©2020 by Sarah Downey

  • Sarah

Is a law degree useful in VC?

Spoiler: not really. But here are the 7 ways in which it comes up.



People always ask me how I moved from being a lawyer to working at startups to being a VC. My answer: it wasn’t intentional — I committed fully to each role at the time until I realized it wasn’t for me, and then luck and external circumstances brought on the next one.


My time in the law was short-lived. I bounced among a commercial litigation firm, a district attorney’s office, and an intellectual property clinic before concluding it wasn’t for me. Then I worked at two venture-backed startups doing mostly organic marketing and some product. I’ve been in venture for 3+ years now and it finally feels like it’s where I should be.


Because narratives make sense to people, it’d be nice if there was a story about how transitioning from law was planned or at least gave me a good foundation for the work I do now. Current lawyers ask me about this a lot, likely because the law (mainly at corporate firms) is an unfulfilling existence of billing hours and filing memos, and they want to see and understand all their exit routes. Sorry, lawyers. I probably wish this story were true more than anyone. I’m sure I have cognitive dissonance about my law school loans and want to believe that I went through three years of expensive schooling for a good reason.


For a few years after graduating law school, I was convinced that saddling myself with a $90k debt for a degree I didn’t use was a terrible idea. Reflecting on it almost a decade later, I’m still not sure it was worth it. But it’s a unique background and it’s come in handy in some unexpected ways.


The 7 ways I use my law degree in VC


1. Hard times with portfolio companies


Unfortunately, it’s when the shit hits the fan with portfolio companies that I find myself using what I’ve learned in the law the most. Mistakes with hiring, firing, treatment of employees, investigations, breached agreements…they’re awful, but they happen more frequently than anyone talks about publicly. It can be intimidating to be the youngest person or the only woman on a board, both of which apply to me often, but that feeling disappears when everyone’s focused on resolving a crisis and I’ve got direct experience with the legal lines defining it.


2. Breaking down complex concepts fast


Both venture and the law present complicated fact patterns and ideas that need to be distilled quickly. To be fair, I had this skill before law school — it’s a big part of what the LSAT tests for and what enables good exam grades — but I refined it during those three years. Whether it’s founders pitching us a new quantum computing solution or legal clients negotiating a tenuous merger, we need to cut to the core of what matters first to see whether the problem is a fit for our skills, interests, and time before we commit further. We grasp the important pieces by asking questions, listening, and researching, and then summarizing what we’ve learned in clear, succinct communications to our partners.


3. Reading as a superpower


Law school pushes the limits of your reading capacity: each semester assigns thousands of pages of cases and articles with a single written test at the end. The best VCs are voracious readers, too. We have to stay on top of technology and industry developments, technical whitepapers, our portfolio companies’ progress, and investment news, along with hundreds of emails and dozens of slide decks every day. And despite all that required reading, many VCs are also leisure readers. Brad Feld of Foundry Group has read over a thousand books on Goodreads. I’m currently 53 books into a 100-book goal for this year. If you don’t like reading, VC isn’t the job for you.


4. Digging up information


There’s a misconception that VCs and lawyers are the experts, not the people we meet with. While we may have pattern-matching based on the variety of situations we’ve seen, the founder (in VC) or the client (in legal) almost always knows more about his or her specific industry or company than we do. It’s rare that a lawyer has the immediate answer to a legal question, or that a VC knows exactly what’s valuable about a startup idea. But we know how to find the answer. Whether it’s e-discovery, Series A diligence, Westlaw searches, product testing, or making calls for backdoor references, we’re solid investigators.


5. Knowing how to read legal documents


VCs usually leave the complex contract work to the real lawyers, like in-house general counsel and external law firms. Still, having spent enough time around contracts means I can flag problematic clauses in term sheets or commercial agreements with a little more ease. It doesn’t mean I have the answer right away (see point 4 above), but it’s a starting point to find one or have a discussion.


6. Reading people’s motivations


I always found the psychological side of the law the most interesting: what does each side in a negotiation really want? Which business relationships will fail, and why? In early-stage VC, the people you’re backing are the most important piece of the decision to invest. Stated motivations aren’t always real motivations, and you need to have the EQ and the observational skills to decode the founders you meet.


7. The appearance of competence


Regardless of whether it’s always deserved, having a law degree conveys a certain degree of perceived credibility to the person who has it. It gave me the edge I needed while working in startups to help journalists trust my opinions as a spokesperson. And while the JD is not the most common advanced degree that you see in venture capital — the MBA is — getting that far in academia does suggest a greater level of competence than not doing so, everything else being equal. Everyone fakes it until they make it when they start out in a job, and having a fancy degree behind you can be an effective (if expensive) confidence booster.


Is having a JD a more valuable resume-booster for VC than something totally unrelated, like maybe…furniture design or cat grooming? Sure. But degrees matter very little. We see job applications from MBAs all the time where candidates emphasize that degree as though it’s a prerequisite for VC. Frankly, we don’t care if you have an MBA. We do care that you’re entrepreneurial in what you’ve built or done.


It’s better to have gotten your hands dirty and launched an app yourself, or wrote a successful movie review blog, or started a coffee company, or designed products at a startup, or wrote software to help your parents’ dental office cut costs. It’s better to be a high school dropout who can write beautiful code than to be a dual JD/MBA who’s never done anything outside of school.


Some of the skills I used in the law — whether I had them to begin with, or honed them that way — are essential traits of good venture capitalists. But there are certainly much more direct paths to a job in VC than a JD, and the experiences I got working at two venture-backed startups were far more valuable to my career today than those I had in the law. But you better believe I’m still a member of the bar today, less because I think I’ll use it someday and more because I get to sign the occasional scary email with “Esq.”


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