Term sheet clause 20 of 25 · Founders and deal terms
Legal fees in a term sheet
In plain English: The company usually pays the lead investor's legal fees, up to a cap. Typical: Capped.
Founder-friendly
Low cap.
Investor-friendly
No cap.
What to watch for
Red flag
Uncapped investor legal fees.
How to model it
Don't judge this clause by reading it; put numbers on it. In our workbooks it's modelled in Assumptions - professional fees, so you can see what it changes in your ownership or your payout before you agree.
Not legal advice. Norms vary by country and market cycle. Have a startup lawyer review your term sheet before you sign.