'Transactional law' practice (venture, M&A, etc.) is fundamentally broken, marked by an evil convergence of self-perpetuating bad incentives that make it almost impossible to reform or even incrementally improve.
Yes, it's the lawyers' fault.
Yes, it's the lawyers' fault.
In any rational world, a deal would just be a checklist of standard terms, and the parties would argue about which boxes to check instead of their lawyers spending weeks trying to trick each other through bespoke verbiage spread out across 10 different docs.
Honestly can't believe I've wasted 11 years of my life on this stupidity. After I wrap up my current slate of deals I will no longer engage in this charade.
*I know some people will complain--yes of course at times there is a legitimate need for novel drafting. But after 11 years of deals, I firmly believe the vast majority of terms for vast majority of transactions could easily be standardized & simplified if not for overlawyering.
Standardization is good, but unfortunately the legal industry even gets standardization wrong.
A great example of bad standardization is the "NVCA forms": a giant mess of old-timey drafting, almost purpose-built to maximize obfuscation and the risk of discrepancies. The VCs unilaterally set the standard & there is no git or version control.
The SAFE might be the most successful example of standardization (other than some commodities contracts), but its success is also illusory. Faced with client pressure to follow a simple form, lawyers adapted by serving up bespoke 'SAFE side letters' to be signed in parallel.
&, like with NVCA itself, the issuer side is basically unrepresented in the standard setting process & there is no consensus mechanism for changes; thus, a few lawyers & VCs can just decide 'ah, it should all be post-money now' & that automatically becomes "market"
the key things that the legal world needs to learn from the software world is free open source software development and the idea of protocol governance
protocol governance has a lot of flaws even in the software world, but at least it's acknowledged as an important issue to grapple with, one where questions of representation & minority impact can matter
in contrast, for example, the idea that changes to the UCC or NVCA should be documented, transparent & subject to the comment & consent of all relevant constituencies would not be taken seriously by most lawyers, least of all the committees who rule over these standards
despite the lawyerly snark (which is partly justified), sloppy and inchoate arrangements like 'just throw everything into a multisig and give the keys to cool people' are an absolutely legitimate rebellion against the comparative insanity offered by 'tradLaw'
people can go pay 2+ law firms to draft rules based on poorly defined standards & principles, culminating in an indecipherable and ambiguous output that delegates power to unknown future judges and juries, or they can instead just trust the majority discretion of people they know
the 'sloppy multisig' cuts ex ante (& possibly ex post) transactions costs, keeps power with the parties rather than shifting it onto overpaid, no-skin-in-game professionals, & is fast--from a certain POV, it's clearly superior
most lawyers just refuse to understand this
most lawyers just refuse to understand this
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