A lawyer offered service for equity and potentially joining the company full time as legal counsel/business dev guy. Is this reasonable? What percentage of the company should I offer him? It's a pre-funding startup with significant upside. Is there anything I should be aware of. Thanks for your help
There's a potential for a real conflict of interest. Any document that he drafts will have to be reviewed by an external third party, or you can put your entire business in jeopardy. Ultimately, this may end up costing you much more than just paying him for his services and relying on the fact that he does not have a vested interest in the phrasing of any contract. (Think shareholder's agreement - who's going to draft it - a shareholder, or someone else?)
I'm a lawyer and my firm frequently does work in exchange for roughly standard fees plus a warrant for a small percentage of equity, such as 0.5%. If the lawyer you're talking to wants only equity...and wants to join, that seems a bit odd and I'd be hesitant.
If it's just for incorporation and minor legal advice during the initial phase, it's not that unusual, and you're looking at around 0.5%-0.75%. In ways, it's good news since it's a show of confidence. Just make sure it's a good reputable lawyer.
This raises some serious questions in my mind, in addition to Elie's excellent point about conflicts of interest.
I'm not saying this is necessarily a bad deal, but you need to look at the situation and this guy's motivations very carefully.