These Are the Common Mistakes Startups Make When Hiring an In-House CounselFeatured

Hello fellow Elphas, I’m the founder of Varia Search, a boutique legal recruiting and consulting firm. Varia Search focuses on placing lawyers at startups and growing tech companies. In my line of work I often hear stories of startups which haven’t found the right fit when searching for an in-house counsel, and would like to share with you some mistakes they have made in case you are in the same position!There are many benefits of hiring in-house legal counsel rather than relying on outside law firms and these advantages extend far beyond a simple cost analysis. However, to reap those benefits it’s important to hire the right lawyer. Here are some of the common mistakes that startups make when hiring an in-house counsel.Mistake #1: Waiting Too Long to Hire an In-House CounselBecause the in-house legal department is commonly viewed as a “cost center” and not a “revenue generator,” startups are often told that they should consider hiring an in-house counsel when the legal fees paid to outside counsel are greater than the cost of adding a lawyer to the payroll. While this approach is appealing because it is straightforward, it doesn’t account for a big piece of the value that an in-house lawyer (and ultimately, a legal team) can bring to a young company. Unfortunately, lawyers are sometimes viewed by founders as obstacles to progress. A lawyer is often the person who tells them what they can’t do. However, the right in-house counsel can be a strategic partner and a huge asset to a growing business. It is much easier for in-house counsel to be viewed by the management team as a “partner” when that lawyer is brought into the conversation early and is part of the discussions about the vision and path of the company. Bringing an in-house counsel on board when there are already fires to put out makes it harder hard to view them as the strategic partner they can be. Mistake #2: Not Finding an In-House Counsel Who Fits with the Company’s Culture and VisionPart of the process of finding the right in-house counsel involves ensuring that your in-house counsel understands how to provide advice and counsel to prevent trouble in the future. In order to do that, the in-house counsel you hire should be someone who understands and supports the company’s objectives and vision. Your in-house counsel should also fit in with the overall personality of your company and be viewed by other staff as a team player rather than a referee. In particular, your legal advisor should be comfortable with the level of risk ingrained in your corporate culture. Especially with a startup, you do not want your in-house counsel to put the brakes on every potential project purely from a reflexive aversion to risk. Mistake #3: Not Asking the Right Interview Questions to Assess Communication Skills and Work StyleInterviews require substantial time and effort, so it’s important to make sure that you’re asking the right questions to get an in-house counsel that will be the right fit for your startup. Before you can determine what interview questions you need to ask, you need to ascertain what qualities you’re looking for. Obviously, you need to look for an in-house counsel that has the legal experience necessary for your startup. You also need to look for someone who has excellent communication skills. Communication skills are important for any employee, but this is especially true for a lawyer whose primary tool is language. You will want an in-house counsel who can communicate promptly and accurately. You can assess this in this interview process. When asked to respond to a hypothetical situation: Do they provide enough information without going into unnecessary detail? Do they speak in legalese or do they talk in language that everyone can understand? Finally, can they think on their feet? In the fast-paced start-up world, you need someone who can provide informed opinions without delay in language that everyone can understand. It is vital that you find an in-house counsel who thinks proactively, rather than just reacting to a problem when presented. While this is a little harder to assess in an interview, it is certainly possible. The best way to do this is to ask behavioral questions. A great way to do this is to start by saying “Tell me about a time” and then fill in the rest based on a situation that your startup might encounter. (Of course, you don’t want to reveal any confidential details about your company, but you won’t need to in order to write a good question.) Another way to get at the answer to whether a candidate thinks proactively is to ask them to complete a written exercise. Again, you could set up a hypothetical situation and ask them to respond to it. You would then evaluate whether the candidate is simply responding to an issue that exists or thinking ahead to what might happen in the future. Not only will this gauge oral communication skills, but it will also help you assess their writing abilities as well. Another benefit of a written assignment is that it is easy to compare the answer of one candidate against the responses of other candidates. There are many advantages of hiring an in-house counsel for your startup. In order to benefit, it’s important to find an in-house counsel at the right time who is a great fit for your startup. If you need guidance on finding the right in-house counsel for your company, feel free to reach out!
@AmyRowland This is fascinating - I definitely fell into that trap of thinking legal counsel was a cost generator. I have a number of clients who might actually need your help here -- I'm going to forward this article to them!
As a startup attorney, I so appreciate this post! We have such a bad reputation for being expensive nay-sayers, and sometimes that stereotype keeps people from engaging counsel (even when they need it most!). The role of a good In-House or Outside General Counsel to assist the company to grow and succeed wisely and efficiently. Your points are great for startups to consider. Thanks for the share!