A recent company The Counsel article highlighted a growing trend: more and more senior legal executives are migrating to startups to take on General Counsel roles. For some, it’s an attempt to find a better work-life balance (oops!), While others are eager to build and manage their own team or see it as an opportunity to work for a focused company. on the mission.
This is great news for startups, especially those in regulated industries, where building strong internal legal teams has been a challenge and the costs can really add up if they choose a law firm. Founders can find top talent, and finding the right resource for your early to mid-size business has never been more likely.
The abundance of available legal talent brings challenges as well as opportunities. Whether you’re the CEO of a high-growth startup or even a mid-sized tech company, finding the right legal leader will have implications for your business down the line. It’s a move you want to be successful from the start.
Know what a GC can bring to the company
The main benefit of having an in-house lawyer is that they will become an expert in all aspects of your business, allowing them to provide more actionable legal advice as well as (sometimes) unique input on various business decisions.
You don’t want a lawyer who will panic and create even more chaos in an already chaotic environment, and you certainly don’t want a lawyer who introduces you and the rest of the management team to “the facts”. and leaves the decision to you (this is a “business decision”).
Another important aspect is that law firms are by nature very risk averse. This can often be at odds with the company’s ability to achieve its goals. However, CEOs will take risks to move the business forward, and having a great in-house lawyer who can handle the potential drawbacks of those risks is essential.
CEOs need a lawyer they can trust to handle a situation once it becomes a problem, as well as a thoughtful lawyer who is clear about communicating potential risks from the start. Leaders don’t need someone to tell them not to take risks or tell them “I told you so” when things go wrong; they need someone who can handle the consequences (good and bad) of business decisions in a calm, organized and professional manner.
Finally, cost is a factor. Law firms traditionally charge an hourly rate, which can become frustrating to manage and fiscally untenable for a startup trying to stretch its funding. As alternative fee agreements become more common, most companies limit these agreements to relatively “simple” representation and will charge by the hour for more complex matters.
Hiring a full-time lawyer and paying that lawyer a living wage will help you manage costs better, and over time, they should provide you with better advice.
Experience and attitude matter
An important aspect to assess is the risk appetite of a chief legal candidate. Many in-house lawyers claim to be “commercial”, but this is rarely the case. Relatively few inside leaders are willing to take almost certain risk to achieve a business goal.
There is something about training lawyers that blows us off at the worst case scenario, but in reality there is a lot of room between risk taking and the catastrophic scenario. Large GCs make the business decision, take the risk, and do so with the confidence that they can manage the results to preserve the business value of the decision while managing the issue to avoid a worst-case scenario.