Avi Emanuel and Lianna Whittleton | Emerging Companies and the Business Advisor

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Emerging companies typically need a combined legal and business advisor. Junior attorneys in emerging companies practice get access to clients early in their career and are often thrust into the critical advisor role.  What does a typical day look like, and how can you best prepare to support an emerging company?

 

More on Avi Emanuel and Lianna Whittleton.


Episode Transcript

SPEAKERS

Avi Emanuel, Wayne Stacy, Lianna Whittleton

 

Wayne Stacy  00:00

So welcome everyone to the Berkeley Center for Law and Technology’s Careers in Technology podcasts. I’m Wayne Stacy, the Executive Director for BCLT. Today we are talking about how lawyers help with funding in managing early stage innovation companies. And I’m here with two attorneys from Wilson Sonsini, Wilson Sonsini handles a tremendous percentage of the emerging company work on the west coast, really among the great pioneers in this field. And we have two of the leading experts from Wilson. So this is a great podcast. We have Lianna Whittleton, she’s the partner specializing in advising early stage companies, and in handling IPOs. And we have Avi Emanuel, a corporate attorney specializing in early and mid stage companies and equity financing. So before we talk about what the practice of law looks like, in the, in this emerging company space, tell us a little bit about what your practice looks like from day to day, week to week.

 

Lianna Whittleton  01:06

Sure, so I’ll go ahead and take that first. As, as Wayne said, I have a bit of a broader practice, which has actually been very interesting to me. I think the core of what you think about when you are a corporate attorney is that you are a service provider to your clients. And your entire goal is to help these companies grow, build, develop and succeed. And so at Wilson, what that tends to mean is you get staff on a company, you develop a relationship, and then you support that company through their entire lifecycle. And what that often means is you are doing whatever it is your company needs you to do. And so depending on what clients are staffed on, when you start what’s going on economically, that can actually change what your day to day client base looks like. In my case, I started over 10 years ago now. And I started working just with exclusively, early early stage companies two kids in a garage, right, your classic quintessential startup. And so what that meant is I was often doing board consents, right, a lot of the housekeeping in creating a corporate entity, and making sure that that functions from a legal perspective, forming the company. Doing the board and your stockholder approvals, granting equities, we did a fair amount of offer letters, because often new companies are hiring people as they get started and ramp up. And then over time, that starts to expand. Right. Um, one thing to understand as a student, that’s always not clear is corporate attorneys tend to do the back office work. So what that means is we are more focused on the corporate structure and not the business itself. So we don’t do licensing agreements, we don’t do commercial arrangements, right, we do the fundraising, we do the the equity on the back side of how that company grows. And so I think it’s contracts writ large, but often a very different type of contract. As your company grows, the types of things you’re looking at on that back end, will start to change as well. And so you move from one on ones with your founders doing offer letters, doing board consents to more complicated transactions, that can mean your debt financing your bridge or your stakenotes, that it means seriously financing, it can mean the series A financing. And the longer that you’re with the company, the larger those transactions get all the way up to an m&a deal or an IPO. So I think the day to day can often vary, but almost always what you’re doing is helping these companies with whatever their needs are on that given day. That’s kind of the high level. I’ll let Avi give you a little bit more detail because I tend to be theoretical on some of this.

 

Avi Emanuel  03:24

Well, what you described is actually pretty spot on for for sort of how my day looks also, you know, I kind of I like to conceptualize, you know, my day to day in like two different buckets, which is, you know, one is just like advice giving, because founders and, you know, other folks at the company will reach out to us, you know, all the time I’ll get, you know, 50-100 emails a day of, you know, hey, I’m thinking about hiring this employee, and, you know, what do you think about this type of arrangement, or, you know, I’m thinking about, you know, adjusting the equity, you know, with, you know, my co founder, or I’m thinking about, you know, doing a fundraising and you know, structuring it in this way, or, you know, what are the tax consequences? So, just various questions or ideas that that founders just want to kick kick around, and, you know, you’re good sounding board, and, you know, some we have a lot of experience, and we kind of see issues all the time. And so we spend a lot of time giving advice. And then the other half is just actually like doing quote unquote, work, which is either drafting agreements or dealing, you know, working on a transaction, right. So but if they’re raising a series A financing, right, there’s just a lot of actual legal work and paperwork that kind of has to, you know, move around and get done. So, you know, I kind of broadly speaking, you know, it’s either giving advice or actually like, doing work, so to speak. They’re both work obviously, but of a different sort.

 

Wayne Stacy  04:54

Well, something I pick up out of the statements that are being made here is that the company is vary in sophistication quite a bit in terms of legal sophistication. So you may have a small company with no In-House Counsel, and no real experience with the law all the way up to, to a company that has a couple or a handful of In-House lawyers. Do I understand that correctly?

 

Lianna Whittleton  05:19

Yeah, no, that’s exactly right. And one thing I think is hard to conceptualize as a law student, but to be aware of is that the relationship you have with your client will change depending on the type of work that you do? So for example, right, obviously, he does a lot of advising, right, when you’re doing startup work, or first circle work, as we call it, it’s primarily a lot of what should I do? Should I sign this term sheet? Should I work with this investor? Did you like this, you know, candidate that we interviewed, as companies get more developed. And as we mentioned, as they have more in house people, you’re not working with the founder anymore, or you’re now reporting to the CFO or to the GC, right? As their transactions get bigger? You know, I never have a company say Should I go public, right? They’ve already made that decision. They’re looking for me to execute efficiently, they’re looking for me to help them with the timeline, right, or some of the mechanics around how best to do that. But the type of legal advice that you give is going to change depending on how big your company is. And a lot of figuring out what kind of a lawyer you want to be is really thinking about what role you’re most comfortable in. So some people love the advisory. Right? You spent all this time helping them structure, right? What’s the founder stock? What is the best thing? What are your long term plans, right? Other people are much more saying, Well, tell me what you want, I will execute it, I will do it efficiently. I will do it thoughtfully, right. And a lot of figuring out what kind of law you want to do is knowing what you personally are enjoying, and you’ll get that experience that your summer as a first year associate?

 

Avi Emanuel  06:41

Go ahead. Sorry. Yeah, I would add, you know, even within the sort of the early stage, or later stage bucket, right, there’s still is you know, variation with clients. So you know, if we have a founder who just, you know, started a new company, but this is his or her like, third time around, and you know, they’ve already had a previous exit, and they kind of, they’re sophisticated, they know exactly what they want, right, they may either tell you what they want, or, alternatively, they may have, you know, they may be looking for more creative bells and whistles that, you know, a first time founder wouldn’t be thinking about. So the type of advice that that we end up giving can be very different. Whereas, you know, a first time founder, who, you know, is just kind of this is all new to them, right? They may just be, you know, they may say, Hey, what do you recommend? And then we just kind of run through the list of, you know, four year vesting, when you’re right, like, just whatever the standard is, we’ll we’ll kind of say, like, here’s, here’s what a boilerplate standard company ought to look like.

 

Wayne Stacy  07:45

Well, in this, I guess, this realm of advising small companies that when you say it like that, it seems like it would be more, well, a little simpler to advise and handle small companies. But that doesn’t really work out that way, does it?

 

Lianna Whittleton  08:01

Think it very much depends on what muscles you want to flex. For example, I remember when I had been at the firm about a month, partner was running late, met a client meeting in person back then she said, Go meet with the client, I’ll be there in 10 minutes. You know, we show up and the person looks at me, and they say, Well, are you an intern? Like, are you a real lawyer you actually capable of advising me, right? And there’s a little bit you develop a presentation form, right, when you’re going in to meet with your startups, sometimes they’re older than you, right? But most of the time, you know, a little bit more than they do, or as I said, you’re gonna help them funnel what their goals are into something. And it’s very much whether you enjoy that type of presentation, right? It’s almost like being a trial lawyer versus an appellate lawyer, right? A trial is a little bit more like, let me help you. What do you want? What are your goals? We’ll build it. Appellate law is more here’s the facts, man, right. You know, we don’t need the show. We all know the rules. And now we’re arguing a case. And so I think of it more about just what it ultimately resonates with you. I think if some people hate the startup practice, right, they are always asking open ended questions. And you know, you’re not in the business of running their business. Other people love that we have a lot more of a business angle to what we’re doing. And when we are advising people were saying, well think three years down the road, right? Think about what your board composition will look like in a little bit. And we’ll help you build it. So it’s a very different type of law. And that’s where I think in law school, everything’s conflated, right, it’s hard to kind of see some of the grades and the nuances, but the role that you have is very different depending on the size of your client.

 

Wayne Stacy  09:33

Well, I know that a lot of these companies as they grow will hire their first lawyer, their first two lawyers, but they’re still small companies. And what is the I guess the opportunity In-House to work for small companies and then what does that job look like?

 

Lianna Whittleton  09:51

You want to go first?

 

Avi Emanuel  09:53

Yeah, so it’s very commonplace that associates you know, from our firm, and our peer firms end up working In-House, at any number of these companies, and I’ve, you know, a long list of friends who I started out working with, and they’re now at these companies, and, you know, that’s great for them. And frankly, you know, the firm also encourages it. And, you know, it’s, you know, it’s useful that, you know, we kind of know who’s on the other side, and there are people that, you know, I’m, I’m now emailing, you know, the client, and it’s somebody that I know, and so sort of, you know, maintaining that relationship is, is, you know, very, very useful.

 

Lianna Whittleton  10:44

So, I think the type of work that you’ll be doing will be very different when you’re In-Hosue versus outside counsel. In a lot of ways, 100% of what Avi and I do all day is really only going to be 10%, or less right of what a company is going to be looking at when they’re running their business on a day to day. So again, I think comes down to what sort of skills that you’re looking to develop and what kind of work you’re looking to do. Right. So Avi and I might do 10 financings a week, a company will do one financing every year, 18 months, two years, right. So very much the work that you’re doing is gonna be quite different. When you’re In-House, you’re wearing that business hat a lot more, right. So while we might do some of the offer letters, you’re likely interviewing the candidates thinking about what positions you’re hiring, right? What is the compensation schedule, so you tend to be much more involved on the business side, because you’re one of few people in a small company, right? So everyone should be wearing a lot of hats doing a lot of different things. If you’re looking for just a pure legal role, you’re gonna look for much larger company, right? Because they’re gonna say, Okay, we have an m&a department, right. And now, this is the role you’re going to execute, it’s going to be a little more similar to what you’d be doing on the In-House side.

 

Wayne Stacy  11:48

So now, the big question for you, if you’re a first year, second year law student, and you want to come down this path, what classes should you be really looking to take?

 

Avi Emanuel  12:03

Definitely, things that I find useful, any any like business, you know, Business Law, or just pure business classes. Financial, if you know how to do spreadsheets, that’s certainly helpful. As far as legal classes, securities law can be helpful. But I certainly wouldn’t say it’s a prerequisite. And frankly, just any class that you find interesting and fun, because, you know, you, even if you don’t get all the underlying classes in law school, like you’ll learn once you get on the job, like very quickly.

 

Lianna Whittleton  12:46

I want to emphasize what Avi just said, take classes that you think are interesting. I know so many of you are focused on building out the right career and the right resume and the right transcript, and that can drive a lot of your decisions. Remember that this is the last time that you’re going to be in school, right. And this is last time you have the opportunity to try a bunch of different things. Because in your practice, right largely, you’re looking to build expertise by doing the same thing, getting more and more reps getting better and deeper and stronger, but in an area of expertise. When you’re in school, that field is open. And I do think a lot of what law school’s focused on is teaching you how to think not necessarily filling your head with data points, or facts or stats that you’re going to pull out later in your practice, right? What you’re doing is learning how to think critically learning how to break down a problem, right? So when a founder comes to us and goes well, there’s three founders, what should we do, you can then spit back to them? Well, there’s stockholder rights, there’s director rights, there’s employment related officer positions, right. But all of that is teaching you how to read a problem and process it not so much be able to say, Aha, well, Corporations Code Section 103, means that you can find that agreement after the fact right, so I wouldn’t focus so much on trying to build out hard skills in law school and more about just what’s interesting. And then the last thing I said is you will learn so much of it on the job, right? The types of agreements that you’re going to be doing are going to be driven by the practice, you have not the law school class you’ve taken. So a lot of it’s learning what you can do on the job after you’ve developed this critical thinking skill in law school.

 

Wayne Stacy  14:13

Sounds like good advice. Well, thank you both for your time. I know you’re both busy. Hopefully we’ll be talking again soon. Take care.

 

Lianna Whittleton  14:22

Thanks very much.

 

Avi Emanuel  14:23

Thanks for having us.