Should One of Your First Employees Be a…Lawyer?

Clint Costa

May 30, 2013 · 2 minutes read

Uncategorized

At a startup, once funding, revenue, or both are in the bank, typically the company will hire new employees.

But, instead of filling up the team with designers, developers, marketers, and salespeople, should a startup consider bringing on a lawyer?

A standard business rule of thumb for hiring an in-house attorney is (give or take) $100M in revenue or 100 employees.  But, there is a big difference between hiring someone to be an “in-house lawyer,” and hiring someone who has a legal skill set.

Startups do not need a traditional general counsel.  In other words, startups do not need a legal overseer who creates bureaucracy and poo-poos every new idea because it’s too risky.  Don’t get me wrong, that role has a vital place in already successful enterprises where growth plans are measured in single digit percentages.  It’s just not a priority for a startup.

In the following three scenarios, it might make sense to bring a lawyer into your startup as an early team member:

  • Specific Regulatory Experience.  Some industries are full of very specific governmental regulations that must be dealt with not only in day-to-day operations, but also in product or service design.  Startups playing in consumer finance, FDA approved drugs and devices, or the manufacture and sale of alcohol are very heavily regulated.  These kinds of businesses need someone with specific experience in these areas.  Having someone on the team who can handle this can more than pay for itself in terms of both the opportunity costs of doing things wrong in the first place, as well as savings from not needing to hire an outside lawyer.
  • Writing Stuff and Following Rules.  As I’ve written previously, lawyers spend a lot of time writing.  They are also trained early on in practice to figure out and follow “the rules.”  These skills can translate quickly to dollars if a startup needs to obtain and maintain female-owned or minority-owned business certification; get approved for private or government grants; or navigate government bidding, contracting, and reimbursement requirements.
  • Figuring Out New Systems.  Lawyers aren’t always called upon to solve purely legal problems.  In order to help a client, a lawyer must often understand how a non-legal system works.  Like a game of Mouse Trap, lawyers are called upon to see and trace the entire system from the boot kicking the marble out of the bucket to the cage falling on the mouse.  This requires phone calls, talking to a lot of people and finding the non-legal resources to tie everything together.  These skills can be helpful if a startup is planning to enter an industry that has aspects which need to be figured out.

Although most people go running when their lawyer comes around, startups might find it useful to keep one close.

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