Bringing it in-house: What to look for when hiring a general counsel

A recent Corporate Counsel article highlighted a growing trend: More senior legal leaders are migrating to startups to take on general counsel roles. For some, it’s an attempt to find a better work-life balance (whoops!), while others are eager to build and manage their own team or see it as an opportunity to work for a mission-driven company.

This is great news for startups, especially those in regulated industries, where building strong in-house legal teams has been a challenge and fees can really add up if they choose a law firm. Founders can find top-tier talent out there, and discovering the right resource for your small to midsized company 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 midsized technology company, finding the right legal leader will have implications for your business down the line. It’s a move you want to get right from the very beginning.

Know what a GC can bring to the business

The primary benefit of bringing on an in-house attorney is that they will become an expert in every aspect of your business, which will let them provide more actionable legal advice as well as a (sometimes) unique input on various business decisions.

You don’t want a lawyer who will panic and create more chaos in an already chaotic environment, and you definitely don’t want the lawyer who presents you and the rest of the management team “the facts” and leaves the decision to you (it’s a “business decision”).

Another big aspect is that law firms are, by nature, highly risk averse. This can often be at odds with the business’ ability to accomplish its objectives. However, CEOs are going to take risks to move the business forward, and having an excellent lawyer in-house who can manage the potential downside of those risks is critical.

CEOs need a lawyer they can trust to manage a situation after it becomes an issue, as well as one who is thoughtful and clear on communicating potential risks up front. Leaders don’t need someone telling them not to take risks or saying, “I told you so” when things go wrong; they need someone who can manage 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 funding. While alternative fee arrangements are becoming more commonplace, most firms limit those arrangements to a relatively “plain vanilla” representation and will charge hourly for more complex matters.

Hiring a full-time lawyer and paying that lawyer a decent wage will allow you to better manage costs and they, over time, should provide you with better advice.

Experience and attitude matter

An important aspect to evaluate is the risk appetite of a legal chief candidate. Many in-house attorneys claim to be “commercial,” but that’s rarely the case. Relatively few in-house leaders are willing to actually make the call to take on almost certain risk to accomplish a business objective.

There’s something about how lawyers are trained that makes us jump to the worst-case scenario, but in reality, there’s a lot of room between taking the risk and the catastrophic scenario. Great GCs make the business decision, shoulder the risk, and do so with the confidence that they can manage the results to preserve the commercial value of the decision while managing the matter to prevent the worst-case scenario.