law firms provide a useful litmus test for a startups readiness to raise capital… since their bar is lower than VCs, if you can’t get the lawyers to defer fees, you probably aren’t ready to speak with investors.