In the Spring of ’99, during my last semester at Berkeley and almost as an afterthought, I signed up for a class on business law. Taught jointly by Noel Nellis and Leo Helzel, Top Down Law was a survey of the types of issues entrepreneurs face.
These guys put together an excellent primer on a number of topics that were at the same time technical, complicated, intimidating, and really, really crucial for startups. Importantly, Noel and Leo provided guidance on how to select and partner with advisers to approach and make decisions.
Here are a few takeaways from the semester which have served me well:
- Take time to figure stuff out on your own. Both advice and mistakes are expensive, and there’s absolutely no reason to outsource at least a basic understanding of legal matters (or accounting/tax, for that matter). You can and should take the time to grasp the logic of the underlying rules and the universe of options.
- Manage your relationships. If you’re actively engaged and interested in the logic of these decisions, your lawyer is much more effective and efficient at providing advice.
- Manage your expenses. During the class, after Noel would describe how a lawyer might advise a client in different situations, Leo would chip in, almost on cue, “And how much would that cost?” As with any other line item, know what you’re getting into with each matter, make intelligent cost-benefit decisions, set budgets, and avoid billing surprises.
- We made a calculated decision about our corporate structure in order to put investors in a tax-advantaged position in the event of a successful outcome (see Sept. 6th blog post for a more detailed explanation).
- Our options structure is optimized both from the employee’s perspective (Sept. 9th blog post) as well as for from the company’s (Sept. 15th blog post).
Every once in a great while, I surprise myself by remembering something from classroom setting. In this particular case, hats off to Noel and Leo for imparting some knowledge that has been incredibly helpful.