3 ms·

Main concerns: Guard your IP - watch out for open-ended "due diligence" requests or anything else that might leave your IP vulnerable to a predatory partner.

by grellas 17y ago

Main concerns: Guard your IP - watch out for open-ended "due diligence" requests or anything else that might leave your IP vulnerable to a predatory partner. Guard your funding options - if they invest as part of the deal, don't give them veto rights over future funding. Guard your competitive turf - any "partner," and especially a well-funded one, can easily become your competitor after the relationship is over. See a good lawyer about steps to prevent this. Guard your people - raiding is not unheard of in this context. Include no-hire clauses in your documents. Guard your rights to derivatives from any joint development - unless you want to create a competitor, don't do as a work-for-hire but get joint rights or, better yet, sole rights to derivatives from the SOW. Guard your own distribution opportunities - limit exclusivity strictly as to time and type of channel. Guard your back from the start - use a good lawyer even at the term sheet stage because both structure and fine points are critical in this type of relationship and you will prejudice yourself if you let poor terms define a term sheet only to have to dig out of them in doing the definitive docs. And don't let them snow you with the "we use these standard documents only" approach - every deal like this is highly customizable and should be done that way. Your description is too general to know what other factors might apply but these are some big ones for many of these types of deals. Hope it helps.

alex_c 17y ago
Thank you - very helpful. We obviously want a good lawyer on our side (I think I can find someone), but it helps to have some things in mind already. I know I hate it when I get asked this kind of question, but I'll ask anyway - what should we expect in fees for a lawyer to advise us throughout the process and help with the final documents? I know it's hard to estimate, but a ballpark low/high.
- grellas 17y ago
  Hard to say without knowing more about the deal, about the lawyer pricing in your local market, and about whether you will be using a big firm or not. In very rough terms, and assuming a deal that does not have a lot of different elements to it beyond those you generally describe (for example, one that does not include a funding component), $5K to $10K might not be out of line when you include a term sheet, drafting/document markup, meeting time to discuss issues and strategy internally, and possible attorney-to-attorney negotiations over at least some issues. With a big firm, start with $10K as a baseline and assume it can easily climb from there (in more complex deals of this type, fees can easily run $20K-$30K and up - yours would not appear to fall in this category, though). Key points: Negotiate for a fixed fee if possible. Have your lawyer do the first draft if possible. Your lawyer will have a good template to start with, and it tends to be more expensive to have to work backward from a first draft that is heavily slanted against you than it is to have it set out right in the first place. Get detailed early-stage advice from your lawyer in the background but do the preliminary negotiating on business terms and basic legal structure directly with the other principal if you can, before getting your lawyer too heavily involved. If you feel you are too inexperienced for this, then use the lawyer up front but you will pay for this. Don't scrimp on the customized terms needed to get the protections properly woven into the final documentation. Your company will have the most to lose if this is not done right.

by grellas 17y ago

alex_c 17y ago

Thank you - very helpful. We obviously want a good lawyer on our side (I think I can find someone), but it helps to have some things in mind already. I know I hate it when I get asked this kind of question, but I'll ask anyway - what should we expect in fees for a lawyer to advise us throughout the process and help with the final documents? I know it's hard to estimate, but a ballpark low/high.

grellas 17y ago
Hard to say without knowing more about the deal, about the lawyer pricing in your local market, and about whether you will be using a big firm or not. In very rough terms, and assuming a deal that does not have a lot of different elements to it beyond those you generally describe (for example, one that does not include a funding component), $5K to $10K might not be out of line when you include a term sheet, drafting/document markup, meeting time to discuss issues and strategy internally, and possible attorney-to-attorney negotiations over at least some issues. With a big firm, start with $10K as a baseline and assume it can easily climb from there (in more complex deals of this type, fees can easily run $20K-$30K and up - yours would not appear to fall in this category, though). Key points: Negotiate for a fixed fee if possible. Have your lawyer do the first draft if possible. Your lawyer will have a good template to start with, and it tends to be more expensive to have to work backward from a first draft that is heavily slanted against you than it is to have it set out right in the first place. Get detailed early-stage advice from your lawyer in the background but do the preliminary negotiating on business terms and basic legal structure directly with the other principal if you can, before getting your lawyer too heavily involved. If you feel you are too inexperienced for this, then use the lawyer up front but you will pay for this. Don't scrimp on the customized terms needed to get the protections properly woven into the final documentation. Your company will have the most to lose if this is not done right.