Beyond Hourly Podcast

Read the transcript below:

The following episode of Beyond Hourly was recorded before the merger of IMF Bentham and Omni Bridgeway.

Stephanie Southwick:
Thanks for tuning in to the Beyond Hourly Podcast, hosted by Bentham IMF (now known as Omni Bridgeway), one of the world's most experienced commercial litigation and arbitration funders. Our podcast focuses on advancements in legal services that drive economic value for law firms and the clients they serve. Episodes of this podcast can be found on our website, www.benthamimf.com (now at www.omnibridgeway.com), iTunes and other podcast networks. We welcome you to subscribe to the podcast and leave us reviews.

I'm your host, Stephanie Southwick. I'm an Investment Manager and Legal Counsel at Bentham’s San Francisco office. Prior to joining Bentham, I was the Managing Partner of Greenfield Southwick, a boutique business and intellectual property litigation firm in Silicon Valley. I was a business and trade secret litigator for over 15 years and I particularly loved my cases involving startups, tech companies and their investors, which is how I met our guest. My role at Bentham involves assessing investment opportunities with a particular emphasis in cases involving misappropriation of trade secrets and serving as a strategic resource for the parties we fund throughout their funding relationship.

Our guest today is Andre Gharakhanian, founder of the San Francisco based law firm Silicon Legal Strategy that represents some of the most exciting emerging technology companies and their venture investors. Andre and his colleagues advise emerging companies in many areas, often serving as outside general counsel and have particular expertise in venture capital finance. Andre has had a distinguished career since earning his JD from Georgetown University Law Center and then going on to work at the Securities and Exchange Commission. He practiced law at Mayer Brown in Chicago representing fortune 100 companies in securities and M&A matters, and then at Orrick in Silicon Valley and its emerging companies group before founding his own firm. Andre, welcome to the Beyond Hourly Podcast.

Andre Gharakhanian:
Hi Stephanie. It's great to be here.

Stephanie Southwick:
Thanks for joining us today. I just gave our listeners a high level general background, but I'd like to back up a little because I always find it so interesting to hear about people's path to success. Tell us a little bit about yourself and maybe even why you decided to go to law school.

Andre Gharakhanian:
That's a really interesting question. Like so many others who go to law school, I think that there was a spark early on and it came from an unusual place, or maybe not a frequently discussed place, was around economics. I was an economics major in undergrad and I had a particular fascination with antitrust law. During my, I think the summer after my junior year of college, I interned at a place called NERA, National Economic Research Associates. They were an economic consulting firm that had an unusual role and you don't really learn about this when you're in school.

They provided the testimony and analysis and trial exhibits for a lot of litigation, so antitrust litigation, securities litigation, etc. I interned there in D.C. after my junior year and was really fascinated working with the antitrust litigators on these cases and putting together different analysis and trial exhibits and really helping to empower their arguments. NERA was one of the consultants involved in the Microsoft case as well. It was sort of cutting edge stuff that was super interesting at the time.

Stephanie Southwick:
Exciting work for a college student.

Andre Gharakhanian: 
Oh yes, definitely. Definitely. It was super exciting work. That put the bug in my head that I was going to be an antitrust litigator. I went to law school for that purpose. Of course, law school is very litigation focused. Upon enrolling in and going to law school, it was very quickly discovered that I was a horrible law student.

Stephanie Southwick: 
See this is the stuff I love to hear.

Andre Gharakhanian: 
Coming from a background, I was a typical sort of type A personality kid, national merit scholar and 4.0 in college and all that kind of stuff. Went to law school and basically kind of got my ass kicked every day and was like, wow, okay, what am I going to do? You don't really have that exposure in law school because so much of it is disputes based. I took a corporations class and then in looking for jobs for 2L summer, just focused more on transactional stuff. That's how I ended up going the Mayer Brown route and realizing that there was still a path for me in the sort of collaborative way of bringing deals together and coming up with creative solutions. It's funny how I ended up here now doing startup and emerging companies work because that was absolutely positively not on the radar heading into, and for the most part during, law school.

Stephanie Southwick: 
Right. When you first started out your legal career, you were representing very large companies, right?

Andre Gharakhanian: 
Yes.

Stephanie Southwick:
How did you become interested in representing startups and emerging companies?

Andre Gharakhanian: 
A few years in, after representing a lot of the larger companies, I got a taste of some private company work, doing some private equity and venture capital in Chicago. Certainly nothing like it is here in the Bay Area, but there was a decent amount of activity. I was a little bit intrigued by just the access to higher-level decision makers in the companies. One of the things that was frustrating to me in working with a lot of fortune 100 companies was you weren't really in-step with a lot of the decision makers. I was helping the number five and treasury at Dow Chemical be able to go home on time as opposed to helping them make a lot of bet-the-company decisions. It really felt like pushing paper. It really felt like sort of outsourced support versus true sort of strategic advising. That sort of got my mind turning. Then it's funny, my brain initially went to, should I even leave the practice of law, should I go be an investment banker?

I had plans to go to New York. That was the plan. In the meantime, I went to a wedding in Los Angeles. My best friend from law school got married. It was a five day—the bride is from Pakistan—so it was a typical, like an Indian wedding. The five days of different types of ceremonies. I met a woman at this wedding, she was living in San Francisco at the time. I lied to her, told her that I was moving to San Francisco. She is my wife and the mother of my son. I ended up coming out here and looking for places to work …

Stephanie Southwick: 
You had to quickly find a job and a place to live since you told her that you were also moving out to San Francisco?

Andre Gharakhanian: 
Yes. I called up a headhunter and a terrific one by the way, and interviewed at a bunch of different Silicon Valley firms and Orrick was super, super early stage focused and that really appealed to me and kind of kicked off now basically a dedication and devotion to this sort of end of the market.

Stephanie Southwick: 
At some point you decided you had had enough of Big Law, right? You made a very gutsy, risky decision to leave your stable, secure salary and go out on your own and be an entrepreneur.

Andre Gharakhanian: 
Yes.

Stephanie Southwick: 
Just like the folks you represent. What do you think it was about your circumstances or your personality that kind of allowed you to make this, what some would call, a risky decision?

Andre Gharakhanian: 
Well, there's something about being here and being surrounded by these companies and these founders that are doing a lot of amazing things and for lack of a better term, you kind of catch the bug, right? Maybe about 18 months after being at Orrick, I was constantly asking myself, should I start something? Should I join a startup? Should I go be in-house legal at a startup? It was constantly going through my brain. The work that I was doing was engaging, but it's almost this constant distraction, like wow, something really shiny is happening over here, over here, over here.

I met a guy who was a former colleague of my Orrick colleagues. The Orrick Silicon Valley office at that time were essentially all people who had left Venture Law Group when it broke up. Definitely sort of the most cowboy true venture lawyers out there and one of their former colleagues was this guy that I met and he had started his own practice. He was younger than I was and so I was intrigued by this notion of being able to market and sell legal services to these kinds of clients. You can't be at MoFo and walk across the street to McKesson and say, "Hey don't go to MoFo, come here, come work with me." A solo attorney can be the outside counsel for a small startup or a small investor and that lit a fire.

I was completely enraptured by that concept and I knew I was going to leave about 14, 15 months before I did and I spent that time putting money away, got the wife onboard, planning out the business and then really building out my network as well. I knew that would be critical. At the time, late '06, early-to-mid '07, there was a lot of activity sort of socially in the city. The dot com bust happened and things were ramping back up and there were all these events. Now, you go to events now, tech events, it's a bunch of service providers. It's nonsense, right? Back then it was Michael Birch from Bebo and Mark Zuckerberg and people were actually going to these events.

Stephanie Southwick: 
You started going to them?

Andre Gharakhanian: 
I started going too.

Stephanie Southwick: 
Right.

Andre Gharakhanian: 
At the time, particularly because most of the lawyers were down in the Valley, I became a fairly well known face in San Francisco and at San Francisco events and was able to really establish kind of a name for myself. You got closer and closer, had planned it out. I had a part-time paralegal I used to work with at Orrick join me. Then October 1, 2007, I made the jump. I had a few clients with me. We had a tiny one bedroom apartment in the Marina in the city, had taken out the dining room. I went to Office Max on Geary with my wife and we picked out two ugly but functional desks and hutches.

Stephanie Southwick: 
Your first office was in your living room?

Andre Gharakhanian: 
Yes, it was in my living room. I had a virtual office though on Hamilton and Palo Alto because at the time there were no venture lawyers in the city. There were barely any. I was worried about the credibility of making sure that I had a Valley address.

Stephanie Southwick: 
Right.

Andre Gharakhanian:
228 Hamilton, Palo Alto was the initial Silicon legal address. For the most part I was working out of the old dining room.

Stephanie Southwick:
The initial Silicon Legal staff or partners, you and a paralegal?

Andre Gharakhanian:
Yes.

Stephanie Southwick: 
Two of you.

Andre Gharakhanian:
Yes.

Stephanie Southwick:
How many are you now?

Andre Gharakhanian:
Now we're 50.

Stephanie Southwick:
Wow.

Andre Gharakhanian: 
It's kind of crazy.

Stephanie Southwick:
That's huge growth. Yes, wow. I've heard you say that you have a philosophy about representing startups. What is that philosophy?

Andre Gharakhanian:
Well, the complexity of the legal work that we do, it's not very intense. When I say that, sometimes people are surprised because I'm a lawyer. I'm supposed to be sort of very proud of my craft, but our craft is a little different. The work is not intensive. It's small business law, small deals. We have this joke, which my team will tell you they're tired of hearing—that we're not helping clients finance a soccer stadium in Brazil or deal with some global mass contamination lawsuit.

What is incredibly intense is managing our clients. Most of them are doing this for the first or second time. They don't have in-house counsel. Everything you do with these early growth startups, it is bet-the-company. It's a fundraising that's going to give them 18 months worth of runway. It's a new hire who's going to accelerate product development. It's a distribution deal that opens up a whole new market. There's this incredible sense of urgency and anxiety and we find that just as important, if not more important than having the technical sort of legal expertise and providing that technical guidance really is good, old fashioned customer service.

Being ultra-responsive, managing expectations, delivering bad news, educating clients, really being a trusted facilitator and advisor and it's something that I picked up on when I was at Orrick and it's something that we've really tried to build into the fabric of the firm. It's memorialized and oriented and trained and evaluated on. There's a way that we do things. There's a way that an email from a Silicon Legal attorney, a paralegal, there's a way it looks, there's a structure to it that's consistent. There's a way that we walk a client through a financing. There's a way that we send back comments on documents.

It's not about moving commas or word-smithing or trying to create some army of automatons, but it's about recognizing the need for a very consistent client service approach and client service interaction that help to breed confidence in everyone in the organization and enable us to scale in a way that is fulfilling to everyone and enables our team to grow. When you can empower very smart associates who have the legal chops to be able to answer questions, when you can empower them to not only take that and then also deliver that advice in a way that wows clients, you enable them to build relationships and grow in their career and create opportunities for themselves at Silicon Legal and elsewhere.

Stephanie Southwick:
What advice would you give a startup company who's going through the process of looking for legal counsel?

Andre Gharakhanian: 
The first and foremost is, I don't care if you don't ever want to talk to me or if you want nothing to do with my firm. The mission critical thing that you have to do is work with someone who does this day in day out. You need to work with super experienced, emerging companies startup council. It's not the right idea to bring in your uncle who also knows a lot because there's a language that we speak. There is a philosophy I feel very strongly about how we think about representing startups, but it's not leaps and bounds away from what our other competitors are doing. They also understand that this is a different kind of client to represent. It's just mission critical to work with a firm that is super, super focused on startups and not only that speaks that language but also has the market data and understands how things are done here because we see it all the time.  

For instance, we represent a lot of investors and we'll go in and they'll back a company that's based in Ohio or somewhere else using council that doesn't do this all the time. There's just a level of friction, there's a level of delay and argument and just lack of collaboration because we're speaking totally different languages. That's the number one thing.

Stephanie Southwick:
Right.

Andre Gharakhanian:
Then the second thing is really look for a firm that can understand what you're going through, that is focused on the earlier end, that is thoughtful about how they staff teams, is thoughtful about the amount of engagements that they take on.

Stephanie Southwick:
I was just going to ask you why you think your clients are better served at a firm like yours than a big firm and I think you kind of answered that in advance.

Andre Gharakhanian:
I think we bring a unique combination that no one brings to the table. One, small enough to care about you. That we are a smaller team. We limit our engagements. We turned down in excess of 70% of inbound leads.

Stephanie Southwick:
Wow.

Andre Gharakhanian:
We are looking for clients who are going to turn into our salesforce. All of our work comes from referrals and so we are very choosy in who we bring in the door and that enables us to again have the right bandwidth and resources to be super hands on, super responsive and like I said, small enough to care about you. Then combining that with just the market experience, the market knowledge that comes from having a world class deal flow and a world class team. I poach all of my associates and paralegals from all of the usual Silicon Valley Big Law suspects. That's one of the things that sometimes misses.

There are plenty of small shops who can provide incredible service, but they do maybe 10 financings a year. I think year-to-date, this year we've done like 512. There's that experience level there. Then topping it off with that perspective that I mentioned—that the bottom line perspective that comes from the fact that we're entrepreneurs. We're not just advising on the sidelines around these issues. We're trying to build and motivate a team, create repeatable processes, deal with technology infrastructure issues, fire people, establish brand awareness. We live through those challenges, we don't just coach companies through them.  I think that it just does something with our framework and our mindset in giving legal advice, makes us a lot more bottom line focused, no nonsense, kind of get the deal done kind of a shop.

Stephanie Southwick: 
Andre, I want to thank you again for talking to us today on Bentham's Beyond Hourly Podcast and sharing your insights, but we are not done. We still have so much to discuss. We'll break here for now and I invite our listeners to check out our next episode for the rest of my discussion with Andre Gharakhanian.  

As I mentioned at the outset, episodes of the beyond hourly podcast can be found on our website, www.benthamimf.com (now at www.omnibridgeway.com), iTunes and other podcast networks. Thanks for listening in and I invite you to subscribe to the podcast and leave us reviews. Please feel free to follow up with me, Stephanie Southwick, at [email protected] (now at [email protected]) for any feedback or ideas you have on topics we should cover on the podcast. Thank you and be well.