Fresh starts – inside the pioneering US school training lawyers on the start-up community

Look out law schools, there is a disrupter in town. Naturally, that town is Silicon Valley, the home of innovation. And the innovator in question is University of California Berkeley, which includes a leading US law school, renowned for its prowess in technology and IP.

It might seem natural that Berkeley Law’s proximity to the Bay Area tech hub would lead to an inventive approach to legal education. This idea certainly drew Hannah Porter, a former entrepreneur, to enrol at Berkeley Law in 2015.

‘I came into law school knowing I wanted to work in corporate law, with start-ups specifically, and I thought Berkeley Law would be a great place to do that, because Silicon Valley is where start-ups are happening,’ she tells Legal Business.

But despite a wide range of practical initiatives for first years to sink their teeth into, none of them were aligned with corporate law. According to Neil Dugal, senior corporate counsel at investment house Omidyar Network, and former corporate counsel at Silicon Valley venture fund 500 Startups, this is a typical law school scenario – academic rather than practical, adversarial rather than transactional. ‘When I came out of law school, the only kind of law I knew was going to trial. I didn’t really know what venture capital was – I didn’t even know what corporate law was.’

‘Our law students are practising at the level of second- or third-year associates.’
Adam Sterling, Startup@BerkeleyLaw

Meanwhile, across the wider UC Berkeley campus, students were busy dreaming up business ideas with little guidance on how to turn them into reality. This mismatch provided fertile conditions for the emergence of Startup@BerkeleyLaw, a trailblazing initiative co-founded by Adam Sterling (along with law professor Robert Bartlett, and supported in part by leading West Coast law firm Wilson Sonsini Goodrich & Rosati), that brings together law students, entrepreneurs and investors, educating them about the formation and growth of early-stage companies and the mechanics of venture capital funding. The programme has developed cutting-edge courses in venture capital funding and law relevant to entrepreneurs, offering a range of initiatives designed to provide hands-on experience within a start-up for budding lawyers, founders and investors, often by matching one group’s skills with the needs of the others.

To Bay Area insiders, the Valley might seem a place where people organically meet and make ideas (and fortunes) happen. Law firms in the sector typically manage a book of multiple clients. As co-head of the legal team at 500 Startups, Dugal had exposure to a portfolio of around 1,800 start-up companies. However, he says the start-up community can seem impenetrable to those outside the club. Leanly-staffed venture capital funds appear secretive places to both emerging entrepreneurs and budding start-up lawyers.

‘In Silicon Valley, it’s lawyers who have created the rules and are the keepers of those rules,’ says Sterling. ‘Lawyers have so much exposure that they’re the unofficial keepers of the market – if I see 1,000 term sheets, I can decide for my client whether the term sheet that they’ve just received is market value or not.’

But until now, this information has failed to filter through to law school students or to junior associates working inside law firms, who often have limited or partial exposure to the clients their firm is advising. Vital information is often even less accessible to the entrepreneurs themselves, especially those still in the education system.

Naresh Sunkara was a virology post-doctoral student at Berkeley in 2013 when he founded Nosocom Solutions, a company that develops technologies to combat healthcare-associated infections. Initially, he found he had to go outside of Berkeley to access guidance to launch his company. ‘My professor was raising his eyebrows and saying “Why are you leaving the lab in the middle of the day?”’ he recalls.

Sunkara established the Berkeley Postdoctoral Entrepreneur Program, but until he met Sterling, he still struggled to find the necessary support from the law school to grow the venture. Particularly challenging was legal advice, not least because the law school was like ‘an iron dome’ in terms of gaining access.

Silicon Valley outsiders might be forgiven for assuming those who write the cheques are more clued up, but investors are just as likely to be looking for information in the wrong places. Established venture capitalists know the lay of the land, but new funds, corporate funds and family offices can all benefit from additional support.

A new talent wave

A major challenge facing all potential investors is the battle for talent, not least because funds often seek ideas from established venture networks. Neglecting channels that more diverse entrepreneurs might follow has resulted in a dearth of founders from non-traditional backgrounds.

Such a misalignment between the pipeline and the gateway into the start-up world often causes unnecessarily high transaction costs. Entrepreneurs, investors and attorneys who lack a sophisticated grasp of the terms of venture capital financing drive up fees.

‘You spend a lot of time negotiating deals purely because you’re trying to avoid misunderstandings and correct previous misunderstandings,’ says Dugal, citing such an inefficiency as a major factor behind his interest in Startup@BerkeleyLaw and a driving force for empowering Berkeley Law students, who are ‘sitting at the centre of arguably the most dominant technology ecosystem in the world’.

The initiative also develops project and people management skills for law students, in recognition of the fact that start-up-focused law practices act for multiple clients and often field lean teams, meaning frequent, direct client exposure for associates. The Berkeley programme therefore provides the sort of preparation that even a typical BigLaw associate training might not.

‘Our law students, if they go and practise in Silicon Valley, are practising at the level of second- or third-year associates in terms of what we expose them to,’ says Sterling.

Practice makes perfect

Startup@BerkeleyLaw students get to rehearse their new skills through its ‘office hours’ programme, where law students can directly advise entrepreneurs and investors during drop-in meetings. This will soon be available via video conferencing, allowing the initiative to connect with more entrepreneurs and investors.

A major benefit of this contact between would-be lawyers, entrepreneurs and investors, is the opportunity to form networks. Traditionally this has been the preserve of business schools, with risk-averse law students often reluctant to reach out to new connections. But in the same way that law firms act as a hub between start-up companies and investors in the real world, Startup@BerkeleyLaw is setting out its stall as a meeting place for entrepreneurs coming out of UC Berkeley and investors.

‘Investors come into our programme to learn about the mechanics of venture capital and for exposure to some of the best start-ups in the world. Entrepreneurs are being educated on the mechanics of starting and scaling a business, and getting access to some of the investors that they wouldn’t otherwise,’ says Sterling.

The most recent scheme sponsored by Startup@BerkeleyLaw is further expanding the programme’s reach beyond UC Berkeley, into the world of under-represented entrepreneurs, through partnership with Code2040, a San Francisco-based non-profit that works with Black and Latino technologists. ‘Access to Entrepreneurship’ launched in July 2017, funding travel for Code2040 entrepreneurs to attend the organisation’s San Francisco annual summit, in which Startup@BerkeleyLaw hosted workshops and office hours, as well as a half-day of intensive training at Berkeley Law.

‘In Silicon Valley, lawyers have so much exposure that they’re the unofficial keepers of the market.’
Adam Sterling, Startup@BerkeleyLaw

For companies moving beyond the formative stages, ready to recruit their first general counsel, or for venture capital funds expanding their in-house legal team, a pipeline of upskilled graduates is a useful resource – particularly in a market where lawyers are going in-house earlier in their careers.

Creating a culture

On top of fostering links between students and the in-house community through involvement with groups like the ‘VCGC’ (Venture Capital General Counsel) annual conference, Sterling is confident that Startup@BerkeleyLaw directly addresses the main challenges for private practice lawyers when transitioning to an in-house role: ‘Our programme is teaching our law students the economics of new businesses and how to set up and manage projects, which are two of the most critical skills for general counsel and in-house attorneys.’

Dugal made this transition himself when he moved from Fenwick & West to 500 Startups, where he saw at first hand the demands placed on advisers at emerging companies. ‘A lawyer working at a start-up will have to wear many, many hats and will have to put out a lot of fires. You’re not talking about a lawyer who is assistant assistant assistant corporate counsel focusing on outbound licensing IP agreements. You’re talking about somebody who deals with everything – as fundamental as advising the board of directors, or as minute as changing a word in an offer letter.’

Porter believes that the programme is giving her skills that are directly relevant to an in-house career path, should she choose to take one: ‘There are so many different workshops that I’ve gone to that are on totally different topics, and it’s made me realise that being a GC in a start-up, you have to be on top of all those things. You wouldn’t get bored!’

But for those not attracted to a career in the start-up world, Sterling is confident that his students are being trained for any corporate ecosystem, such as capital markets or M&A. ‘They understand the building blocks feeding successful late-stage companies, so it’s totally relevant,’ he says.

Startup@BerkeleyLaw is steeped in Silicon Valley culture, however, developed in true start-up approach and non-hierarchical, as demonstrated by its student-run programmes like ‘Startup Law’. ‘We piloted a number of workshops and courses, many of which worked. Based on the feedback we received, we’ve iterated and grown,’ says Sterling.

There’s still further scope for learning through Startup@BerkeleyLaw, says Dugal, who would like to see fellowships that enable students to work at new companies or funds and have the opportunity to interact with GCs, venture capitalists and non-lawyers on a professional level. ‘If they go on to a law firm they are better equipped for client representation, they are more effective lawyers, and they have pathways beyond law firms for later in their lives – they’ll have life ventures.’

An innovation like Startup@BerkeleyLaw might not entirely disrupt the legal education model, and its relevance will depend on the market each individual institution serves. But as automation and AI begin to relieve law firms and in-house departments of low-level work, law schools might be advised to adopt more forms of practical learning and network-building, so that even the most junior lawyers are furnished with broader skills. The age of lengthy legal apprenticeships filled with repetitive tasks could be about to be consigned to history – along with other outdated operating systems. LB

Catherine Wycherley, editor and features writer, GC magazine