In startup hotbeds like Silicon Valley, Boston, and even New York it’s common for law firms to work out special arrangements with startups who generally have little cash (usually that’s why they need a law firm in the first place, to raise cash). These law firms are willing to defer payment until the cash is raised or even accept equity as payment.

Law firms in Indianapolis are also familiar with special arrangements for startups.

At Pocket Tales, we’ve looked to Nick Mathioudakis from Baker & Daniels for help, but I’ve also seen Barnes & Thornburg, Alerding Castor, and to a lesser extent Ice Miller (although right now they have a case study for a startup on their homepage), hanging around the Indianapolis startup scene.

This is great for the startup but obviously there’s something in it for the law firm too. Assuming they continue to survive, startups generally require a lot of legal work and a successful startup can be a big revenue source for law firms. Mint Founder Aaron Patzer estimated legal costs of $10,000 - $50,000/ month not including special events like incorporation and additional rounds of fundraising.

What if you’re not quite ready to seek professional legal advice?

You can help yourself.

Because investors and startups both have an incentive to lower the legal costs involved with raising capital, there has been a big push to standardize certain legal documents. Recognizing this, some very experienced law firms have begun to offer templates for term sheets for free online.

Below is a list of places to find example term sheets, stock purchase agreements, incorporation documents etc. Some of these links, like Orrick, even contain examples of employee agreements and consulting agreements.

These will never replace legal counsel, but they’re great learning tools. Let’s face it, we make a lot of verbal agreements with partners, or that sister who knows graphic design, or that dad who is loaning us $2,000 to get started. Glancing at these will at least give you an idea of what to think about when you do so.

Y Combinator
Series AA Equity Financing Documents
http://ycombinator.com/seriesaa.html

Orrick
Start-up Forms Library
http://www.orrick.com/practices/corporate/emergingCompanies/startup/forms_index.asp

TechStars
Model Seed Funding Documents
http://www.techstars.org/2009/02/07/techstars-model-seed-funding-documents/

National Venture Capital Association
Model Legal Documents
http://nvca.org/index.php?option=com_content&view=article&id=108&Itemid=136