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How much should I budget for legal in year 1?

Started by BudgetFounder · Dec 1, 2024 · 15 replies
For informational purposes only. Not legal advice.
BF
BudgetFounder OP

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.

RN
RealNumbers

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

SC
SpentTooMuch

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.

WS
WhenToSplurge

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

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