There has been a lot of debate on whether a startup should hire a General Counsel (GC) and if so, when the appropriate time is to do so. Startups fear that since attorneys are always looking to minimize risk, a General Counsel will be a constant “no-person,” shutting down every idea that the company has because the risk is too high. On the other hand, there are many issues startups deal with that could be taken care of by an attorney – like governmental regulations, stocks and securities obstacles, and intellectual property protection

Company Size or Financial Stability?

Many startups look to the size of their company when deciding whether to hire a GC. A common threshold is to hire a General Counsel when you hit the 100 employee mark. Other startups have hired a General Counsel as early as 10 employees. Although the size of your company may be a good metric, what could be a more important factor is how much money you have to spend on needed legal bills as a company.

At some point it may be more financially beneficial to your startup to hire a General Counsel rather than seek outside counsel only. Big law firms can charge you hourly rates that will make your legal bills skyrocket every time you need advice whether it is about how to hold board meetings or how to enter into agreements with outside parties. It would be more cost-effective to pay a General Counsel a decent salary and rest assured that he/she will take care of most legal issues themself, while knowing that they have your company’s best interest at heart. Even if your GC may not be extremely well-versed in one area of the law, it is cheaper to have them around for all other aspects and retain them to find outside counsel for the one specific task he feels needs more expertise.

Upcounsel can help your GC find the proper outside counsel in the event they need a business lawyer on their side.

What Characteristics Make for an All-Star General Counsel?

AirBnB has now become legal in San Francisco. The company owes this accomplishment to its attorney(s). One of the bigger mistakes a startup can make is not hiring the right kind of legal counsel for itself. Yes, you want the attorney to fit in with your company culture, but more importantly, you want them to be competent.

Competent has many meanings in the startup world, the most obvious being that they should be experienced. Your GC should have anywhere from 4-10 years of experience in a broad variety of law including but not limited to: corporation and securities law, employment law, contract law, intellectual property law, and tax laws. As mentioned above, if they happen to be not too well-versed in any of these fields, a resourceful GC will know who to reach out to who can help get the job done efficiently.

Your GC should trust their instincts. The startup world is a fast-paced one and you need someone who can make a good, well-informed decision on the spot, rather than try to come up with a perfect answer that can swallow up his precious time that can be best used on other tasks.

Another quality your GC should have is flexibility. Your GC should not be the type of attorney that says no to every idea because of the risk factor.  They should be a problem solver that can come up with a way to mitigate risk and let the ultimate decision-maker on whether or not to move forward. The two of you should build a trusting relationship that is based upon a beyond the surface understanding of your product and where you would like it to go.

Finding the right GC is hard, and many founders turn to their friends who can offer their services at a cheaper rate. However, by doing diligent research you can find a quality GC that can save you money by having them on board 24/7 and will fit well within your company. Seek your GC out when you see it is more beneficial and cost-effective to have someone on site who shares the same vision as you. This is the first step in your journey to success.

About the author


Zoya Afshar

Zoya Afshar is a Licensed Attorney and Head of Content at UpCounsel. Prior to joining UpCounsel, Zoya worked in a variety of fields of law including Bankruptcy, Criminal Defense, and Employment Law. Her love for all things media and marketing related began in her undergraduate years when she worked for CNN's Larry King Live.

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