It’s from a couple of years ago, but there’s a neat article making the rounds in a legal e-newsletter I receive that caught my eye. It’s from the Harvard Business Review and discusses why lawyers, in particular, should be good early-stage hires at startup companies. It got me thinking about how I’d answer this question: should your first in-house counsel position be with a startup?
But before I do that, I think it’s worth digging into the HBR article in some detail, which makes a few interesting observations about how lawyers can help early-stage companies think through thorny legal issues. Of course there is no shortage of them: from employment and confidentiality matters to intellectual property and corporate governance, a well-trained law firm associate can handle a broad range of matters that would otherwise be shipped off to outside counsel. Indeed, as the authors of the HBR piece note:
Early stage companies — at least those with founders sufficiently experienced or savvy to recognize that they walk a road pitted with legal potholes — tend to manage such standard risks by hiring outside counsel. And while the costs associated with that outside attorney often rank among the highest in a startup’s budget, they do not typically rise to the level of a full-time annual salary. To justify her presence among the first dozen employees, a lawyer must add something beyond legal knowledge to the equation.
And lawyers can, in fact, add lots of value to a fast-moving startup. We are trained to think in a certain way, to analyze problems, to digest complex and dense details, and come up with creative solutions. This training is invaluable for startups that move quickly and must make decisions on the fly. For lawyers who are trained to be risk averse, this is a paradigm shift in how we view the world. But more on that below.
First, the article goes on:
Not every lawyer is well suited for the gig, however. A lawyer with the qualifications outlined above needs a tolerance for risk. For one thing, she must be willing to give up her plush office and lucrative salary for a computer station at a long table and compensation in the form of prayers, otherwise known as stock options. Her professional risk tolerance must follow suit. An essential attribute of a business attorney is providing “risk-adjusted” advice, and the level of tolerable risk for a startup generally far exceeds that for a Fortune 500 company. Lawyers at startups need to recognize that a workable answer today is often preferable to the perfect answer tomorrow; hand-wringers need not apply.
In my view, the authors hit the nail on the head here: it’s really a question of risk tolerance. How much of it are you willing to take at this point in your career, when you’ve likely sunk the last decade into law school and working in the law firm trenches? You might have nothing to lose at this point – you might not want to make partner, or the writing might be on the wall that you won’t make partner. But some of the specific questions you should be asking yourself if you are presented with the opportunity to jump headfirst into a startup are:
Are you willing to give up your law firm salary for what will likely be a (relative) pittance in base compensation, benefits, and other perks to gamble on the potential upside of the stock options or RSUs that the company may offer?
Are you comfortable working in a highly ambiguous working environment, where your role might be very loosely defined (or not defined at all)? Does the idea of “creating your own job description” excite (or terrify) you?
Are you comfortable cracking the whip on business and operations people who may have no clue what they’re doing? (This probably goes for any in-house counsel position, but is a particularly critical issue in the startup world.)
Are you willing to work like any other startup employee, with nothing more than a laptop and little in the way of back office, tech, and other support services that you probably took for granted in the law firm? (You’ll probably be able to wear jeans and a hoodie, at least.)
Can you make the transition to “risk-adjusted adviser” from private practice? This is perhaps the most important question to ask yourself before going in-house. I have seen many in-house lawyers fail in their roles because they cannot evolve from a private practice mindset.
What do I mean? I will explore this issue in a future article, but in general to succeed in-house you must be able to talk – and write – in a manner that the business will understand. You are not writing memos to a senior partner or a judge. The business moves too fast for that and your internal clients don’t have the time or interest to wade through it.
Instead, your emails, memos, and verbal conversation style all need to be short and punchy. I think it’s probably harder for more senior law firm attorneys to make this jump, but either way you need to figure out how to build trust with your particular business partners. Otherwise, instead, you’ll be punching a one-way ticket back to the law firm.
Like so many questions in life, there are no right answers to all of these questions!
What works for you won’t necessarily work for the associate across the hall. But hopefully this list gives you a framework for walking through your decision. Looking back on my career, I’m (mostly) glad that I made my way in-house into a more established company (even though that company was ultimately acquired, and at times I wish I took more professional risks earlier in my career).
But now, with nearly a decade of in-house experience and two small children, I don’t think I would be interested in going to work for a startup. Of course that could change down the line once I reach some other professional (and financial) goals. So, as always, I continue to keep tabs on open positions in other companies both inside and outside of my industry.
What do you think?