How I Invest with David Weisburd
E136: Navigating Startup and Venture Capital Legal Risks w/Constantine Karides
07 Feb 2025
In this episode of How I Invest, I interview Constantine Karides, a Lead Partner at Reed Smith, to discuss the critical role lawyers play in the startup and venture capital ecosystem. Constantine shares insights on what founders and investors should look for in legal counsel, the leverage model law firms use, and how AI is reshaping the legal landscape. From the importance of choosing the right law firm to navigating legal costs effectively, this episode is packed with actionable advice for entrepreneurs, venture capitalists, and investors.
Full Episode
And so if you show up on a first deal, you get on a Zoom call and there's you and five other folks, none of whom the client had seen before, wondering what's going on. Oftentimes, startups or even venture funds, depending on where they are, aren't going to question the fact that you have all those folks on the call. It can become a pretty expensive endeavor and one that's not answered necessarily.
And I don't think it furthers the best interest of the client at all. And the right time to ask that is when you have the leverage, when you're choosing the law firm before, because after that, you're kind of stuck with the firm.
Definitely want to do that before you get too far along. It's hard to pivot and change law firms. There's a lot of cost that goes along with that, transition and otherwise, and also sunken investment of time and energy. What are the most important questions that startups or venture capital funds should ask their lawyers before they engage with a lawyer?
I think it's a little different for each of those two buckets. If I'm a startup, I want to look at my legal relationship as I would a strategic investor. And that is beyond lawyering, what can this law firm or lawyer bring to the table? There are a lot of lawyers who can paper or put together initial formation documents and negotiate with investors and put together a tax structure that works.
And so beyond that, what are you bringing to the table? Do you have a network of partners or potential partners for the underlying business? Do you have a network? of investors that might be interested in the next round or the current round.
Are you well positioned within your law firm to be able to drive value to me if I need to ask you to make concessions on pricing or to try to do alternative fee structures, which some startups need to do to be able to move forward with an eye towards a broader relationship?
And so I think I would, as a startup, want to make sure that I have hired a lawyer from a firm that can do the work, of course, at a high level of quality, but also that brings to the table off-balance sheet value, not just legal services. That you want to make sure that that partner has the right credibility internally to help the startup double-click that and explain why that's important.
Especially if you're dealing with big law, and I'm at a big law firm, decisions are often not made at the lawyer level when it comes to doing things that are not straight down the middle. And so there's a layer of bureaucracy or even just an inability to deliver on value propositions
on one hand, and on the other hand, an inability or less of an ability to deliver the right talent or the right people. If your relationship partner is well placed at a firm, either because they have a significant
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