Prototype Prime, a new start-up incubator which opened in partnership with the Advanced Technology Development Center (ATDC) at Georgia Tech and the city of Peachtree Corners also has some help from some legal partners, among them Troutman Sanders. Legal Executive Institute sat down with Troutman Sanders partner Jim Schutz to discuss the involvement of the law firm in this project.
Legal Executive Institute: Could you tell us a bit about Prototype Prime and why it was created.
Jim Schutz: Prototype Prime is an organization co-founded by start-up veteran Sanjay Parekh and Peachtree Corners mayor Mike Mason in partnership with ATDC and the city of Peachtree Corners. Currently, we are focused primarily on technology companies, to provide them support in the initial stages of launch.
Legal Executive Institute: Tell us how Troutman Sanders got involved in this project.
Jim Schutz: Troutman Sanders got involved because I have been working with Sanjay over the years in various technology and start-up organizations, and Troutman Sanders has done a quite a bit of work with Georgia Tech and technology companies in town generally. And as we looked at what’s happening in Atlanta versus other cities, we realize that we have a lot of resources here to thrive as a technology hub.
Often, these companies can’t afford to have legal representation at every stage of everything they do; they need help to ensure they are preserving the rights they need and make sure they haven’t cut corners that will cause too many problems later on.
Legal Executive Institute: It sounds like Troutman Sanders is involved in several different ways in Prototype Prime. Can you explain those for us?
Jim Schutz: One way Troutman Sanders is involved is by holding open office hours at Prototype Prime, similar to what we’ve provided at ATDC and other communities. Our office hours have two parts. The first part, I would describe as a live-in-the-room attorney radio show. Various start-up companies come to the room and most either don’t have significant legal counsel or can’t afford to go back to a lawyer every time they have a question. It’s a simple Q&A format that allows the companies to hear each other’s questions and interact with us and each other. We treat this open forum almost like an academic session — we’re not their lawyers for the most part, so we cannot dispense specific legal advice, but we can give a very high-level overview of how different aspects of the law can affect these types of companies at this stage.
If they have specific issues that really need legal advice, we suggest they engage someone. But at least they can start thinking about when they should be seeking legal advice and what type of legal help they may need.
Second, any companies at Prototype Prime that have retained our firm are welcome to come during those office hours for off-the-clock or non-billed legal counseling.
Additionally, for clients that do sign on with Troutman Sanders, we can also provide lines of credit for future legal services. What you generally find with most with start-ups is that cash flow and budgeting is a really critical aspect of all the services they receive. The practical reality is legal fees don’t come neatly packaged in set monthly fees, but are more like individual transactions; however, one $5,000 fee for a specific legal service could be a startup’s entire profits for the month.
What Troutman does is basically set a cap on how much of their legal fees we can defer and then we lock them into a monthly fee, almost like a retainer, for a period of time to help them through those early years. For the companies at Prototype Prime, we are investing even more heavily in the community by waiving the monthly fee for a period of time.
Ultimately, most companies later transition into a more traditional billing model, though several clients who at this point incur much higher amounts still prefer the fixed monthly fee arrangement, essentially preferring to basically budget their legal spend each month. With those clients, we do revisit that monthly amount at the end of each year and sometimes suggest revising. Some companies, even after they’ve got much bigger, however, still want that consistency and budgeting predictability.
Legal Executive Institute: Why did Troutman want to get involved in this community and how has the rest of the firm supported it?
Jim Schutz: We got involved in Prototype Prime for a few reasons. One is that because we generally represent clients of all sizes, we like being able to leverage and share expertise gained from clients involved in much more sophisticated situations with clients at much earlier stages of their businesses. The goal with true start-up clients is to help them navigate appropriate expenditures.
All of us have worked with start-ups who are beyond the initial phases and who didn’t get much counsel early on, and you find yourself trying to untangle messes they got into because of that lack of representation early on. To the extent we can prevent that and build relationships early on, that’s really our main goals.
Often, these companies can’t afford to have legal representation at every stage of everything they do; they need help to ensure they are preserving the rights they need and make sure they haven’t cut corners that will cause too many problems later on. All of us have worked with start-ups who are beyond the initial phases and who didn’t get much counsel early on, and you find yourself trying to untangle messes they got into because of that lack of representation early on.
To the extent we can prevent that and build relationships early on, that’s really our main goals.
Beyond that, many of us are really passionate about this work, and firm leadership has been very supportive of our efforts. We work very closely with the corporate team and others to make sure we can offer the full set of services that these companies may need. Most start-ups we’re helping are technology companies, so a good amount of what they need is assistance with patent law or representing software companies in all various transactional situations. We also supplement that with a few other specialists, such as our labor and employment team helping when these start-ups are hiring their first employees.
Really, this is a very fun part of our practices — you meet a lot of smart, energetic folks that are driving to the business, wherever and whatever that may be. It’s very refreshing.