Interview with Tim Harris of Morrison Foerster
Andrew Laucella
Tim Harris | Morrison Foerster
Posted Monday, April 10, 2017

In your experience at Morrison Foerster, what industry changes have you seen in the companies you have worked with in Silicon Valley, and what has remained the same in the industry?

I have been doing this for 21 years, and my practice has always been focused on start-ups. However, the industry sectors that have been in favor and out of favor has changed quite a bit. People who preceded me talked about how Silicon Valley went through the semi-conductor boom first in the 1970's. Then the personal computer boom occurred in the 1980s with the inclusion of apple products, and the original IBM Doss and Windows computers. Then the internet revolution happened in the 1990's. Then the mobile computing and personal internet and ecommerce began in the first decade of the 2000's. Industry sectors seem to come and go such as the tad little booms in clean tech. There was a period of 4-5 years where tons of money flowed to clean tech. There was also about an eighteen month period where tons of money went to bitcoin mining startups. Literally start-ups that created server farms with MPGAs doing nothing more than hashing algorithms looking for bitcoins. We are now seeing a lot of money going into technologies for autonomous vehicles for flight and automotive. So, different sectors come and go, but there is a common theme in the 21 years that I have been doing this in that all of the start-up companies face really similar legal issues. Setting up their corporations and helping them raise capital, that problem is equally faced I suppose by a start up doing a pig farm as it is a start up doing packaged delivery by drones. They all need to set up corporate legal structures and they all need to convince investors, "Hey I have a fantastic idea. Sure there is a ton of risk associated with me and the team and we will have to overcome hundreds of hurdles in order to get success, but if you believe in me, I'm willing to sell you a slice of my dream, a slice of the future, and then I'm gonna build the company off of your capital." That has not changed. And I'm sure if you spoke to lawyers who are older than I am they will say that is right. Whether it was real estate investment or savings and loans, the idea of "I have a dream to build something in the future that is gonna be big, give me your money today and the risk reward is gonna pay off for you in the future," that part is not new in Silicon Valley.

So sectors have changed, but the model of the, not always the case, but typically young, typically unproven, high-risk companies (in terms of investments) have created incredible returns and become incredible successes in Silicon Valley. Companies like Apple that have literally changed the world. When I came here, apple was selling high end, expensive, personal computers mostly to the educational marketplace. Fast forward 21 years, we're all carrying extremely high powered computers in our pockets. We call them mobile phones, but they are more powerful than the first apple computers. Were plugged in 24 hours a day and we have access to the internet at all times.

The revolution in the music industry is probably another great example. There have been songs and artists who have written music that consumers have loved since the beginning of time. People started out with vinyl records, and had to have a turn table to play the records, and had to drive to each other's homes and loan records out to teach other, and swap them and couldn’t record them. Along came magnetic tape and people could record songs and play them. Then tape went by the wayside after twenty different formats and now it's all digital and it flows freely and you don’t even need to have a copy of the song because you can stream it from the internet. So some things change, like the mechanisms, but the content of music is still beautiful and melodious to the ear, and it gets people excited for their exercise or their commute.

How have lawyers roles in the start-up industry changed during the course of your career?

When I started here in Silicon Valley, I came here pre-internet and pre-email, and I came here pre-computer on an attorney's desktop. I have photographs of me on my first day of work when I came to this law firm and you can see I'm wearing a suit and tie, my hair is combed very neatly, the desk is super clean and there is not a computer on the desk.

One reason I got into law is because my father was a lawyer. I was a software engineer first. I studied computer science and I was a programmer out of college. But I came here and I started practicing law, and there were no desktops, no computers. We went to a secretary who did all the word processing on one of those mini computers downstairs in the basement using terminals. The IBM selector typewriter with correction capability was a big revolution for my father. He and I overlapped and we practiced law for a little bit together in different parts of the country, but when computers came around and word processing came around and we could turn documents quickly and then share them over email, wow, the profession totally changed. It went from a profession older folks would say that made quality take a hit in exchange for quantity and responsiveness. I have argued with my dad and said "au contraire old man," now the great work product that you and everybody else in your firm did used to be constrained by who could access the file cabinet and had the great examples of the contracts. [So the best lawyer was] who inside your firm knew the best indemnity clause, who knew the best governing law clause, and you guys walked around using what we now call the sneaker-net to get that. Now with computers, quality has skyrocketed because bad stuff just doesn’t survive. Really good stuff floats to the top and people reuse it. My dad said toward the tail end of his career, it's crazy you guys draft contracts in like a day or two, where it used to take us two weeks. And you guys now get contracts at six in the evening, and you are able to mark them up and send them back by nine in the evening. And then he turns them the next morning at nine in the morning. So the velocity and the pace at which law is practiced has increased three orders of magnitude. The number of clients that I can juggle and the expectations of my clients, that I have access to best practices and ways that people have solved these problems in the past is now just a given. You could imagine how funny it would be to be a lawyer that opens up shop these days and boasted to your clients we don't have cimputers, we don’t believe in that, we handwrite everything and have it typed up for you. You would never get a single client. People now naturally expect in Silicon Valley business transactions to be done in light speed. And clients 21 years ago would have been sheepish about saying hey MoFo, I know that you represent so and so big client, I want you to use for me the same contracts you use for them. People would have been sheepish back then to ask that. Now people just expect it. They say, I can see that you represent the biggest and strongest tech companies in the world, and I want the same lawyers that are working on that big company to work on my little start up.

It seems as though the companies that you are helping to function, are actually effecting change in the legal industry in return in many ways. That is a very interesting cycle of business.

In my career, I started my career in 95, 96, the commercial internet was just taking off. I find it's more than ironic, its deliciously funny, that when cloud computing and cloud storage first became a thing, when people began to think the internet is becoming ubiquitous, and as hardware costs drove storage way down, people started to say, "Hey we don’t need to store that locally, we can store that on a server somewhere. And as long as its encrypted or has a password behind it, we can store stuff in the cloud and don't have to store it here." I find it ironic and funny that there were many lawyers and many law firms that were very risk averse and said no no no, our clients entrust us with really sensitive stuff, and we are not gonna store that in the cloud. Our clients trust that we are keeping that within our four walls and that we are locking our offices and securing our computers at night. And we had clients, start-up companies, that were very early in the development of transmission encryption and compression storage and retrieval, all of which are based tools for cloud computing. Well now I find it quite funny that I come to work today and it's amazing how much of what we do is in the cloud.

And so to your point, yes early start-up companies that I worked on that advanced technology we now end up eating that very same dog food that we helped those clients develop years ago. We still have limitations on what we can store in the cloud, but client billings and old archived but fully encrypted client files. I think about due diligence, almost every business transaction where two companies are going to come together and do something, investment, joint venture, acquisition, anything, they both need to check each other out and make sure they know who they are dealing with. They conduct investigative due diligence on each other. When I started practicing law 21 years ago, I remember one of my first matters was one blood bank that was acquiring another blood bank. So I had to drive to Oakland to some dusty old warehouse with boxes stacked up on shelving units like the ones at Costco and I was taking copious notes looking at these documents at the site. Now several billion dollar transactions are conducted and people move the diligence material up into the cloud and they will say: "Opposing law firms, you may have access to this, here's your password." We don’t travel anywhere or make copies, we just review it online. So talk about accelerating the pace at which law is practiced. We could not do any of that but for the advances and computations that we helped foster in the early 90's.

We can't talk about specific client engagements, but the world knows we're very much out there on the public record and that we've done work for apple. I think about the iPhone in my pocket and every once in a while my wife and I will be talking and we will say to our kids, remember before cell phones, and the kids say, "what do you mean before iPhones" and they start to think about it, and they think "you couldn’t text us during the day!" Unless my wife went to a physical landline telephone and called me and I wasn’t already on the phone, I couldn't talk to her until I was home at night at 6pm. And the kids find that bizarre in this world where we are all constantly connected. Apple is just an example where the company has revolutionized every industry, including law.

How has your background in engineering and computer science helped you as an attorney?

One way that my particular practice has changed over time, is directly a function of me having been, and I still consider myself, a computer scientist. And that is that over time I have transitioned from being purely a legal advisor to being a split between business advising and legal advising. What I mean by that is, I think a lawyer is just a very sophisticated pattern recognizing algorithm. That’s a term that comes from computer science. You start out as a brand new lawyer and you’ve got all these legal constructs and concepts in your head, but you don’t see how they play out. So you have to watch how they play out altogether. It's like watching your first basketball game ever. You have a vague sense of the rules and you know which direction the players are going and that they have to put the ball in the hoop. By the time you watch your 50th basketball game you're starting to pick up on more nuances. Your 500th basketball game you're way smarter now, your 5000th basketball game and you are ready to start coaching. I think that lawyers are similar. I began practicing law and I had the concepts and the constructs in my head but it took a good ten years to see many companies succeed. And I had to be reflective and think back to why these companies succeeded. I have also seen good companies fail and I've had to scratch my head to see what the wrong move was that made the company fail. I don't know that you can accelerate that process. Young lawyers have to be patient to see a lot for your private recognition algorithm. It's really hard to see success brewing and it's really hard to see failure brewing. But I have gotten better at spotting that earlier in the process. And I've also lost my filter as a young man and I talk to clients, many of whom are younger than me, and try not to lecture them, and say, "You didn't ask me, but the path you are going down you are likely to run into these problems. I'm not discouraging you but just so you know this is what others have tried in the past, and these are the sort of problems they have run into." And people say "Wow, I didn't think about that!" How awesome to have a lawyer who is thinking three steps down the road." I couldn’t have done that unless I had walked this road a hundred times. So that’s one big way that my background has helped me.

As a software engineer I do have a bit of a methodical and very quantitative approach to law. And now I'm gonna get really specific on you. Because I raise capital for companies, I have been building spreadsheet models for longer than most lawyers in Silicon Valley. Back to the days of Lotus 123, I have always been very comfortable with cap tables and spreadsheet. That's becoming a more popular skill, but earlier on in my career that was a differentiating skill. I was able to show clients this is who owns your company today, this is what it will look like after you do this transaction. Or here is what the company looks like, here are three models that it will look like if you go down door A, B, or C, to help people quantitively understand the consequences of their actions.

Do you have any advice for students or practitioners entering the start-up industry in the near future?

Some tips for young people actually goes back to technology. I see tremendous peril in an overreliance on technology. What I mean by that is I have seen examples of young lawyers, not necessarily at my firm, who have really let themselves get lulled into being "glorified word processors." They don't write stuff, they search around, and gather stuff, and cobble together preexisting material. But at some point as a lawyer you have to be able to write. I'm all for not reinventing the wheel and utilizing what has been done before, but don’t be afraid to write and draft because someone did that once before and they are no better than you are.

Same thing with email. Because we communicate asynchronously, 24 hours a day with people around the world; that's a great communication means, but for goodness sake, don’t email a client that is one telephone call away or a 5 minute drive away. I have noticed older clients, who have gone through the trends, have said "I kind of miss the days where I sat with my business advisor over breakfast or coffee and they understood my business. And now there are people I have never met before that are sending me stuff over email at eleven at night." So I think there is a threat to the attorney client relationship that technology presents and I am constantly encouraging my young associates to invite clients, even if it is just to social events, so that you can get to know them as people.

So don't rely on the technology. Just because you find an integration clause or governing law clause on a system in a contract, maybe even a contract that I wrote, it doesn't mean that its perfect for your situation or that its even good. I do see people who come to me with work that isn't as good as it could be and I tell them that they need to improve it [in various ways.] And I get this defense that "I found it though! I found this here, I found it on the internet, I found it with this other big company." And I say, "That’s great, but what do you think about it? Here's my criticism of it, do you agree with my criticism?" And they say, "Well yeah, that is better." And I say "Good, that's what you do as a lawyer. You think though all your work product and you don't take what someone else has done as a given." Doctors are taught you don't just hand out a prescription to "Patient X1" because it worked for "Patient X." You have to study the patient and find out, does he have the same problem, and is the prescription right for him. You need to practice the law like a science. You need background knowledge and you have to assess, analogize, synthesize, and filter out what's relevant and what's not. And unfortunately you have to have seen the movie many, many times to figure out, "if I do X, what the outcome is going to be."

Tim Harris is the Managing Partner of the Morrison Foerster Palo Alto Office in the Emerging Companies and Venture Capital Group. H specializes in representing startup companies and venture capital firms in corporate and securities matters. In his startup practice, Mr. Harris advises emerging growth technology enterprises from formation through acquisition or initial public offering in matters including venture capital financing, debt financing, equity incentive compensation, and technology development. Mr. Harris founded the firm's Startup Speaker series, which educates entrepreneurs on the legal issues they will face over the lifetimes of their startups.