Hypothetical question
Just raised a seed round and building my budget. What do startups typically spend on legal in year 1? I've heard everything from "$5K" to "$100K" and have no idea what's realistic.
Just raised a seed round and building my budget. What do startups typically spend on legal in year 1? I've heard everything from "$5K" to "$100K" and have no idea what's realistic.
Rough benchmarks for B2B SaaS (your mileage may vary):
Year 1 (pre-seed/seed): $5-15K
- Incorporation: $2-3K
- SAFE/Note docs: $0 if YC standard, $2-3K if custom
- Contractor agreements: $500-1K or templates
- Misc questions: $2-5K
Year 2 (post-seed, hiring): $15-30K
- Employment matters: $5-10K
- Customer contracts: $5-10K
- IP/Trademark: $3-5K
- Misc: $5K
I spent $60K in year 1. Mistakes I made:
1. Used a BigLaw firm for everything ($750/hr associates)
2. Asked my lawyers to draft contracts I could have templated
3. Over-lawyered early customer deals that didn't need it
4. Paid for a trademark when I should have waited
Could have done the same for $15K with a startup-focused boutique + templates.
Places worth spending money:
- Priced equity round docs (get these right)
- Employment issues (CA especially)
- Enterprise customer contracts ($100K+ deals)
- Any actual dispute or threat
Places to save:
- Standard NDAs, contractor agreements
- SAFE notes (use YC templates)
- Basic incorporation
- SMB customer ToS