top 5 startup law firms - kruze consulting law firms.pdfthe top 5 startup law firms report was...
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Kruze Consulting © I [email protected] I 415 . 322 . 1610
TOP 5 STARTUPLAW FIRMSFEBRUARY 2019
Vanessa Kruze, CPA
Kruze Consulting is a leading CPA firm serving funded startups with Accounting, Tax, Finance and HR support, and we have a unique view into startups’ expenses.
Legal expenses are often a meaningful component of a startup’s burn. We analyzed over $18 million dollars worth of legal spend by over 140 Seed, Series A, and Series B US startups to identify the top 5 startup law firms in the United States. The startups in this study have raised over $850 million in combined funding, and are backed by leading venture capital and seed investors.
Kruze Consulting © I [email protected] I 415 . 322 . 1610
TOP 5 STARTUP LAW FIRMS
TOP 5 STARTUP LAW FIRMS
RANK FIRM LOGOREVENUE
MARKET SHAREABOUT THE LAW FIRMS
1Fenwick& West 7.2 %
Consistently recognized as one of the top technology law firms, Fenwick & West
has offices in Silicon Valley, San Francisco, Seattle, New York and Shanghai.
2Wilson Sonsini Goodrich and
Rosati7.0 %
Wilson Sonsini is a nationally recognized law firm that provides services to technology
and life sciences companies, and the venture and private equity firms that fund them.
3
Gunderson Dettmer Stough
Villeneuve Franklin & Hachigian
5.2 %
Headquartered in Silicon Valley, Gunderson represents over 2,500 technology and life science companies, and over 450 venture
capital firms.
4Orrick, Herrington
& Sutcliffe 4.7 %
With 25+ offices in Asia, Europe and North America, Orrick provides technology companies with their legal advice for
fundraising, M&A, IP litigation, employment, and more.
5Perkins
Coie 4.5 %
Located in Seattle and with a total of 19 offices across the United States and Asia,
Perkins Coie represents clients across a wide range of industries and stages of growth—
from startups to FORTUNE 50 corporations.
Fenwick, Wilson Sonsini, Gunderson, Orrick and Perkins Coie likely make any “top” startup law firm list, but these land at the top of the list in terms of billable dollars. These 5 firms in our survey captured approximately 45% of every dollar that their clients spent on legal fees.
“We are proud of the work we do with early stage startups, from financing to IP to acquisition advice. Startup founders turn to us because they know we can support them from their first financing round to their IPO and beyond.” - Kristine Di Bacco, Fenwick & West Partner
Kruze Consulting © I [email protected] I 415 . 322 . 1610
TOP 5 STARTUP LAW FIRMS BY CLIENT COUNT
RANK FIRMCLIENT
MARKET SHARE
1 Fenwick & West 15 %
2 Gunderson Dettmer Stough Villeneuve Franklin & Hachigian 15 %
3 Orrick, Herrington & Sutcliffe 13 %
4 Wilson Sonsini Goodrich and Rosati 11 %
5 Goodwin Procter 11 %
Excluding litigation, these startups spent tens of thousands on legal fees per year. Across the board, there is a wide-ranging amount of money spent by startups on legal costs. This typically varies by industry, IP needs, funding round, and other Company-specific HR issues. The average startup in our study spends about seventy-seven thousand dollars per year, and the median spend is about thirty-nine thousand dollars per company.
A whopping 15% of the analyzed startups are working with Fenwick and Gunderson. It’s important to note that many startups work with more than one single legal provider, with many turning to firms specializing in areas like immigration, employment law, IP, or others working with more than one “big” law firm.
HOW MUCH DO STARTUPS SPEND ON LEGAL COSTS?
$77,150 Average legal spend per startup
$38,990 Median legal spend per startup
“Goodwin attorney’s love helping start-up clients navigate the legal aspects of their endeavor, so that they can focus on innovation. We are thrilled to be on Kruze’s Top 5 Start-Up Law Firm list! Partnering with clients and seeing their evolution from start-up through their entire company lifecycle is one of the best parts of our job.” - Bill Growney, Goodwin Procter Partner
TOP 5 STARTUP LAW FIRMS
Kruze Consulting © I [email protected] I 415 . 322 . 1610
When companies raise additional funding, it is typical to see a large outlay of money to legal firms to compensate for due diligence and corporate advisory during the fundraising process. For a Seed round, the legal costs in our analysis are typically between $5,000 to $10,000. For Series A rounds, legal costs are typically between $50,000 to $65,000 - although there are several instances of startups’ paying north of $100,000 in legal fees for a fundraise. Often times at the Seed round, law firms will defer payment until the total funding exceeds a pre-determined, significant threshold.
TYPICAL LEGAL COST FOR SEED AND SERIES A
$5,000 to $10,000 Seed Round Legal Costs
$50,000 to $65,000 Series A Legal Costs
STARTUP LEGAL SPEND BY INDUSTRY
AVERAGE MEDIAN
Not surprisingly, startups in different industries spent very different amounts on outside legal costs. The Healthcare industry tends to lead the pack with startups spending thousands of dollars per year on compliance with entities such as HIPAA and the FDA. Companies in the Hardware space are also known to spend a significant amount on legal costs, namely to establish and defend patents, and file trademarks on products. Legal spending in the other main industries tends to be a little more consistent, but can vary based on their own unique circumstances and needs.
TOP 5 STARTUP LAW FIRMS
Kruze Consulting © I [email protected] I 415 . 322 . 1610
TYPICAL RANGE OF LEGAL SPEND BY FUNDED STARTUPS
Proportion of Startups by Annual Legal Spend
Note: when possible, our analysis excludes litigation costs. Companies in our sample set involved in active litigation easily spent over a million dollars a year on legal fees, and often with specialized law firms. We excluded these specialized law firms from our analysis to show what a typical “startup” would spend and which top firms they would choose to work with in the normal course of operations. We strongly advise startups to avoid involvement in lawsuits, as it is EXPENSIVE.
STARTUP LEGAL SPENDING TRENDS FOR 2019
While Kruze Consulting’s data is currently limited for 2019, we expect to see a continued healthy legal spending marketing. This spending is will be driven by a strong venture capital fundraising market.
“In 2019, we expect to see startups demanding better support from law firms, including more transparent pricing, more professionalized account management, and greater access to tools and products that make legal procurement easy, fast and frictionless.” - Augie Rakow, Chairman of Atrium, a tech-enabled legal platform and law firm, whose clients’ have raised over $500 million in new capital.
TOP 5 STARTUP LAW FIRMS
Kruze Consulting © I [email protected] I 415 . 322 . 1610
ABOUT KRUZE CONSULTING
A LEADER IN CLOUDACCOUNTING SOFTWARE
Our practice is built on best of breed cloud accounting software like QuickBooks, Xero, Netsuite, Gusto, Zenefits, Expensify, Avalara, Brex and Bill.com. Technology makes us more efficient, saving our clients money and letting us offer higher value services like FP&A modeling, 409A valuation, and venture debt consulting. Startups deserve to work with CPAs using modern software.
BE READY FOR YOUR STARTUP’SNEXT VENTURE CAPITAL ROUND
We know how to de-risk your startup’s next venture capital round. When we do your startup’s tax returns, we make sure you are ready to fly through your next VC’s tax due diligence checklist. And when you use us as your bookkeeper, we maintain a due diligence folder so you can quickly respond to your next investor’s accounting questions.
ACCOUNTING, FINANCE, TAXES, & PAYROLL - ALL FOR STARTUPS
Startup CFO services, startup accounting, and bookkeeping services, startup annual taxes, expense reports, payroll, 409a, venture and venture debt consulting, FP&A, benefits: we’ve got your startup covered. And because we are leaders in cloud accounting software, we can deliver it all to startups at an affordable cost. Take your startup’s finances to the next level with Kruze!
OTHER KRUZE RESEARCH STUDIES
A CPA FIRM SPECIALIZED IN STARTUP ACCOUNTING & TAX
Startups are our niche and our passion. Our clients have raised over half a billion in venture capital financing in the past 12 months. We are one of only a few accounting firms that specialize in funded startups - we only offer financial and tax services to fast-growing startups in the Seed, Series A, Series B, and Series C stages.
A STARTUP TAXEXPERT
Nobody knows startup taxes better than us. Each year, we help hundreds of funded startups prepare federal and state taxes. Our firm has executed over $3 million in startup R&D tax credits last year - that means we help our startup clients each save up to $250,000 in payroll taxes. Our founder is a Deloitte Tax alumni, and our Vice President of Tax is a former IRS agent.
TRUSTED BY TOP VC’S FORTHEIR STARTUPS
Top angel investors and VCs refer Kruze because they trust us to give the right advice. Our clients are portfolio companies of top technology and Silicon Valley investors, including Y-Combinator, Kleiner, Sequoia, Khsola, Launch, Techstars and more. With us, your numbers are in order when it’s time to raise another round of venture financing.
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The Top 5 Startup Law Firms Report was created by VP of FP&A Healy Jones and Onboarding Manager Alex Janeck. Design by Lucila Romero.
ACCOUNTING,FINANCE TAX & HRFOR STARTUPS