How to Hire In-House Counsel and Build a Legal Team (Tips for Tech Startups)

How should startups hire when they expand into having in-house legal teams? What should their first hire look like?

As a legal tech company, our situation is different from most. One of our founders (ie me), our Product team lead, and one of our senior software engineers have all worked as lawyers in the past.

While we have not had to worry about what it’s like to build an in-house legal team, I believe our situation makes us uniquely qualified to share advice about how to grow and operate an in-house legal team.

Making the first legal hire (a tech company example)

Circumstances can vary a lot, so let's take an example of a tech company that has grown to the point where it needs to negotiate many sales contracts. To date, they've been relying on external counsel.

Suppose I'm a non-lawyer CEO hiring for that first legal role. In that case, I want a senior commercial counsel, ideally with a broader knowledge than just commercial legal work.

I ideally want them to have some in-house experience. Law firms can provide extremely strong training for new lawyers, but the shift from a law firm to in-house is a big shift in mindset regarding how you look at problems and risk.

The difference between in-house counsel and law firm talent

If a lawyer is shifting from a firm to being in-house, they tend to move from trying to eliminate all risk to managing risk and being clear that business objectives are at least as important as legal risk management. For this reason, it helps to have someone who can already make this distinction.

And then there's the issue of what kind of peer they are to the rest of the management team.

I've seen and heard of examples where companies decide they can cut costs on external lawyer bills by hiring somebody in-house and they find a junior lawyer who reports to the VP of Finance or another executive.

That's often a disaster for a bunch of reasons. People who think that way clearly don't understand the value that lawyers can provide.

That first hire is a strategic decision. You really need to understand what your strategy is, what your goals are and what your needs are.

How to attract high-quality in-house legal talent for your startup

To attract the right kind of talent to your startup, you need to be able to offer the right kind of work environment. One where there is an intellectual challenge — where they can see that their work is meaningful in the sense that it impacts the business's success.

And you need to be able to make them feel like they are valued as enablers and strategic contributors to the company.

Beyond that, you're getting into cultural issues, and obviously, there will be cultural differences between organizations.

Everything you might hear more generally about a great culture within a company is also very important to in-house counsel who have choices about where to go.

They have choices in terms of in-house positions in different industries; they have choices in law firms; they have more and more choices to act as outsourced or fractional legal counsel.

The startup mentality (legal edition)

One of the things that is a key differentiator with tech startups is that they are indeed a startup. This can be seen as a detriment or a career risk to some, whereas to others, it represents a big opportunity.

By their very nature, startups are defined by a certain amount of innovation and fresh thinking. This means there are no entrenched ways of doing things. For a certain lawyer profile, this represents a welcome challenge — the ability to create something new while still being a valuable contributor, keeping things on course from a legal perspective.

While lawyers tend to view problems as an assessment of risk, some have a high tolerance for it and will jump at the opportunity to help navigate a startup through its early years.

The goal is to find some experienced talent who shares this mentality, give them a supportive work environment where they can thrive, and encourage them to become contributors in business areas beyond the scope of legal work.

Do that, and you will have an easier time attracting more talent when the time comes to grow again and expand the in-house team.