No 'One Size Fits All': Tips for Crafting a Legal Team That Meets Your Tech Startup's Needs

What We Really Mean When We Say “Startup”

The savvy general counsel does her heavy lifting in the definitions. So what do we mean when we say “startup?” More a vibe than a set of parameters, startups combine growth, risk and novelty to create a unique set of challenges for lawyers.

Accordingly, no blueprint exists for how to build a legal team prepared to manage a high rate of change, a willingness (and even a preference) to take outsized risks, and the ability to navigate a market that you and your colleagues may be in the process of creating. And though plans may prove useless in such conditions, planning remains indispensable (hat tip, General Eisenhower). The TechGC hivemind has thoughts.

Key Takeaways:

• There's no one-size-fits-all template for designing a startup legal team — but themes have emerged across the TechGC community that offer a good starting point.

• Common steps include: assessing status quo for risk and operations; locking down commercial contracting; prioritizing specialists based on volume and value; and adopting best practices on hiring.

• A common hiring progression starts with commercial contracting (with or without legal operations in support), followed by risk-driven specializations in regulatory compliance, product development, privacy, and geography. M&A and litigation specialists are rare at the startup stage.

• Per a 2020 TechGC Survey, the median ratio of employees to lawyers is 100:1 across the TechGC membership. That ratio drops to 60:1 for highly-regulated industries.

Initial Assessment: Risk, Operations, and Culture

Many a general counsel start as the first in-house lawyer. "Never assume anything," Jordan Kanfer, GC at telecommunications company NTT America, cautioned at a TechGC roundtable. "Sometimes you come in and companies have a fairly [robust] legal process and sometimes it's just complete disarray.” Diagnosis precedes prescription.

That diagnosis typically breaks down into “at-risk” and “operations”. A startup operating in a highly regulated industry requires a different approach than a software company expanding sales into multiple countries. What the GC is there to do will vary accordingly. Ultimately, risk drives prioritization. At the same TechGC roundtable, Raymond Sczudlo, General Counsel at startup b.well Connected Health said, "I think the most important thing to guide you all along is to have very clear results of risk assessments, and always be looking at the top one, two, or three risk areas," says. "At the end of the day, that's your job."

And while risks tend to cluster by industry, operational issues commonly cut across industries and contexts: establishing standard contracts and associated playbooks, protecting intellectual property, formalizing relationships with employees (especially where the GC precedes the first in-house human resources professional), managing essential vendors, and organizing key books and records.

The process of assessing risk and operations will itself shed significant light on the company culture, and in particular, the legal culture into which you’re entering. Is legal (i.e. you) seen as a partner or a service provider? The TechGC community knows enough to have a preference for the former. But navigating the initial dive into your work can influence where you and the organizational culture end up, regardless of where you start. Preparation, courtesy of the hivemind, can help.

Building the Team Part 1: Survive and Advance

One way to think of building the legal team mirrors how your client thinks of building the company: survive and advance. If you can’t sell the product, an immaculately conceived risk management approach won’t matter. So commercial contracting typically leads the way, setting a foundation for the future. Depending on the business model, you may be negotiating one or two big deals a quarter yourself or closing dozens (or hundreds) of customers a day on an e-commerce platform. Engaging precisely and purposefully across the executive team to assess risk tolerance across particular contractual provisions will help demonstrate your acumen, engage as a partner, and inform hiring needs.

The unique growth trajectory of a startup means those needs will vary, likely faster than your ability (and budget) to hire. Ho Shin, General Counsel at the SaaS software platform Yext, advocates for skilled generalists. "I've always taken the NFL Draft' approach, where you don't necessarily draft for a specific weakness — you look for the best available athlete," he said at a TechGC session on in-house hiring. "Certainly a good lawyer will get to know your core commercial contract very well, but [they should also] be able to navigate the different types of commercial work that's going to come through the door, whether it's NDAs or data deals."

The volume and type of work under the GC’s management drives the question of legal operations. This force-multiplier role assists across a wide range of functions including budgeting, system administration, vendor management, knowledge-base development, and more (aptly summarized by this chart from the Corporate Legal Operations Consortium [CLOC]). Few hires can be as impactful, not to mention cost-effective, in ensuring the GC has bandwidth to keep the main thing the main thing.

Asher Richelli, General Counsel at risk and compliance firm G2 Risk Solutions, advises setting up the technology framework prior to hiring, positioning yourself as an efficient operator. "The C-suite may also appreciate this strategy, as it may delay hiring other attorneys and/or legal assistants and, therefore, help control costs," he shared recently on the TechGC Braintrust. Popular options among the TechGC membership include generic ticketing and legal-specific contract lifecycle management platforms like Jira, LegalDesk, Notion, AirTable, and DocuSign CLM.

Building the Team Part 2: (Consolidate & Thrive)

Once the core commercial infrastructure is in place, the next set of hires will be more company- and industry-specific. Common breakdowns include specialization in regulatory compliance, product development, privacy, and geography. Rare are the cases where an organization that can still credibly call itself a “startup” (vibes notwithstanding) is hiring in-house specialists for mergers and acquisitions or litigation. And in the context of hypergrowth, even these specialists need to freelance and multitask to respond to the gotta-have-it needs of a rapidly evolving business. Scaling companies require scalable lawyers.

For Richelli, an experience in a previous role proved that a scrappy team can be sufficient: "At one point, I worked for a highly regulated company that went from 500 employees to 2,000 and found that, with robust systems in place (even though we were extremely busy), we managed with three attorneys in the U.S. and one legal assistant," he wrote, adding, crucially, that the company had separate compliance and risk departments, which legal helped establish.

Hiring the Builders

Aphorisms abound in the startup game on the topic of execution over inspiration. It’s about getting stuff done. So while it’s one thing to articulate a design for a startup legal team, it’s quite another to make it happen.

Jen Berrent, former Partner at WilmerHale and general counsel of WeWork, echoed Ho Shin’s emphasis on optimizing for the good athlete in a recent TechGC blog post. She relies on a pithy set of three questions:

(a) Why do you want to work for this company?

(b) What do you think about the company mission?

(c) What do you like about what you do?

Notably for Berrent, none of these orient around particular legal skills. The first establishes how the combination of the person and the company allows the candidate to unleash their superpowers while the next assesses a candidate’s stickiness and likelihood of happiness in a hard-charging, fast-changing environment. The third ranks most practical in assessing the fit between the (immediate) workload and the candidate’s preferences.

Ultimately, lawyering in the startup context relies on an ability to learn fast and thrive in environments of uncertainty. That’s a lot like a job interview: taking incomplete information, identifying knowledge gaps, and communicating compellingly with transparency. Consider the wisdom of poet Maya Angelou: “When someone shows you who they are, believe them the first time.” Does the candidate show up on time, well-researched on the company and its leadership? Do they understand the business model and have they prepared probing questions? Can they speak with precision about legal topics for which they’ve been responsible? As Sczudlo puts it: "Look for people who have practical skills to do the hard legal work and research, but who can then translate it into something understandable and actionable for your client."

Sound advice, courtesy of the hivemind.

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