The $1000/hour project manager

January 31, 2023

A disclaimer

It would be a huge mistake to minimize the role that lawyers play in venture financings.  A good startup lawyer does more venture deals every month than a startup founder will do in their entire career, and brings a ton of valuable experience and judgment to the deal.  They will help you avoid catastrophic mistakes (which are easier to make than you’d think), get important governance decisions right, and can guide you to a smooth closing - they’re an absolutely crucial part of getting deals done.

But….

The way startups currently work with lawyers on financings makes your legal counsel a project manager as much as a counselor.  The person with the least time available, and the highest hourly rate, with attention divided among countless clients, defaults into being the one running your extremely important, time sensitive process.  

Since financings are so important and only happen a few times in a startup’s existence, founders tend to lean heavily on their lawyers.  They will often spare no expense, and hire one of the name brand law firms that are among the most expensive available - a version of “no one ever got fired for buying IBM”.  Then, once the term sheet is signed, the lawyers run most of the process - from the important things that require real legal judgment, like drafting documents, reviewing diligence materials and negotiating legal rights, to the blocking and tackling that, while also important, does not need to be done by the most expensive person in the room.

Things your law firm does that could be done by software

A huge subset of the work done by your law firm is actually very routine, more like project management than sophisticated legal work.  

Among the things that are currently done by law firms but could be done by software:

  • Preparing drafts of routine documents from forms
  • Sharing draft documents with investors
  • Running redline comparisons between document versions
  • Gathering contact information and signatures blocks for investors
  • Calculating internal splits between the different funds affiliated with an investor
  • Creating signature pages
  • Sending signature requests
  • Preparing the closing set
  • Confirming wire instructions
  • Filing documents with Delaware
  • Obtaining good standing certificates

All of these tasks need to be done correctly in order to run a smooth financing.  But they should not be done entirely by law firms charging by the hour.  Not only is that expensive, but it’s a manual process that is prone to error.

What we’re doing to improve the situation

Dealkit is built to address all of this.  We’re building the platform to help you run a perfect financing process.  We give founders and lawyers the tools to do all of this with software.  We save everyone time and increase the quality of everyone’s work.  And your legal team can spend time on the parts of the deal that really need their judgment, while we run the project management with software built for exactly this workflow.

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The $1000/hour project manager

It would be a huge mistake to minimize the role that lawyers play in venture financings. A good startup lawyer does more venture deals.