Here’s what you need to know
There is little more exciting than your first job as general counsel (GC) at a startup. Finally, you get to be in charge and do things the way you have always wanted. For many, this begins at a small company where the entire legal team is usually just you. This situation means that mixed with that shiver of excitement is a twinge of fear: “What happens now, and can I handle it?”
The answer to the latter part of that question is almost certainly, “Of course you can!” The answer to the former can be a bit more complex. In this article, we’ll explore some things you need to know heading into your first GC role with a startup firm.
Jump to ↓
Is being General Counsel at a startup right for you?
Being resourceful in a startup environment
Expanding your legal resources
Prioritisation and delegation: Key skills for a startup GC
Leveraging AI as General Counsel
Becoming venture capital savvy
Is being General Counsel at a startup right for you?
Being the only in-house lawyer at a startup takes a special type of person. Do you have at least several years of experience practicing law? Are you ready to give up the perkriss and cushy lifestyle of working at a law firm or a big in-house department? You will need to be almost completely self-sufficient — a Swiss Army knife of legal skills — and ready to work long hours to ensure everything gets done.
Be ready to fly by the seat of your pants when making legal decisions about risk and litigation. You may not have an office or a cubicle, time to go to an external law firm for advice, or hours to research a problem. You will constantly make vital decisions with less-than-perfect information in areas of the law where you have little background. Are you comfortable with this?
Finally, be ready to take on more risk than you’ve ever experienced in your legal career. Your orientation will quickly become more business than legal much of the time.
Clarifying your role
Before accepting the job, clarify your exact role as general counsel for the startup. Will you be part of the executive team and a trusted advisor to leadership and the Board of Directors, or will you simply be a scrivener whose job is to draft commercial contracts and manage external law firms? Have your role, duties, and expectations nailed down before accepting the in-house position.
 |
|
Being resourceful in a startup environment
As general counsel of a startup, you will watch your spending. Money will be at a premium with pressure to limit expenses. You may have little to no budget for advice from law firms.
Here are things to focus on:
- Review any external law firm spend. Look back at legal spending in recent years and assess whether any law firms the company is using are of a suitable size for its needs.
- Find a small boutique law firm or sole practitioner. You can stretch your legal budget by ditching the big law firms and finding a small firm, sole practitioner, or an alternative legal service provider to help with legal work.
- Consult specialist blogs. You can find a lot of free guidance and information through legal blogs dedicated to GCs or startup company lawyers working alone.
Expanding your legal resources
If you can obtain the budget, get Practical Law. It is a lifesaver for a solo in-house lawyer or small startup legal team. Practical Law equips you with resources like research tools, forms, checklists, and sample policies, enabling you need to find answers fast.
Focusing on the legal basics
Odds are that there is a lot for a new GC to fix at a startup. You cannot fix it all at once, so focus on the basics:
- Understand the primary company documents. The founders are likely to have prepared them without considering all potential legal concerns, so this first step is crucial.
- Clean up and prepare documentation showing who owns what in terms of the equity of the company.
- Implement the right human resources policies, which has probably been an afterthought at the company.
- Prepare form agreements for the company’s most-used commercial contracts and install a repeatable contracting process.
- Get on top of data privacy and security issues.
- Protect the company’s intellectual property (IP), such as trademarks, patents, copyrights, and trade secrets. For many startups, the company’s value is at risk if its IP is improperly copied or stolen.
Building a legal network in the startup ecosystem
You may operate as a legal department of one, but you are not alone. Focus on building a network of in-house or outside lawyers with whom you can consult, share resources, and bounce ideas off at no cost. This network expands your department without adding headcount. Many cities and regions have organisations comprising general counsel and senior leadership team members that meet or email regularly. You can also create your own group for strategic partner collaboration.
Prioritisation and delegation: Key skills for a startup GC
You must become an expert in prioritising and delegating. Hone your ability to decide what needs to be done now and what can wait. Focus on prioritising urgent and high value tasks.
Even if you are the only lawyer, you can still delegate. If it doesn’t require a legal qualification, a task can be delegated. For example, administrative assistants can do far more than answer the phone and keep your calendar. Let calls roll to voice mail, manage your own calendar, and then decide which substantive tasks your assistant can take on for you in your fast-paced environment.
Others in the business may also be available to take on tasks. For example, can someone in sales be trained to do contract intake and gather all the information you need to begin to draft the contract? Your pool of available people is only limited by your imagination.
Leveraging AI as General Counsel
Artificial intelligence (AI) provides additional opportunities for moving time-consuming tasks off your plate. AI can help with a range of administrative and legal services, which frees up your time to spend on more pressing matters.
Generative AI (GenAI) can help with document processing and classification for a wide range of matters, including due diligence, document and contract review, compliance, contract management, knowledge management, and deal analysis.
“Legal generative AI is supposed to augment what a lawyer does,” said Zach Warren, Thomson Reuters Institute Manager of technology and innovation. “It’s not going to do legal reasoning, not going to do case strategy. What it’s supposed to do is do repeatable rote tasks much more quickly and efficiently.”
Startups generally thrive by being at the forefront of technology, especially innovations that allow them to be more agile and efficient. Embracing AI to help streamline legal work fits right into that environment.
Becoming venture capital savvy
Venture capital (VC) is crucial to many startups. It’s also a highly complex space requiring specialised knowledge on fund and deal-related work. Hiring external law firms may be worth considering for the following activities:
- Negotiating the critical terms of a transaction
- Drafting the investment documentation
- Managing the transaction
- Conducting legal due diligence
- Anticipating and resolving issues that may harm future fundraising or the potential exit
If your small business retains external legal advisers for venture capital transactions, expect to be central to that effort. The reality is that most GCs are involved in appointing law firms for fund or mergers-and-acquisitions-related work, despite the perception that it’s a senior leadership decision. Be prepared to help screen candidates with a strong focus on industry knowledge.
Adopting a ‘yes’ approach with your partners
You must quickly enter “yes” mode and drop “no.” This approach doesn’t mean you cave on everything, but you must understand the company’s risk tolerance and adjust your legal thinking accordingly. Accepting uncapped liability in a contract may seem risky, but it might be the only way a startup can sign that keystone customer. Don’t say “no,” say “We need to get some insurance.”
Being the GC of a startup is both challenging and exhilarating. Be sure you understand what to expect and have the stomach for a new way of working in a fast-paced environment. Once there, be scrappy and creative to expand your legal resources and the ability to say “yes.”
