Stock for Attorney Fees? This situation arises when a startup company offers stock to a lawyer in exchange for legal services. I’ve derived the following 2 postulates to explain why startups and lawyers agree to this setup:
1. Startups are broke.
2. Lawyers are expensive.
For the same reasons that your startup lawyer should not be on your board directors, stock for fees may affect your startup lawyer’s ability to give unbiased legal advice. Furthermore, Rule 1-8(a) of the ABA Model Rules of Professional Conduct provides that a lawyer may not enter into a transaction with a client unless:
(1) The transaction and terms on which the lawyer acquires the interest are fair and reasonable to the client and are fully disclosed and transmitted in writing to the client in a manner which can be reasonably understood by the client;
(2) The client is given a reasonable opportunity to seek the advice of independent counsel in the transaction; and
(3) The client consents in writing thereto.>>> READ MORE at: