"Time for Law Firms to Take Part in Designing the Venture Ecosystem"
Forum remarks noting that unless the cost structure of legal services in early-stage startups is changed, disputes will only be deferred, not prevented.
In the venture ecosystem, legal services generally appear only after a problem has already arisen. This is because, in the early stages of a startup, cost concerns often lead founders to postpone legal review.
However, there are matters—such as equity agreements, stock option design, and agreements between co-founders—that become difficult to undo if they are not sorted out early on.
In fact, a significant portion of disputes arise not because the legal issues are complex, but because there is no documentation. Verbal agreements hold up only as long as the relationship stays good.
There are two things a law firm can do. One is to create a cost structure suited to the early stages of a company. The other is to make standard documents publicly available to improve accessibility.
It is also necessary to compile and share the clauses that repeatedly cause problems at the investment stage. The same disputes keep recurring at company after company.
The phrase "ecosystem design" may sound grand, but in practice, it comes down to a simple question: when do you get a single document drawn up?