This is incorrect in my experience. My company was sued by LinkedIn about a year after receiving a $1MM seed round. We were low on money with about $250K left and raising when the suit hit.

This is a game of leverage.

Lawyers are tools that have to be used effectively to apply leverage. Like any tool, good ones make a big difference.

At the time LI was worth about $30 Billion, we had $250K. We convinced LinkedIn to settle after about 4 months in SF court for a nominal amount.

Good/ethical lawyers were critical along with significant creativity from our side on how to use them.

We survived, raised a round and the company is still kicking.