Post Category → Legal Tech

The Carta SAFE for Seed Rounds

Background reading:

As I’ve written in various places (see above), a significant problem that has emerged in startup ecosystems involves certain investor organizations pushing startups to adopt their preferred financing templates. Predictably those templates are often riddled with issues that favor the interests of the money. Of course these organizations are far too clever to come out and state transparently, “we want you to use this document because it makes us and other investors more money,” so they spin other narratives about saving founders time, or reducing legal fees; even though the “cost” to founders is often orders of magnitude higher than whatever they might be “saving” by mindlessly signing the templates.

This dynamic was most visible with YC’s announcement of the Post-Money SAFE, which implemented economic concepts exorbitantly favorable to seed investors (including YC of course), but was marketed as a way to (air quotes) “help” founders have more “clarity” about their cap table. YC, their long list of positive impacts on the ecosystem notwithstanding, is still an investor with lots of mouths to feed. No one should’ve been surprised that it would use its brand leverage to push a more investor-favorable document onto startups, particularly now that, with its brand having significantly matured, it no longer needs to rely as much on “founder friendliness” to attract startups.

Carta, the incumbent capitalization SaaS used by startups, recently announced that it is enabling automated SAFE financing on its platform. Interesting news, and I’m sure it’ll save teams planning on closing SAFE financings a bit of hassle. But automated SAFE closings have been available on other platforms, like Clerky, for some time, and realistically the technology behind it is hardly earth-shattering. Given that SAFEs are utilized far more in California than in the rest of the market, that’s probably where the automation will have the most impact.

What I find much more interesting, and relevant to topics I write about, is that Carta chose to tweak the YC SAFE docs and create a “Carta SAFE.” Companies can still close on YC’s Pre-Money or Post-Money SAFE templates, but they also have the option of a Pre-Money or Post-Money “Carta SAFE.” The changes themselves are fairly innocuous, but helpful and balanced. More importantly, I think it’s worth recognizing the valuable role that an organization like Carta could play in promoting various template financing structures to startups.

YC is a venture capitalist, and thus highly biased in the terms it purports to offer as “standard.” They lost tremendous credibility among the legal and startup community – although surely gained favor among VCs – with their 180 on the Post-Money SAFE. They absolutely deserve respect for their track record of picking successful startups, but lines have been crossed with respect to any facade of “founder friendliness” in their template standards.

Carta, however, is a technology company that (as far as I know) is not investing in dozens of startups every year. Carta has far less reason to favor an investor-biased document, and thus potentially has far more credibility in swaying market “standards” in a more balanced direction. This is visible in how they’ve implemented their automated seed financings and templates, relative to how YC pushed out the Post-money SAFE.

Go to YC’s website, and you can’t even find the old pre-money SAFEs with more company-favorable economics and terms. All you have is the new (profoundly investor-biased) Post-Money docs for download. This simple fact has actually caused huge confusion among inexperienced founders, who often aren’t even aware that YC dramatically changed their forms and economics, and thus (thinking they are doing themselves favors) simply download and execute the forms on YC’s site. YC could’ve very easily offered up the new Post-Money SAFEs, while leaving the old forms also available for download, with clear prompting to founders to work with advisors to decide which form they prefer. Instead, YC consciously chose to promote only the new forms, signaling a clear desire to change the market “standard” in favor of investors.

Contrast that with Carta. The Pre-Money v. Post-Money distinction is front and center in their UI, with both types of forms easily accessible to startups, and with helpful tools for comparing dilution from the different structures. This is a far more honest and transparent way for helpful templates to be offered to startup teams, without shady gimmicks or marketing spin to nudge them in favor of the money. It should be applauded.

Of course, I’m not going to wrap up this post without acknowledging that Carta still has bias. Who doesn’t? As an automation tech company, they are obviously biased toward automation and templates that enable automation. There are countless ways in which financing documents can (and often should) be negotiated and tweaked to make them a better fit for the unique context of a particular company raising money from particular investors. Sometimes convertible notes of various flavors make more sense. Other times seed equity. Other times the full suite of NVCA equity docs.

Despite growing traction among public templates, an enormous amount of investors and startups still take advantage of flexibility and customization in their deal docs, because the stakes are so high, the context and people involved so nuanced, and the terms so permanent, that it’s worth doing a bit of negotiation. If a few thousand dollars of legal fees can save you a few million in the long-run on your cap table, it doesn’t take advanced calculus to arrive at a decision.

In saying that, I’m obviously reflecting my own bias as company counsel to startups (and not investors). My job is to ensure startup teams are aware of all the options on the table for their financings and corporate governance. That of course includes bringing up when an automated template might make sense. Sometimes it does, often times it doesn’t. We can all stop pretending that serious lawyers are in any way threatened by tools like Carta or Clerky. I love these tools, because the last thing I enjoy spending my time on is shuffling cookie-cutter forms. Use the cookie-cutter when it makes sense, but make sure you really understand the tradeoffs and limitations, because a lot of very smart teams decide to put the cookie-cutter down and take a more “custom fit.”

Venture capitalists, together with Startups, are biased in favor of their own bank statements. Automation tech companies, like Carta, are biased in favor of hyper-standardization and automation. And high-end ECVC (Startup) lawyers, like me, are biased in favor of flexibility and customization. There’s no need to hide any of this. Every party has an important role to play in the ecosystem, and the interaction of all the moving parts ensures we all arrive at a reasonable equilibrium.

Moving (Too) Fast and Breaking Startup Cap Tables

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As I’ve written many times before, the “move fast and break things” ethos, which makes absolute sense in a software environment where fixing “bugs” is quite easy and low-stakes, becomes monstrously expensive and reckless when applied to areas where the cost of a mistake is orders of magnitude higher to fix (if it’s fixable at all). Silicon Valley got a very visible and expensive (to investors in terms of capital, and founders in terms of legal errors and terrible legal advice) lesson in this reality a while back with a very well-funded (but ultimately failed) legal startup heavily promoted as enabling (via over-hyped vaporware) startups to “move faster” and save significant costs. That legal startup was, perhaps unsurprisingly, controlled by money players with all kinds of reasons to profit from startups (that they invest in) getting weak legal and negotiation guidance. No one wants an in-experienced founder to move fast and mindlessly do what investors want more than… those investors.

That fundamental point is one that inexperienced founders need to keep their eye on throughout their entire fundraising and growth strategy. Notice how, for example, certain Silicon Valley groups adamantly argue that SV’s exorbitant rents and salaries are nevertheless worth spending capital on, and yet simultaneously they will howl about how essential it is that startups minimize their legal spend (a small fraction of what is spent on rent and salaries) in fundraising, and move as quickly as possible; usually by mindlessly signing some template the investors created? Why? Because they know that the one set of advisors most capable of “equalizing” the playing field between inexperienced startup teams and their far more seasoned investors is experienced, independent counsel. Aggressive (and clever) investors say they want you to adopt their preferred automation tools and templates because they care so much about saving you money, but the real chess strategy is to remove your best advisors from the table so that the money can then, without “friction,” leverage its experience and knowledge advantage.

At some obvious level, technology is an excellent tool for preventing errors, especially at scale when the amount of data and complexity simply overwhelms any kind of skilled labor-driven quality control mechanism. But there is a point at which people who sell the technology can, for obvious financial incentives, over-sell things so much that they encourage buyers to become over-dependent on it, or adopt it too early, under the delusion that it is far more powerful than it really is. This drive to over-sell and over-adopt tech for “moving really fast” is driven by the imbalance in who bears the cost of fixing “broken things.”

Ultimately the technology seller still gets paid, and puts all kinds of impenetrable CYA language in their terms of service to ensure that no one can sue them when users zealously over-rely on their products in ways clearly implied as safe by the tech’s marketing. Founders and companies are the ones who pay the (sometimes permanent) costs of a poorly negotiated deal or contract, or in the case of cap tables incorrect calculations and promises to employees or investors.

In the world of cap tables, automation and tracking tools like Carta (the dominant player, justifiably, by far) are enormously valuable, and doubtlessly worth their cost, in helping the skilled people who manage the cap tables keep numbers “clean.” In the early days of Carta’s growth (once called eShares), there was a general understanding that cap tables rarely “break” before the number of people on the table exceeds maybe 20-30 stakeholders as long as someone skilled at managing cap tables (in excel) is overseeing things. That last part about someone skilled is key.

There are in fact two broad sources of cap table errors:

  • Using Excel for too long, which creates version control problems as the number of stakeholders grows; and
  • Management of cap tables by people who are simply too inexperienced, or moving too quickly, to appreciate nuances and avoid errors.

Technology is the solution to the first one. But today it’s increasingly becoming the cause of the second one. The competitive advantage of technology is speed and efficiency at processing large amounts of formulaic data. But the advantage of highly-trained people is flexibility and ability to safely navigate nuanced contexts that simply don’t fit within the narrow parameters of an algorithm. In the extremely human, and therefore subjective and nuanced, world of forming, recruiting, and funding startups in complex labor and investor markets, pretending that software will do what it simply can’t do –  delusionally over-confident engineers notwithstanding – is a recipe for disaster. The combination of new software and skilled expertise, however, is where the magic happens.

The Carta folks have been at this game long enough to have seen how often over-dependance on automation software, and under-utilization of highly trained and experienced people in managing that software, can magnify cap table problems, because it creates a false sense of security in founders that leads them to continue flying solo for far too long. Sell your cap table software as some kind of auto-pilot, when the actual engineering behind it doesn’t at all replace all the things skilled experts do and know to prevent errors, and you can easily expect ugly crashes.

That’s why Carta very quickly stopped promoting itself as a DIY “manage your cap table by yourself and stop wasting money on experts” tool and evolved to highly integrate outside cap table management expertise, like emerging companies/vc law firms and CFOs; who spend all day dealing with cap table math. They realized that the value proposition of their tool was sufficiently high that they didn’t need to over-sell it as some reckless “you can manage cap tables all by yourself!” nonsense to inexperienced teams who’ve never touched a cap table before. The teams that use Carta effectively and efficiently see it as a tool to be leveraged by and with law firms, because startup teams are rarely connected to anyone who is as experienced and trustworthy (conflicts of interest matter) in managing complex cap table math better than their startup/vc law firm.

But as is often the case, the cap table management software market has its own “race to the bottom” dynamics – but a better name may be the “race to free and DIY.” If I’m a company like Carta, and I know that truthfully very few companies need my tool before maybe a seed or Series A round (excel is perfectly fine, flexible, and simple until then), I’m still extremely worried that someone will use the time period before seed/Series A to get a foothold in the market and then squeeze me out as their users grow. That someone is almost always a “move fast and break things” bottom-feeder that will, once again, over-sell founders on the idea that their magical lower-cost DIY software is so powerful that founders should adopt it from day 1 to save so much money by no longer paying for expertise they don’t need.

Thus Carta has to create a free slimmed down version, and they did. But they’ve stuck to their guns that cap tables are extremely high-stakes, and even the best software is still extremely prone to high-cost errors if utilized solely by inexperienced founders. That’s why Carta Launch has heavy ties to a network of startup-specialized law firms. It’s free as in beer, but honest people know that it still needs to be used responsibly by people who fully understand the specific context in which it’s being used, and how to apply it to that context.

But the bottom-feeders of cap table management are of course showing up, with funding from the same people who were previously happy to impose costs (errors, cleanup) on inexperienced teams as long as their software gets adopted and their influence over the ecosystem therefore grows. The playbook is tired and predictable.

Why are you using that other (widely adopted and respected) technology that still relies (horror of horrors) on skilled humans? It’s 2020, you need :: something something automation, machine learning, AI, etc. etc. :: to stop wasting money and move even faster. Our new lower-cost, whiz-bang-pow software lets you save even more time and manage your cap table on your own, like the bad ass genius that you are.

We know where this is going. Many of us already have our popcorn ready. While before I might run into startups who handled only a formation on their own, and show up with a fairly basic and hard-to-screw-up cap table, I’m increasingly seeing startups who arrive with seed rounds closed on a fully DIY basis, and totally screwed up cap tables involving investors and real money. They also often have given up more dilution than they should’ve, because no independent, skilled expertise was used to help them choose and negotiate what funding structure to use. Clean-up is always 10x of what it costs to have simply done it right, with a thoughtfully chosen (responsible) mix of technology and skilled people, on Day 1.

Technology is wonderful. It makes our lives as startup/vc lawyers so much better, by allowing us to focus on more interesting things than tracking numbers or inputting data. The stale narrative that all VC lawyers are anti-technology really gets old. We were one of the first firms to adopt and promote Carta, along with numerous other legal tech tools. Not a single serious law firm views helping their clients manage cap tables as a significant money driver. But that’s like saying no serious medical practice views X or Y low-$ medical service as a significant money driver. Something can be a small part of a professional’s expertise, and yet still way too contextual, nuanced, and high-stakes to leave to a piece of software pretending to be an auto-pilot.

When the cost of fixing something is low, move as fast as you want and break whatever necessary. But that’s not contracts, and it’s not cap tables. In those areas, technology is a tool to be utilized by still-experienced people who regularly integrate new technology into their workflows, while maintaining skilled oversight over it. Be mindful of software companies, and the clever investors behind them, who are more than happy to encourage you to break your entire company and cap table as long as you utilize their half-baked faux-DIY tool. Their profit is your – often much larger than whatever money you thought you were saving – loss.

The Race to the Bottom in Startup Law

TL;DR: There is a long-standing race to the bottom occurring in startup law, led by certain firms who’ve chosen to ignore the ethical standards of the profession in order to maximize revenue; including by flouting rules on conflicts of interest through aligning themselves with influential investors and “power brokers” in the market. The end-result of that race is damaged startups who are being led to believe that they’re getting “efficiency,” when what they’re really getting is biased garbage advice and a time bomb.

Background Reading:

Regulated professions are regulated for a reason. In the case of law, much like healthcare, you are dealing with significant information asymmetries on very high-stakes issues where decisions have permanent consequences; where malpractice or bad ethics can seriously and irreversibly damage a “client.” That is undeniably the case in high-growth Startup Law, where you very often have inexperienced business people (founders, early employees) navigating very complex and high-dollar issues; and to make it even harder, on the other side of those issues are often misaligned money players who are 30x as experienced at the entire game than founders/employees are.

The world of early-stage startup businesses is quite unique in this respect from the rest of the business world. In most high-dollar business contexts, there’s an equal balance of experience and influence on both sides of the table. Company A has seasoned execs, and Company B has seasoned execs. But not so in early-stage. Company X often has entrepreneurs who are doing this thing for the first time, and have very few connections to the broader business ecosystem. Investor Y, whom they are negotiating with and who influences decisions on their Board, has been in the business for 10-20+ years, has done 50-100 deals, and has spent all of that time becoming fabulously networked with other investors, accelerators, serial executives, lawyers, advisors, mentors, etc.

This imbalance presents an opportunity; an opportunity to use the experience/power inequality to push deals and high-level business decisions in the direction that the money players want, often without the inexperienced players really even understanding what is happening. Now, what is the role that lawyers (counsel) are supposed to play in this game? Lawyers serving as company counsel are supposed to take their broad level of experience and market understanding – surpassing that of most investors – and use it to “level” the playing field for the common stock (founders and early employees). Experienced, talented corporate lawyers are supposed to be the “equalizers” that early-stage companies (particularly common stockholders) rely on to ensure no one takes advantage of them on deals and corporate governance. Great for the common stock. Not so great for the clever money; which would obviously much prefer to keep the field slanted in their favor.

So let’s say I’m a very smart money player, and if I can find a way to neutralize the role of independent company counsel, to maximize my leverage, what should I do? Negotiating very aggressively against the lawyers and startups is a failed strategy. It’s too visible. Early-stage capital has become more competitive, and money players rely on personas of “friendliness” for deal flow. Angrily pounding the table would quickly shatter that persona. You need to me much smarter than that at this game.

You start with asking yourself: what do these lawyers need in order to fully do their job as strategic advisors? The answer is two-fold: (i) clients, and (ii) time. Without clients (referrals), lawyers can’t stay in business. And without time to study issues and negotiate, and ability to charge for that time, they can’t advise companies properly. That’s where the strategy lies. I often refer to this strategy as the “Race to the Bottom” in Startup Law.

Buy counsel’s favor with referrals.

As a repeat player with “access” to lots of deals and potential clients, investors can “buy” the favor of law firms by simply channeling referrals to them. First-time entrepreneurs have absolutely no counter-balancing resource in this area, because they just aren’t that well-networked or influential. Pay close attention in startup ecosystems and you’ll often realize how many of the most prominent lawyers built their practices by riding referrals from a few repeat players. Doing a great job for companies certainly can get you business, but doing a great job for investors (so that they refer companies and deals to you) can get you 20x that, because of the volume they touch.

So Step 1 of the Race to the Bottom is to make it clear to law firms that those who “behave” (by biasing the advice they give to inexperienced startups) will get business, and those who don’t won’t. The lawyers/firms most motivated by maximizing their business, and most willing to flout conflicts of interest in order to get that business, start competing at how far they can go to win the favor of these juicy referral sources, while minimizing the visibility of this game to inexperienced outsiders.

Squeeze counsel’s time.

For a company lawyer to do their job in advising a startup, they need time. Answering questions, explaining issues, and negotiating all take time, especially when the executives you’re working with are completely inexperienced (which in early-stage startups, they often are). Seasoned investors, however, don’t need nearly that much time from lawyers, because they’ve played the game 30 times already. So startups need a lot of lawyer time, but investors don’t. Opportunity? You bet.

But again we reach the “visibility” problem. If an investor simply tells the founders, “stop talking to your lawyers,” that’s too easy to read into. A far more successful narrative is: “let’s save some legal fees.”

“Your lawyer is just over-billing. Their request isn’t “standard” and is a waste of time.”

“This deal is all standard/boilerplate. Let’s move quickly to close without lawyer hand-waiving.”

“We really don’t have the budget to get lawyers involved on this Board issue.”

“I’m saving you some legal fees. Cap your legal bill at X.”

“Here, just sign this template (that I created). It’ll save you fees.”

I’ve often found it very amusing how certain aggressive investors, happy to write you large checks for funding talent wars and expensive bay area offices, suddenly have lots of (air quotes) “insights” to share when discussion turns to the legal budget. Increasing your burn rate makes you more dependent on the money, which they often like; but heaven forbid you spend capital on a service that reduces their influence/leverage. Thank goodness they’re ever so generously “looking out” for the bottom line.

If an experienced investor knows the lawyer across the table needs time to explain to inexperienced founders why the terms or decisions such investor is pushing for should be resisted, and such investor prefers that the lawyer stay quiet, the answer is not to explicitly tell the lawyer to shut up. Too visible. The investor instead gets the founders to do it themselves, by suggesting that they should focus on minimizing their legal bill. Nevermind that the issues a great (and independent) lawyer will bring up are 10-20x+ more consequential long-term than the rate the lawyer is charging. By getting founders to myopically think that legal advisory is just empty hand-waiving, and therefore be unwilling to pay for real counsel, investors are able to silence counsel by making it unprofitable for them to speak up. With no one else at the table who actually knows the game, the money then gets free rein to set the rules.

One particularly clever strategy here is worth highlighting: fixed or subscription fees. Most high-end lawyers bill by time, and for good reason. See: Startup Law Pricing: Fixed v. Hourly. The highly contextualized needs of varying businesses are simply too diverse for high-end outside corporate counsel to set broad standardized costs for legal work. High-growth businesses across diverse industries and contexts are far more diversified in their legal needs than the medical needs of patients (fixed fees in healthcare can work), and so there’s just no neat bell curve to enable a viable general flat fee system without setting serious (and dangerous) constraints on what a corporate law firm is able to do.

Investors who push company lawyers to work on fixed/subscription fees know exactly what the end-result of that fee structure’s incentives will be: staying quiet about negotiation points, rushing work, and delegating to cheaper, inexperienced people who just follow standardized checklists/scripts. Market competition sets constraints on how much law firms can charge while remaining competitive, but in an hourly rate structure a law firm still has to at least do the work to get paid. Under a flat or fixed subscription fee, the incentives are reversed. Every extra minute of advisory or customization is lost margin, so cut every corner imaginable, as long as the client can’t see it. And because in the case of early-stage startups the client is often led by an inexperienced founder with no in-house general counsel to vet work product or know what questions outside counsel should be asking, hiding all the shirking/corner-cutting from the client is quite easy.

Firms who simply don’t care about ethics and quality are happy to have you pay them for doing the absolute bare minimum of work, via a flat or subscription fee; and clever investors will happily reward their weak company-side advisory with continued referrals.

The Race to the Bottom.

So what is the predictable end-result of this race to the bottom in startup law, where massive conflicts of interest with the investor community are conveniently overlooked, and lawyers are incentivized to keep their mouths shut and rush work in a standardized assembly-line built to the specifications of unethical investors? In terms of a law firm’s operating structure, it looks like this:

A. The law firm has deep ties to, and referral dependencies with, very influential money players in the startup ecosystem, including VC funds and high-profile accelerators; rendering it completely uncredible to suggest that those investors don’t influence the firm’s advisory. A significant portion of the firm’s business comes from investor referrals, ensuring the firm follows the investors’ preferred protocols.

B. Highly experienced, true Partners and Senior Lawyers are virtually non-existent at the firm, with minimal contact with early-stage startups. It’s only lawyers with many years of specialized experience and vetting who know how to navigate significant high-stakes complexity. Juniors – like lawyers who’ve only practiced for a few years, or paralegals – are only able to safely handle legal work that fits within narrow parameters. Often referred to as “de-skilling” in professional circles, this ensures that when a startup is negotiating against a highly experienced player, the person advising the startup is minimally skilled (and cheaper to the firm). They’ll basically check boxes and fill in forms. Investors will love it. The most highly experienced and talented lawyers (Senior Partners) are the most expensive people on a law firm’s payroll. By eliminating them, a firm can improve margins under a flat or subscription fee model, while torpedoing quality and flexibility. Firms that care most about growing revenue, whatever the impact on quality/ethics, are OK with that.

C. The firm vocally touts the purportedly enormous benefits of standardization, inflexible automation technology, speed, and fixed/subscription fees. By pushing a message that founders should just focus on minimizing legal bills and fixing their costs, the firm hopes they’ll overlook the quality issues with their weak, cookie-cutter counsel. This firm is happy to pretend that it’s in startups’/founders’ best interest to just handle legal work as quickly and automatically as possible. The fixed/subscription fees ensure that the firm is rewarded for cutting corners, delegating work to inexperienced people, and just filling in templates with minimal negotiation or advisory. They’re happy to peddle the templates/form documents, and follow the protocols, that certain aggressive investors (falsely) claim are “standard,” particularly those investors whom the firm depends on for referrals.

D. The firm attracts lawyers who are less interested in actually practicing high-stakes law for the long-term, and the quality accountability that entails, and instead care more about finding future job opportunities with high-growth startups or VC funds. The fact that the firm’s incentive structure totally constrains their ability to actually practice high-level law (and properly advise clients) doesn’t bother them, as long as they get paid and have access to good networking opportunities.

I’ve seen different law firms reach different levels of this race to the bottom. Without a doubt, Silicon Valley culture, with its historical “move fast and break things” approach to raising as much money as possible as quickly as possible in hopes of being a unicorn, has reached some of the most extreme points. Entrepreneurs who fully understand the implications of this race to the bottom, and want to avoid them completely for their business, should read: Checklist for Choosing a Startup Lawyer.

To be crystal clear, I am a big believer in efficiency, and the thoughtful use of well-applied technology to stay “lean” on legal. It’s why I left BigLaw years ago to build out an unapologetically high-end boutique firm, where top-tier lawyers’ rates are hundreds of dollars an hour lower than the conventional firms they left. Their lives are also far healthier because they bill fewer hours. Legal technology is a part of our model, and we are definitely early adopters, but I’m not going to over-hype its significance. The truth is at the top tier of emerging tech/vc law, there’s too much complexity, contextual diversity, and massively high error cost for software to make a huge dent; with deep non-apologies to the software engineers hell-bent on “disrupting” lawyers with an app. We’re talking about highly complex, highly unique companies navigating serious decisions and 8-10+ figure transactions involving very sophisticated players; not a coffee shop or plumbing company.

We’ve grown profitably and sustainably every year since I got here, with 2019 being our best year yet. But I also care deeply about professional ethics, and doing the actual job that inexperienced and vulnerable clients pay me to do. That means cutting out fat from the legal industry, but not muscle. It means delivering highly experienced, specialized strategic counsel capable of flexibly addressing clients’ varying needs as they come up, while leaving out the many other layers of unproductive overhead that traditional firms are often burdened with. See: When Startup Law Firms Don’t Sell Legal Services. Top-tier law can be made leaner and more accessible, but it requires leadership/stakeholders that take professional ethics and quality standards seriously, rather than treating legal work like just another product to recklessly hack and market your way into maximal growth.

We’re in an extremely exciting time for the legal industry. While BigLaw will always serve the largest and most complex deals, I believe the future of the industry (at least the segment that serves non-billion-dollar “happily not a unicorn” clients) is a diversified ecosystem of lean, specialized firms operating far more flexibly and efficiently than traditional mega firms; enabled by technology and operating structures that cut costs without cutting corners. That is the kind of innovation clients, including startups, need and deserve. Blatant flouting of conflicts of interest, and massive dilution of the quality of legal counsel, is not innovation. It’s a race to the bottom, in which the losers (inexperienced teams) are being taken for a ride.