[logicallee]

you missed the parent's point.

if it paid its own legal fees it would get that much less equity.

imagine I said "I'll invest 1M at a 2M valuation but you have to burn 800K of it in a bonfire." vs if I said "I'll invest 200K at 2M valuation but I'll celebrate by burning 800K in a bonfire."

The same thing happens to the money (it burns in a bonfire / goes to the lawyers) but in the first one I have 50% of your company and in the second one I have 10% of it.

Because in the first one I added it to the equity investment before making you pay it.