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Raising Debt Capital for a Startup
Because most loans and lines of credit are asset-based loans, knowing the lender’s guidelines is very important. The industry and market characteristics, the stage and health of the startup in terms of cash flow, debt coverage, and collateral are critical to the lender’s evaluation process. Naturally, startups have more difficulty borrowing money from banks than established businesses because they don’t have assets, track record of profitability and a positive cash flow.
Protection of Intellectual Property in a Startup
Aside from competence of management team, control of intellectual property is a major focus of investor scrutiny. The ability to identify and protect intellectual property directly reflects on investor confidence and the resulting access to capital available to technology start-up. Protection of intellectual property assets is available through the law of copyright, trade secrets, patents and trademarks.
Fees
Introduction
Pinsky Law, Patent & Trademark Agents, is a business, technology and intellectual property law firm providing a range of legal services to support companies involved in the development, distribution and use of technology and intellectual property assets. We also serve as corporate general counsel on a part-time basis for clients whose management teams require dedicated, in-house legal management and resources, but are not yet large enough to justify hiring full-time general counsel. Business and intellectual property legal services, including corporate services, patent agency, and trademark agency, are the most expensive of all legal services. One of the reasons for this is that business and intellectual property law firms have to hire lawyers who have a law degree, a business degree, and an engineering degree. These individuals are rare and are in high demand. Accordingly, professional fees charged by the lawyers providing corporate and intellectual property legal services are high.
In the interest of cost-effectiveness, we offer a three stage approach to rendering legal services, namely: (1) a one hour initial consultation; (2) a preliminary review of the facts of your case, legal problems, technology, state of the prior art, in order for us to define what services you may require and estimate a fee for your representation; and (3) performance of the legal services that you select and authorize. During the initial consultation, stage 1, expect to pay $250.00 for a one hour consultation. At stage 2 expect to pay fees and disbursements in the range of $1,000.00 to $3,000.00, depending on the nature and extend of the preliminary work required. The performance of legal services, stage 3, will cost extra.
For example, for filing articles of incorporation and properly establishing a corporation the fees and disbursements will be at least $1,700.00; for preparing a basic shareholders agreement the fees and disbursements will be at least $1,500.00; for filing an application to register copyright the fees and disbursements will be at least $500.00; for preparing an application to register a trademark the fees and disbursements will be at least $1,800.00; and for preparing an application for patent the fees and disbursements will be at least a few thousand dollars. For more complex matters such as litigation, or incorporation of a company with a complex corporate and shareholder structure, or preparation of a complex patent application, fees and disbursements can easily be over $10,000.00. If you cannot afford business and intellectual property legal services, we strongly encourage you to seek a financial and/or business partner to support your endeavors.
Billing Process
Clients have come to us from other firms and lamented about the billing policies they endured. As a client of the Firm you do not pay for basic business, technology and intellectual property law research. We do not charge our clients to maintain our knowledge of the law and procedure. Furthermore, due to the wide range of business and intellectual property matters we handle, it is quite common that we have dealt with the same issue before. Accordingly, we can appropriate much of our existing work to handle the new matter.
Our rates are approximately one-half the rates of our peers at large firms for most client matters. How? We leveraged technology, and we eliminated the high overhead, inexperienced lawyers, and pyramid leverage of the traditional law firm's business model to maximize value for our clients. We have a simple philosophy when approaching fees and billing - we treat our clients' money like we would treat our own. Unlike large, general practice law firms we do not separate the billing department from the legal department. We are accountable for the work and fees we bill. There must always be meaningful and clear value to the work that is billed. If not, such charges will not be incurred.
Advance of Fees
Before we begin work on behalf of clients, we require an advance payment of fees. The advance payment is placed in the Firm's trust account and serves as a source of payment for all or part of the Firm's account or accounts when rendered. Clients are asked to replenish the trust account from time to time. Any unused portion of fees will be returned to clients upon completion of a project. Incorporation of a company or filing of trademark, patent and copyright applications all require payment of government fees. Prior to any incorporation of a company or filing of trademark, patent or copyright applications, all government fees must be deposited in the Firm's trust account.
Time Billing
The time billing fees are based principally on the time spent by the Firm on behalf of clients. Minimum billing increment is six (6) minutes. Records of all time are kept and accounts are then prepared and sent to clients periodically.
Flat Fees
As we noted above, our practice encounters the same issues and procedures repeatedly. While the client might be new to corporate or patent or trademark application process, we are experienced. The Firm and our longstanding clients have a strong preference to utilize a flat-fee billing whenever possible. Accordingly, we attempt, if we see fit, to prepare flat-fee estimates for work prior to the initiation of the project. Flat fees give clients security in knowing the anticipated costs for matter and promotes efficiency in the legal process. For example, a typical patent application step-by-step flow chart is shown below.
