If you want to better manage outside counsel, take charge of the relationship and don't go it alone.

1. !
! !
!
!
!
!
!
!
When!Your!Software!Company!Hires!a!
Big!Overpriced!Law!Firm!.!.!.!!!!
!
Never%Go%It%Alone!!!
!
By
Mark D. Walters
GENERAL COUNSEL TO GO™ PLLC
www.gctogo.com
425.688.7620

2. !
!
!
When%Your%Software%Company%Hires%a%Big%Overpriced%Law%
Firm%.%.%.%%Never%Go%It%Alone!%%%
% !
!
!
!
1 of 5
© 2013 Mark D. Walters
Feel free to share this document.
Please pay it forward.
88.Software Companies Rock the Law Firm House
Software companies are fantastic law firm clients. First of all, they are incredibly fun
to work with because they have big ideas, they have tons of talent, and they are hell
bent on changing the world. Their enthusiasm is infectious. Secondly, software
companies are frequent consumers of legal services. They hire law firms to set up
the corporate entity, to prepare the Stock Option Plan documents, the Buy-Sell
Agreement between founders, file trademark and patent registrations, prepare the
core business contracts (NDA, Employment Agreement, Independent Contractor
Agreement, Software License Agreement, etc., etc.). As software companies grow,
they look to their law firms for guidance on employee issues, licensing transactions,
and risk management.
Let there be no doubts: software companies are highly desirable clients for law firms
big and small.
Hiring a Big Overpriced Law Firm
While a big overpriced law firm should not be the first law firm your software
company hires, sooner or later, you’re going to consider hiring a big expensive
law firm. In many cases, the founders will consider hiring the company’s first big
law firm when it begins to raise capital. This often makes sense because
investors are familiar and comfortable with the big overpriced law firms that
work in their world. It also makes sense because, ultimately, your software
company will pay the legal fees with investor funds, so investor comfort with the
software company’s legal team can help close the round. (But this does not
mean investors are not interested in conserving cash; of course they are).

3. !
!
!
When%Your%Software%Company%Hires%a%Big%Overpriced%Law%
Firm%.%.%.%%Never%Go%It%Alone!%%%
% !
!
!
!
2 of 5
© 2013 Mark D. Walters
Feel free to share this document.
Please pay it forward.
Whatever your reason for hiring a big overpriced law firm, there’s one thing you
know: you are going to pay more—likely a whole lot more—than you want to. The
odds are high—indeed a near certainty—that you will end up feeling ripped by the
law firm-billing machine. You will likely rationalize that overpriced lawyers are simply
part of doing business in the technology sector, and there is nothing you can do
about it.
There is a Better Option:
Hire and Manage Your Big Law Firm the Same Way Large
Established Software Companies Do
Did you know that the business teams at large established software companies
almost never directly hire outside counsel? These companies have staff attorneys,
or General Counsel, that hire and manage these important and costly relationships.
Most every General Counsel has law firm experience. They know how law firms
operate and how lawyers bill, and they use this inside information to protect their
company from the law firm-billing machine. Indeed, the business team often uses
the General Counsel as a “bad cop” to manage outside counsel and help ensure the
company is getting more value for its legal spend.
You can and should do the exact same thing.
Altman Weil has conducted and published annual surveys on the legal market for
many years. Its 2012 Chief Legal Officer Survey, reports the results of its survey of
over 200 General Counsel working in-house at corporate law departments.
The survey asked Chief Legal Officers what they have done in
the last 12 months to control costs – their highest management
priority as reported in the 2011 Survey.

4. !
!
!
When%Your%Software%Company%Hires%a%Big%Overpriced%Law%
Firm%.%.%.%%Never%Go%It%Alone!%%%
% !
!
!
!
3 of 5
© 2013 Mark D. Walters
Feel free to share this document.
Please pay it forward.
The number one answer, from 71% of respondents, was to
negotiate price reductions from outside counsel.
There is no reason why your software company should not be doing the exact same
thing. Hire your own General Counsel and assign him or her the job negotiating
price reductions from your law firm. Legal fees and legal costs will be a top
expense item, so there is no reason you should not control it. And don’t you already
think your paying far too much for legal services? This tactic can save the company
many tens if not hundreds of thousands of dollars.
Some software company executives worry about offending their law firm if they
“lawyer up” to negotiate price reductions from their law firm. If you share this
concern, keep the following in mind:
Software companies are killer law firm clients.
Big and small law firms across the United States are
searching for new software company clients, and the
software company’s purchasing power gives it
leverage.
The big law firms know full well that their competition is
equally hungry for new software company clients.
When your software company is hiring a big law firm,
never forget that it’s a buyer’s market.

5. !
!
!
When%Your%Software%Company%Hires%a%Big%Overpriced%Law%
Firm%.%.%.%%Never%Go%It%Alone!%%%
% !
!
!
!
4 of 5
© 2013 Mark D. Walters
Feel free to share this document.
Please pay it forward.
If you’re not convinced and fear offending your law firm, consider this: hiring a
General Counsel to select and negotiate a price reduction with your law firm
will give you cover. Just like law departments in larger corporations where this is a
their highest management priority, your software company can use its own General
Counsel as the “bad cop” to do the necessary dirty work of striking a better deal
with your law firm. If you get any blowback, simply tell your law firm that your
company uses its General Counsel to hire and manage this important
relationship—just like large established software companies do—because your
company needs to conserve cash. It’s impossible to argue with this strategy and
goal. Also keep in mind that large law firms are hearing the exact same message
from their larger corporate clients.
A second reason why your software company should have its own General Counsel
hire and manage its relationship with outside counsel is this: software companies
with General Counsel are sometimes viewed more favorably and treated more
favorably than software companies that do not have a General Counsel. It’s
probably not fair, but it’s a reality. The attorneys at big law firms may give more
professional courtesy to lawyer colleagues than non-lawyer executives. After all,
they speak the same language, they share the same life-altering experience of
attending law school, and they share the same rite of passage of taking and passing
the Bar Exam. Thus, the odds are high that your General Counsel can achieve a
better result.
A third reason why your software company should have its own General Counsel
hire and manage its relationship with outside counsel is this: let’s face it;
oftentimes dealing with the law firm is a huge distraction. With a General
Counsel on staff to deal with the suits, the executive team can stay focused on
growing the business.

6. !
!
!
When%Your%Software%Company%Hires%a%Big%Overpriced%Law%
Firm%.%.%.%%Never%Go%It%Alone!%%%
% !
!
!
!
5 of 5
© 2013 Mark D. Walters
Feel free to share this document.
Please pay it forward.
A fourth reason why your software company should have its own General Counsel
hire and manage its relationship with outside counsel is this: attorneys at the large
law firms know that General Counsel have seen the big law firm sausage
factory from the inside. Because of this insider information, your software
company’s General Counsel can be far more effective when negotiating fee
agreements and fee reductions with these law firms. In short, your General Counsel
can call bullshit on the law firm’s bullshit.
So, if you want to get a better deal and more value from the law firm-billing
machine, and if you want to stop feeling so frustrated and ripped off by your law
firm, your software company should employ the tactic and strategy that the large
established software companies do when they hire big overpriced law firms.
Hire your own General Counsel to negotiate a price reduction. Make this a top
management priority, and never go it alone!

7. ! !
!
!
!
!
!
!
!
© 2013 Mark D. Walters
You are free to share this document.
Please pay it forward.
About the Author
Mark D. Walters provides General Counsel legal
support to owners and executives of software
companies in the greater Seattle area and across
the United States. Mark also sits on the Advisory
Board of a advertising agency, where he provides
guidance related to business strategy, intellectual
property protection, employment law issues and risk
management.
Mark represents established software development
companies. He helps them get price reductions with big law firms, and he helps
with software development and licensing deals, together with employment law,
intellectual property protection and risk management. Mark has also
represented companies in lawsuits involving contracts, trade secrets, copyright,
and trademark issues. In the Spring of 2011, Mark represented Washington
State Supreme Court Justice Faith Ireland (ret.), who was appointed Guardian
ad Litem for Michael R. Mastro in Washington’s largest bankruptcy proceeding.
This unique blend of litigation and transactional work informs Mark’s business
approach to law.
Mark is writing a book entitled, Disrupt Legal Billing Once and For All – Winning
the economic battle with your law firm, that will be published in 2013. Mark is
also a frequent speaker on topics dealing with law and business.
For pre-booking inquiries and speaking fees, please call 425.688.7620.
!