Term sheet condition states we have to use the investor's law firm

Our company has just received a term sheet for a convertible debt investment. One of the clauses states that we have to pay the fees for drafting the agreements (which I understand is normal), but also that we have to use a legal firm of the investor's choosing. Is that standard/normal? If we're paying the fees, shouldn't we be able to choose the firm?

pay the fees for drafting the agreements

Hmmm ... the most common form I've seen is each party bears their own legal expenses. So the kindest interpretation is that if you want to change it, you carry the can.

use a legal firm of the investor's choosing

Now this is what we call tying (competition law 101). The nasty interpretation is that the investors got the lawyers to draft the term sheet at a cheap price (a good transaction lawyer can easily be $500/hr) in return for them hitting up the actual users. Now there may be good reasons for this clause in that it preserves consistency and they already have the detailed knowledge. On the other hand, a truly ethical lawyer (if not an oxymoron) would consider this a potential conflict of interest, working for both parties.

As a lawyer, it's definitely a conflict of interest. Some lawyers would be OK with proceeding to represent both parties if you both waive the conflict, but some wouldn't.

I agree with the above post. Use your own counsel of your choice, but you should expect to pay your legal fees and the investor's legal fees.

You should hire your own lawyer. But paying your own lawyers and your investors legal bills, is normal.