25 February 2019 at 11:00 BST

Five firms dominate startup legal spending

New study says nearly half of all startup legal spending goes to just five firms, with two firms attracting 14 percent of total between them.

Shutterstock

Fenwick & West and Wilson Sonsini Goodrich & Rosati top the list of law firms for startup companies, according to a new study. The average startup spends $77,150 on legal costs each year

Top 5

The two firms attract 14 percent of every dollar spent on legal services by startups, according to research conducted by Kruze Consulting. The others in the top five by revenue market share were Gunderson Dettmer Stough Villeneuve Franklin & Hachigian; Orrick, Herrington & Sutcliffe; and Perkins Coie. In total, the top five firms captured approximately 45 percent of startup legal fees in the study. Kruze, which provides services around tax, HR and other matters to startups, analysed the legal spend of more than 140 US-based Seed, Series A, and Series B startups with over $850 million in combined funding. The list of firms is US west coast-centric and included some of the big law players best known for representing technology companies. Fenwick has 7.2 percent of revenue market share and Wilson Sonsini has 7 percent, Kruze found. Fenwick also came out on top with client count: 15 percent of all startups in the study have worked with the Silicon Valley-based law firm.

Wide array

The startups analysed spend their legal dollars on a wide array of services, including funding, IP, and HR issues. The average startup in the study spends $77,150 on legal fees per year, while the median startup spends $38,990 per year. Kruze excluded most companies involved in active litigation from their analysis. The study said companies in fundraising mode typically spend $5,000 to $10,000 on Seed round legal costs and $50,000 to $65,000 on Series A legal costs. Across industries, health-care startups appeared to have the highest legal bills, followed by companies that develop hardware. The report can be found here.

 
   
 
 
 

Also read...

Cybersquatting sets new record growth

WIPO reports cybersquatting cases grew by 12 per cent to reach a new record in 2018, director general calls for added vigilance.