FII - WSGR Form of Engagement Letter

Document Sample
FII - WSGR Form of Engagement Letter Powered By Docstoc
					                                                                                                                  650 Page Mill Road
                                                                                                            Palo Alto, CA 94304-1050
                                                                                                                     PHONE   650.493.9300
                                                                                                                       FAX   650.493.6811

                                                       [insert date]

[insert client contact information]

         Re:         Representation of [insert company name].

Dear [name]:

         We are pleased to have been retained to advise a company to be formed that is expected to be
called [insert company name]. (the “Company”). This letter describes the basis on which Wilson Sonsini
Goodrich & Rosati (“WSGR”) will provide legal services to the Company and bill for those legal
services. We believe that it is beneficial to the attorney-client relationship that you have a clear
understanding of our billing and engagement policies and procedures. Unless a separate engagement
letter has been entered into with respect to legal services, it is understood that any future legal services or
matters will be provided by us under the same terms and conditions described herein at the billing rates
and policies in effect at the times such services are performed.

        We believe that the wealth of experience of this firm enables us to provide both cost effective and
creative legal advice. We look forward to the opportunity to build such a relationship with the Company.

         We work in client teams, the composition of which we like to maintain over time. This increases
our productivity in providing legal services to you. The people on your team here at WSGR are listed in
the table below along with relevant contact information.

         Name                                              Office
         Yoichiro (“Yokum”) Taku                           Phone:           (650) 354-4251
         Corporate & Securities Partner                    Fax:             (650) 493-6811
                                                           Assistant:       Eriko Morio (650) 565-5112

         Troy Foster                                       Phone:           (650) 565-3600
         Corporate & Securities Partner                    Fax:             (650) 493-6811
                                                           Assistant:       Liya Sobolev (650) 845-5014

         If at any time you have any questions or concerns, please feel free to contact any of us.

       We work with the vast majority of our clients from initial founding through all stages of their
growth and development and it would be our intent to do so with the Company. Other areas of firm

[insert company name]
[insert date]
Page 2

expertise, such as patent, trademark, employee benefits and labor groups, may be called upon as your
needs develop and we will coordinate all these efforts for you.

         A number of the specific policies and procedures applicable to our representation of the Company
are outlined below.

           Scope and Duties. We will provide those legal services reasonably required to represent the
           Company and will take all reasonable steps to keep the Company informed of our progress and to
           respond to your inquiries. We note that our duties do not include representation of the founders,
           shareholders, officers or other individuals or entities associated with the Company. On occasion,
           differing interests may lead the Company and one or more of the individuals associated with it
           toward divergent goals. In those instances, we will represent only the interests of the Company.
           For example, founders or other officers may enter into various agreements with the Company
           from time to time. Although we may explain how these or other documents could affect the
           interests of the particular founder or officer, in doing so we will be acting as counsel to the
           Company, not the individual involved.

           Professional Undertaking. We will do our utmost to serve the Company effectively. Our goals
           are to provide the Company with legal services in an effective and efficient manner, and to
           respond to the Company’s inquiries promptly.

           WSGR represents a large number of clients. Some of these clients may wish to enter into
           business relationships with the Company. Some of these clients may be or become customers,
           vendors or competitors of the Company. Others are in the fields of venture capital and financial
           services. Also, you may be aware that we operate an investment fund, WS Investment Company,
           LLC, which is funded primarily by the partners in the firm. This fund invests directly in many of
           our venture-backed clients and in some cases indirectly through investments in numerous venture
           capital funds that support our clients. Nothing about those potential investments or this
           explanation lessens our obligation to represent the Company’s interests zealously and to the best
           of our ability. If any of these business or investment relationships should give rise to an actual or
           potential conflict of interest during the course of our representation of the Company, we will do
           our best to identify it and bring it to your attention for resolution. In addition, if you are
           concerned about any relationships we might have with particular companies or individuals, such
           as competitors of the Company, please bring those concerns to our attention.

           Disclosure of Current Representation of Founder Institute, Incorporated. Under
           Rule 3-310(B)(1) of the California Rules of Professional Conduct (the “Rules”), we are required
           to provide the Company with notice that WSGR currently represents Founder Institute,
           Incorporated (“FII”). In the course of such representation, WSGR drafted forms of certain legal
           documents for FII’s educational program, including but not limited to the Founder Agreement
           entered into between FII and [insert name of FII participant], one of the Company’s founders,
           and the warrant to be issued by the Company to FII pursuant to the terms of the Founder
           Agreement (the “Warrant”).

[insert company name]
[insert date]
Page 3

           In addition, WSGR or WS Investment Company, LLC may acquire an interest in the warrant
           bonus pool maintained by FII, which bonus pool may include the Warrant.

           The Rules require us to tell the Company about WSGR’s representation of FII and the potential
           interest WSGR or WS Investment Company, LLC may acquire in the Warrant by participating in
           the warrant bonus pool because it is possible that such representation or such interest may divide
           WSGR’s loyalty to the Company.

           The Company is entitled to expect that we will represent its interests fully and vigorously without
           regard to the interests of FII or any interest of WSGR or WS Investment Company, LLC in the
           Warrant, and we intend to do so. We do not believe that WSGR’s relationship with FII or any
           interest WSGR or WS Investment Company, LLC may acquire in the Warrant will affect
           WSGR’s representation of the Company. However, if a conflict does arise, we will discuss this
           matter with you before we proceed. If we conclude that waivers of such a conflict are necessary
           under the Rules and are unable to obtain them, we may be unable to represent one or more of the
           parties in the matter. In such a circumstance, the Company’s interest in that matter may require
           independent counsel.

           Confidentiality. Generally, it is in the Company’s best interests to preserve the confidentiality of
           all communications between WSGR and the Company. If the Company discloses these
           communications, it jeopardizes the privileged nature of the communications, so we advise the
           Company not to disclose privileged information to third parties.

           Legal Fees, Costs and Billing Practices.

           Time-Based Billing. As a general matter, we bill for our services based on the hourly rates of the
           attorneys or paralegals working on any given project. Our schedule of hourly rates for attorneys
           and other members of the professional staff is based on experience and specialization in training
           and practice. Our hourly rates currently range from $[100] for our junior case assistants to over
           $700 for our most senior attorneys. Our fee schedules are revised periodically. The enclosed
           Schedule of Rates indicates our current hourly rates for attorneys and other members of our
           professional staff.

           Costs. Often it may be necessary for us to incur expenses for items such as travel, overnight
           courier or messenger services and governmental filing fees. Similarly, some matters require
           substantial amounts of costly ancillary services such as photocopying and computerized legal
           research. The enclosed Schedule of Rates indicates the rates at which we charge for certain firm
           services. These items are separately itemized on our statements as "costs advanced," in order to
           allocate these expenses fairly and keep billing rates as low as possible for those matters which do
           not involve such expenditures. Some “costs advanced” represent out-of-pocket costs, some
           represent an allocation of overhead costs associated with the items and others represent a
           combination of both factors. We will generally request advance payment of out-of-pocket
           expenses such as filing fees and travel expenses. We do not bill for telephone costs.

[insert company name]
[insert date]
Page 4

           Billing Practices. We will prepare statements to describe the nature of the services we render to
           the Company and our costs advanced for those services. Our statements will normally be
           prepared and mailed during the month following the month in which we render services and
           advance costs. We generally expect payment in full within 30 days after the statement date. A
           copy of our current Billing Policies and Procedures is attached which gives more information
           about billing matters.

           Retainer. As we have discussed, the Company will provide us with an initial retainer of $1,000,
           which we will use to credit against legal fees and expenses. Any unapplied retainer amounts will
           be refunded to the Company upon request.

           Special Arrangements for Start-up Company Clients. We understand the particular financial
           needs of start-up companies and will work with you to respond to those needs. Per our
           discussion, we will defer payment of legal fees (but not our costs, which we expect to be paid in
           advance of disbursement to third parties) relating to the general corporate organizational activities
           we perform in structuring the Company and the pursuit of funding until the earlier of (i) the
           Company has received debt or equity financing in excess of $750,000, or (ii) [insert date one year
           from date of engagement letter]. If for any reason the Company has not been successful in
           obtaining its funding prior to the time that the Company has accrued unpaid invoices in excess of
           $5,000, we will re-examine this payment arrangement and will discuss with you alternate
           payment arrangements for prospective work to be done by the firm. This deferral includes
           matters related to incorporation, issuance of founders stock, option grants, stock administration,
           and preparation of standard employment related documents such as offer letters, confidentiality
           and invention assignment agreements. This deferral does not include matters beyond these non-
           corporate organizational matters, such as licensing, litigation, real estate, patent or trademark
           matters among other things. If you decide not to pursue the Company’s currently proposed
           business, we will write off deferred fees. Accrued fees and costs are due immediately if the
           Company terminates our services as its primary outside counsel. Accrued fees and costs would
           also be due upon the sale of the Company or other similar transaction.

           Investment in the Company. As we discussed, this firm’s investment partnership, WS Investment
           Company, LLC, has asked for, and been granted by you, the opportunity to invest in each of the
           Company’s financings, at the same price per share paid by the other investors in such rounds, as a
           condition of our representation of the Company. We understand that this opportunity is subject to
           approval of other investors, but we expect that the Company will use reasonable efforts to
           facilitate the investment by WS Investment Company, LLC. The Company should evaluate
           whether this stock purchase is fair and reasonable to it and you may wish to seek the advice of an
           attorney outside of this firm about whether the Company should sell stock to WS Investment
           Company and such attorneys. If the Company has any concern that the proposed investment in
           connection with future financings as described above is not fair and reasonable to it, or that it
           would compromise our independence of professional judgment or otherwise interfere or affect
           our representation of the Company, it is essential that you raise these concerns with separate
           counsel and us now. Otherwise we will rely on your signature below as confirming your
           agreement to the proposed investment and that our representation of the Company will not be

[insert company name]
[insert date]
Page 5

           affected adversely by such investment, that such investment is fair and reasonable to the
           Company, and that the Company has given us its informed consent to make the proposed
           investment. While any investment decision will be ultimately made by WS Investment
           Company, it is unlikely that this investment will exceed $100,000 in any round.

           Termination of WSGR's Representation. Either of us may terminate WSGR's representation of
           the Company at any time for any reason. At the time WSGR's representation of the Company
           concludes, all unpaid fees and costs owed for our legal services become due and payable. If at
           that time the Company does not request the return of its files, WSGR will retain the Company’s
           files for a period of five years, after which WSGR may have the files destroyed.

           Binding Arbitration. We do not anticipate having any disagreements with the Company about
           the quality, cost or appropriateness of our services, but if any concerns about these matters arise,
           please notify us immediately. We would endeavor to resolve any disagreements in a fair and
           amicable manner. If for some reason we are not able to resolve any dispute ourselves, then
           WSGR and the Company agree that all disputes or claims between us of any nature whatsoever
           shall be resolved by binding arbitration before the American Arbitration Association or JAMS in
           the county of Santa Clara. This agreement includes but is not limited to disputes over the quality
           or appropriateness of our services, the fees and costs of our services and the Company’s
           obligations to timely pay for our services. The arbitrator shall have power to decide all matters,
           including arbitrability, but must decide all disputes in accordance with California law. WSGR
           and the Company choose arbitration because it is usually less expensive and quicker than
           litigation, and it will allow them to resolve their disputes privately. The arbitrator shall allow
           limited discovery to enable WSGR and the Company to present their cases, but will be mindful of
           their mutual desire to avoid the expense of broad discovery typically allowed in civil litigation.

           Notwithstanding, either of us may first submit fee disputes to the local bar association. If the bar
           association declines to hear a fee dispute, or if either of us wishes to reject a decision by the bar
           association on any fee dispute, then the fee dispute shall also be resolved by arbitration as set
           forth above.

           Miscellaneous. This letter is the entire agreement between the Company and WSGR concerning
           WSGR’s provision of legal services to the Company. California law governs this letter. If any
           term of this letter is determined to be invalid or ineffective for any reason, the remaining terms of
           this letter will remain in full force and effect. By signing this letter, the Company affirms that it
           understands that it is free to consult with other counsel before signing this letter about the wisdom
           of agreeing to the terms of the letter, including the provision for binding arbitration. The
           Company also affirms that it is voluntarily signing this letter. This Agreement will not take
           effect, and WSGR will have no obligation to provide such legal services, until the Company
           returns a signed copy of this Agreement.

        If the terms of WSGR’s representation of the Company as explained in this letter and in the
attached Billing Policies and Procedures and Schedule of Rates are satisfactory, please execute the
enclosed copy of this letter as indicated and return it to me.

[insert company name]
[insert date]
Page 6

         In closing, let me say again how pleased we are to work with you. I believe that Wilson Sonsini
Goodrich & Rosati can make a substantial contribution to the success of the Company and look forward
to our future work together. Should you have any questions, please feel free to contact me.

                                                                  Very truly yours,

                                                                  WILSON SONSINI GOODRICH & ROSATI
                                                                  Professional Corporation

                                                                  Yoichiro Taku

        The undersigned has read and understood the foregoing terms and conditions and the attached
Billing Policies and Procedures and Schedule of Rates and agrees to them as of the date Wilson Sonsini
Goodrich & Rosati, Professional Corporation, first provided services to the Company.

APPROVED and agreed this ____ day of ____________ 20__.

[insert company name]


Address for Billing:


Attention:            _________________________________
Telephone No:         _________________________________
Facsimile No:         _________________________________


        I acknowledge that Wilson Sonsini Goodrich & Rosati will be representing the Company and not
me individually. This acknowledgment applies to any stock, option, employment, or proprietary
information or similar agreements I may enter into with the Company, as well as any other matter
involving the Company and me.

[insert name of founder]                                           [insert name of founder]

                                     Signature Page to Engagement Letter

                                                                  February 2010

                                         WILSON SONSINI GOODRICH & ROSATI
                                         BILLING POLICIES AND PROCEDURES

This statement of Billing Policies and Procedures and the attached Schedule of Rates generally describe
our current billing policies and procedures. We ask that you review this information carefully and
encourage you to discuss with us any questions you may have concerning these policies and procedures at
any time, especially if elements of our policy vary from your own internal policies or practices.

1. Basis for Professional Fees for Legal Services.

     Hourly Rates. Our policy is to charge a reasonable fee that reflects fair value for legal services
     rendered in connection with the particular matter or matters involved. The basic factor used to
     determine our professional fees is the number of hours that attorneys and other professional staff
     devote to client matters multiplied by the billing rates that are applicable to the particular matter or
     matters. Accordingly, each of our lawyers and legal staff maintains time records for each client
     matter. These records are reviewed monthly by the responsible billing attorney before an invoice is

     The attached Schedule of Rates reflects the current ranges of billing rates for our attorneys and
     professional staff. The rates applicable to a particular matter depend on a number of factors,
     including the experience and expertise of each attorney and member of our professional staff, the
     nature and complexity of the matter, and the special skills required to perform the particular legal
     services. We customarily review our billing rates annually and adjust them to reflect an increase in a
     professional's experience, responsibilities and expertise. In addition, an individual timekeeper's rate
     may be adjusted to reflect his or her promotion. When we adjust rates, the adjusted rates are
     automatically applied to ongoing matters unless otherwise agreed in writing.

     Other Factors. Although the principal factor in determining our fees is the number of hours we
     devote to a matter, the amount and rates we actually charge may be adjusted upward or downward to
     reflect a number of other factors that bear on the reasonableness of our fees. These factors include the
     novelty and difficulty of the questions involved, time limitations imposed by the client or by the
     situation, the nature and circumstances of the client (e.g., individual, venture fund, early stage private
     company, mature public company, etc.), the size and scope of the matter, our judgment as to the
     number of hours reasonably and productively devoted to the assignment, the value of the services
     performed, and the results obtained.

     We are always available to discuss alternative billing arrangements with you. We will consult with
     you in the event we propose to use a different method of billing than charging for our time based on
     hourly rates.

     Staffing. Staffing decisions will be made with the objective of providing high-quality legal services
     on a basis that is both effective and economical. We will use our best judgment to reasonably
     minimize the number of lawyers who work on any particular client matter.

     Fee Estimates and Budgets. Unless a specific written agreement to such effect has been reached in
     advance with the client, any estimates of our fees represent only our best approximation of those fees,
     and such estimates do not constitute a maximum or minimum fee quotation.

2. Disbursements and Costs.

     In addition to the professional fees described above, we charge for expense disbursements and other
     costs incurred in connection with performing legal services. All such charges are itemized
     individually on our invoices. We will attempt to minimize these expenses, consistent with client
     directives, time constraints, and quality requirements.

     Disbursements to Third Parties. All disbursements to third parties are invoiced to clients at our
     actual cost. These include filing fees, court reporter fees, expert witness fees, computerized legal
     research, photocopying (when it is more efficiently outsourced than performed by our staff),
     investigator and consultant fees, postage charges and travel (see the separate section on travel,

     We may request that third-party charges in excess of $500 be paid directly by the client to the third
     party where practicable.

     Costs Incurred. Costs incurred for support services are charged only to those clients who make use
     of such services. These services are invoiced at our estimate of their actual cost; this includes direct
     costs, equipment maintenance, and a reasonable allocation of other expenses directly associated with
     the provision of the service. These services include in-house photocopying, document preparation
     (only in litigation matters or when used in lieu of professional printing), outgoing facsimiles and
     delivery charges. Charges for these costs are included on the attached Schedule of Rates and may be
     changed from time to time to reflect changes in our cost structure, in which case the new rates will
     automatically apply unless otherwise agreed in writing.

     Travel Expenses. We charge for local travel expenses, including the time spent in transit in
     connection with client matters as well as reimbursements for tolls, parking, and mileage (per the
     attached Schedule of Rates).

     Costs for out-of-town travel on client business are charged to the client at our cost. It is our policy
     that attorney travel shall conform to the client's own travel policies and shall otherwise be prudent and

     We charge travel time at the standard hourly billing rates. We will use reasonable efforts to mitigate
     such charges by spending as much travel time as possible working on client matters, whether for the
     client on whose behalf the travel is undertaken or for another client (in which case the time will be
     billed to the other client).

3. Retainers.

     It is our policy to obtain an advance from clients under certain circumstances. These circumstances
     may include engagements in connection with complex litigation matters, certain corporate finance
     transactions, or patent and international trademark matters where we will incur substantial third-party
     expenses in connection with our services.

4. Invoices.

     Our standard practice is to invoice our clients for fees for services rendered as well as disbursements
     and costs on a monthly basis, unless other arrangements have been made. On matters that are not
     billed monthly, we may send out monthly invoices for disbursements and costs. We attempt to
     include all costs and disbursements in the statement for the month in which such expenses are
     incurred. However, information concerning some charges may not be available for billing until a
     subsequent billing period, at which time we will invoice them.

     We will use our best efforts to respond to requests for special invoice formats, subject to the
     limitations of our client-accounting software. Please discuss such requests with the attorney
     responsible for your matter.

     Our invoices are due and payable upon receipt, unless other arrangements have been agreed to in

                                                                  WILSON SONSINI GOODRICH & ROSATI
                                                                  Professional Corporation

                                                            SCHEDULE OF RATES


     Members of the Firm ............................................................................................ $650 to $975 per hour
     Associates ............................................................................................................. $290 to $610 per hour
     Of Counsel/Special Counsel ................................................................................. $440 to $750 per hour
     Legal Staff ............................................................................................................ $120 to $300 per hour
     Library Personnel .................................................................................................. $100 to $175 per hour
     Photocopying (in-office): Black & White / Color ...................................................... 15¢ / 30¢ per page
     Document preparation (in litigation or in lieu of professional printing) .............................. $40 per hour
     Electronic Data Hosting (litigation matters: data under active review or analysis) .... $40 per GB/month
     Outgoing Telecopy: Domestic / International ....................................................... $1.00 / $2.00 per page
     Delivery Services .................................................................................. Standard rates based on distance
     Mileage .................................................. IRS standard mileage rate (at January 1, 2010, 50¢ per mile)

THIRD-PARTY DISBURSEMENTS. Disbursements to third parties are generally invoiced at our actual
cost. Third-party disbursements include filing, court reporter and expert witness fees, computerized legal
research, outside photocopying, investigator and consultant fees and travel. Any rebates paid to the Firm,
based upon our travel volume, are used to offset the direct costs assessed us by our independent travel
agency. Travel transaction fees are not charged to clients. Third-party charges in excess of $500 may be
forwarded to the client for direct payment by the client.

SUBJECT TO CHANGE. The attorney in charge of a client matter will determine the appropriate billing
rates from the ranges set forth above. Our hourly rates for professional services and the rates for support
services specified above may be adjusted from time to time. Rates for professional services are generally
reviewed annually, and the adjusted rates are automatically applied to ongoing matters. If requested,
billing rates applied to a client’s matters will appear on our invoices. In addition, because of special
expertise, a limited number of attorneys and legal staff may bill at hourly rates higher than those shown in
the table above.

                                                                                                                         February 2010


Shared By: