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Should a startup co-founder charge back a ~2k USD legal review fees to company?
I am in a situation where there is a legal case between (1) co-founder, (2) the startup and (3) VC investor and a legal document (let's call it "side letter") has been developed to settle the issue.
Now the (1) co-founder wants to have a private legal advice session that would cost around 2,000 USD to provide legal consultation on the "side letter" because (1) co-founder was not involved when the side letter was developed and only (2) the startup and (3) VC investor had access to a legal advisor to write the side letter.
Question: does the (1) co-founder have the right to conduct a private legal advice session on the side-letter and charge back the cost of around 2,000 USD back to the company? Any other feedback is welcomed.
- rajacombinator 8y agoYes, morally speaking. Don’t screw your cofounders. Pay that man his money and move on. 2k is a drop in the bucket to a VC funded company.
- technuke 8y agobut isn't this an abuse to the shareholder money injected in the company given that he wants to conduct a private consultation session?
- rajacombinator 8y agoNo. The investors should have put in the money with the expectation that some of it would be used to clear up whatever cap table issues exist. Could your ex founder pay for this himself? Sure, but founders are often short on cash and it is bad for the system if hostile VCs can come in and just bury the founders they don’t like in legal fees. I assume you’re trying to get rid of this former cofounder - 2k is a pittance, it’s better to resolve this quickly and move forward.