While the unique culture of a startup
can be refreshing, it can also be a
balancing act for a general counsel
to make sure corporate bylaws are
respected and decisions are feasible
from a legal standpoint. While the
suit and tie is no longer necessary, the
responsibility of a lawyer remains the
same — and it is important to keep
focus. It is easy to get swept up by the
casual and entrepreneurial spirit but
critically important to remember why
we are there.
At times, when founders hit upon
a grand idea and the entire office is
abuzz, you will still be the “no” person.
In instances like these, there will be a
fine-line between risk tolerance and
standing firm on issues that can have
severe legal ramifications. In these mo-
ments, it is time to drop that entrepre-
neurial hat and put on the legal one.
Managing outside counsel
Another challenge, which is often overlooked, is working with outside counsel from within such a company. Law
firms are still built around institutional
clients that have more rigid forms.
Startups like to reinvent everything —
including deal structure. Oftentimes,
general counsel become the proverbial
translator between the company and
outside counsel. A startup benefits
from coordinating with external counsel, with the in-house attorney quarterbacking a project to avoid draining
limited time and financial resources.
Understand that while your external firm is trying to protect its client,
the environment they work in is
different from yours. Startup lawyers
will naturally become generalists —
and outside counsel are often used
for more specialized matters. The role
of general counsel is to balance the
needs of the company with associated
legal risks and to determine which
can be managed and which must be
Lastly, be prepared to justify the
need to outsource specific legal matters
and to reply to questions such as: “Why
do we need to pay another lawyer if we
have one here?” Founders love to think
in terms of ROI and I have found this
approach to be useful when outlining
the need to outsource legal work (e.g.,
outlining the legal fees associated vis-à-vis the time saved/long-term issues it
Don’t wait: Build it
Apart from pressing legal issues, the
last thing on a founder’s mind is an
IP portfolio, contract management,
external counsel oversight, or the annual contract review. Do not wait for
a mandate; take initiative by treating
the company as one large ship being
66 ASSOCIATION OF CORPORATE COUNSEL
Nine things to remember as a startup lawyer
START ME UP: CHALLENGES, TIPS, AND TOOLS FOR STARTUP LAWYERS
Tools for the first general counsel:
1. STOP SAYING ‘NO!’ AND ‘WHY?’: THINK ABOUT ‘YES!’ AND ‘HOW?’
Rather than raising proverbial red flags and saying ‘no,’ begin
adopting a different worldview to find solutions.
2. FOUNDERS ARE NOT LAWYERS
Startups are made of young entrepreneurs that you have not likely
encountered in your legal career. Try not to take everything at
face value and understand where they are coming from.
3. YOU WILL BE MORE THAN “JUST” A LAWYER
You will be expected to wear many hats. Rather than focus on
legal tasks, consider embracing the opportunity to grow.
4. KEEP FOCUS
At times, it will be necessary to take a step back from the buzz and
excitement and remember your primary role as legal counsel.
5. MANAGING OUTSIDE COUNSEL
The relationship with outside counsel is more than budgeting legal
costs. It involves establishing a long term relationship with counsel that
understands the business and will require a liason with the founders.
6. DON’T WAIT: BUILD IT
Many mandates may not be on the mind’s of the founders. However,
as the first general counsel, it should be on your mind either
through an IP portfolio or a contract management system.
7. KNOW THE PRODUCT INSIDE AND OUT
In order to properly advise, startup general counsel should
understand every facet of the product or service.
8. BE PART OF THE TEAM
Break the ice with colleagues that will give you nicknames such as the
“Bad News Czar,” as is the case with Colin Sullivan of Patreon.
9. EMBRACE THE OPPORTUNITY
There is a unique opportunity in serving as the first general counsel
for a startup. Be sure to appreciate and embrace the opportunity.