This is true for any advisor, your expectation should be that they will make you aware of the likely consequences--some of which you may not have foreseen--for a course of action that you are contemplating. But they cannot make the decision for you.
There was a great quote in a 2006 Fortune profile of Larry Sonsini (the Sonsini in Wilson Sonsini) when they asked TJ Rogers why he valued Sonsini's advice:
"I don’t take orders well," says T.J. Rodgers, the founder, chairman and CEO of Cypress Semiconductor. "But taking advice from Larry Sonsini is easy. He’s professorial. He’s nonjudgmental. ’You can choose to do this, you can choose to do that, and these will be the consequences.’ So you realize you’re not being forced or pushed into anything. He explains to us why the sometimes frustrating, arcane and inefficient system we have makes sense, or at least made sense at one time, and therefore should be followed."
1. The best attorneys present options and make you aware of the likely and potential consequences of different courses of action, but understand that the business decision still rests with the client.
2. If you allow an attorney to invest (and then re-capture his dollars in (possibly deferred) fees) you may find it difficult to fire or replace the attorney. Make sure it’s someone you want a long term relationship with: there is no such things as "free legal advice."
3. Work with advisors who are willing to be transparent about their fees. If you were a prospective WSGR client, the answers that they gave here should be unacceptable. Understand why the code of ethics for accountants prohibit similar fee arrangements.
Not "copied" exactly - skmurphy posted the same comment in both places. (I do this sometimes too, especially if the comment is in a moderation queue at the original site.)
Venture Hacks moderates their comments so I wasn't sure they would post it and I thought it was an appropriate comment on the blog post as an HN comment as well.
Sorry, in the original Fortune article WSGR was vague in their responses to questions about the side fund they were running that did equity investments in their startup clients.
Accountants who own shares in the company would have a vested interest in making it appear better on paper, or more profitable than it actually was; or distorting the companies financial position to an outside party doing due diligence. With a lawyer it's much more complex, but it basically boils down to the question of whether your lawyer is advising you as an independent advisor, or as an interested party who wants a return or is afraid of losing their investment.
Comments
This is true for any advisor, your expectation should be that they will make you aware of the likely consequences--some of which you may not have foreseen--for a course of action that you are contemplating. But they cannot make the decision for you.
There was a great quote in a 2006 Fortune profile of Larry Sonsini (the Sonsini in Wilson Sonsini) when they asked TJ Rogers why he valued Sonsini's advice:
"I don’t take orders well," says T.J. Rodgers, the founder, chairman and CEO of Cypress Semiconductor. "But taking advice from Larry Sonsini is easy. He’s professorial. He’s nonjudgmental. ’You can choose to do this, you can choose to do that, and these will be the consequences.’ So you realize you’re not being forced or pushed into anything. He explains to us why the sometimes frustrating, arcane and inefficient system we have makes sense, or at least made sense at one time, and therefore should be followed."
The full profile is here: http://money.cnn.com/magazines/fortune/fortune_archive/2006/...
I blogged about it here http://www.skmurphy.com/blog/2006/11/30/larry-sonsini-profil...
Three related take-aways for entrepreneurs:
1. The best attorneys present options and make you aware of the likely and potential consequences of different courses of action, but understand that the business decision still rests with the client.
2. If you allow an attorney to invest (and then re-capture his dollars in (possibly deferred) fees) you may find it difficult to fire or replace the attorney. Make sure it’s someone you want a long term relationship with: there is no such things as "free legal advice."
3. Work with advisors who are willing to be transparent about their fees. If you were a prospective WSGR client, the answers that they gave here should be unacceptable. Understand why the code of ethics for accountants prohibit similar fee arrangements.
This comment is copied from the OP comments.
Not "copied" exactly - skmurphy posted the same comment in both places. (I do this sometimes too, especially if the comment is in a moderation queue at the original site.)
Venture Hacks moderates their comments so I wasn't sure they would post it and I thought it was an appropriate comment on the blog post as an HN comment as well.
The answers WSGR gives where?
Sorry, in the original Fortune article WSGR was vague in their responses to questions about the side fund they were running that did equity investments in their startup clients.
What conflict of interest does it create for your lawyer to own your stock? Why are accountants prohibited to own?
Accountants who own shares in the company would have a vested interest in making it appear better on paper, or more profitable than it actually was; or distorting the companies financial position to an outside party doing due diligence. With a lawyer it's much more complex, but it basically boils down to the question of whether your lawyer is advising you as an independent advisor, or as an interested party who wants a return or is afraid of losing their investment.