What is the Ideal Legal Department?

Startups regularly ask what their Legal Department should look like as they are growing and even as they are looking to hire their first in-house counsel.  More established startups question whether to have a General Counsel and, if so, when.  C-Level Executives and/or General Counsel eventually have to determine how many in-house counsel to employ as well as whether to utilize contract administrators, paralegals or legal secretaries.  So, for your company, what is your ideal Legal Department?  The answer is…it depends.

To identify your ideal, you should be consider the following:

1. What are the current legal needs of your business?

Are you a Software as a Service (SaaS) provider, which will necessarily require lots and lots of contract drafting and negotiation?  Are you a publicly traded software company, which will necessarily require corporate governance and IP management.  Are you a manufacturer, which will necessarily require knowledge specific to an industry, such as the TABC.

2. What are the future legal needs of your business?

Are you working toward an IPO?  Do you plan to expand via mergers and acquisitions?  Do you need to negotiate and secure a business critical partnership?  Will a new service offering expose you to additional legal disputes (e.g. online review provider)?

3. What are the current legal capabilities of your Legal Department?

Do you have a generalist?  Does your more than capable employment and contract attorney not know the first thing about Intellectual Property?  Can your new GC learn enough to navigate her way through the company’s first acquisition, and are you ok with on the job training for such a deal?

Equipped with answers to the above, you can now consider how to fulfill your legal needs and structure your ideal Legal Department.

Like other aspects of your business, you can identify the total number of hours required and allocate full-time equivalent employees (FTEs) in order to fulfill existing needs.  If you don’t have the existing manpower, then you can consider hiring, utilizing outside counsel, part-time contract workers and/or interns.  One additional option is to utilize outside counsel in a secondment role, meaning you utilize a licensed attorney with particular experience, skill or knowledge related to your particular needs, typically at your office.

Put simply, once you understand your needs and capabilities, you can focus on defining and filling your ideal Legal Department.  Don’t hesitate to see how others have done it, succeeded and failed, and utilizing alternatives to simply hiring in-house because you think you have to.  Exponential growth may be the goal of your startup, but understand that organic growth of your Legal Department, including utilizing alternatives like outsourced counsel, may be ideal.

Looking for support in answering the three questions above? Reach out to us for a free consult.


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