Shouldn’t the Standardization of Venture Capital Documents Lead to Reduced Legal Fees?
As an industry, venture capital is relatively young. Yet it has been around long enough–through busts and booms–that it will not simply go away as some might have you think. Venture capital is a legitimate industry which is now being enhanced through standards and patterns. Documentation is one area that is trending towards consistency in venture capital.
In the past, a startup company’s lawyer and the venture fund’s counsel might have haggled over terms that are now perceived as boilerplate. The National Venture Capital Association (NVCA) working groups have done an outstanding job creating model Series A documents.
But if venture capital documents are becoming standardized, why are law firms charging more for venture financings?
I hear more and more remarks about how high legal fees have been for their Series A financings, from $50k, $75k, $100k and upwards. And I’ve heard from both entrepreneurs and attorneys.
Of course, each venture capital transaction is a unique deal and document drafting/negotiation is not the only legal work to be completed in a venture financing. Also, I’m not implying that the legal industry should start commoditizing its practice. But you would think that legal document standardization would lead to a reduced need for negotiation…and therefore reduced legal bills.