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Why Startups Should Hire In-House Counsel To Increase Profit From The Start


When you own a startup business, legal services are a definite need. Quite often, companies hire part-time legal counsel or hire lawyers on an as-needed basis. But Amy Rowland, former lawyer and founder of Varia Search, a legal recruiting firm for high-growth startups, argues that certain types of companies wait too long to hire in-house help, costing them money that they could be putting towards growth in the business.

Legal counsel is critical to your management team if you are founding a high-growth startup in a heavily regulated industry such as health tech or have much Intellectual Property to protect.

The main benefit of having an in-house legal advisor on your business team is that they are the internal advisement from idea to execution, rather than hiring a legal team as a cleanup crew after a legal issue arises. If your legal team has a seat at the table and is in the critical business meetings, they will be able to advise you right at the outset of the risk of taking on specific projects or hiring practices to anything in between.

The cost-benefit of having in-house legal services is that overall it can be a much more cost-effective solution. Businesses that do not have in-house legal support often carry projects too far before consulting a legal professional, which can cause wasted time and money on projects that couldn’t get off the ground.

Businesses that are regulatory heavy and have intellectual property benefit from in-house legal help versus outsourcing. When outsourcing, there is often a much higher cost in correcting errors than having legal counsel at the outset because you are likely paying per hour for cleanup. Businesses that are heavier in regulatory and IP need in-house legal services earlier rather than later.

Amy leaves you with these top reasons you may need an in-house lawyer or legal team in your business:

1. Having in-house legal counsel minimizes risks

When the legal advisor has a seat at the table, they can prevent potential problems and expensive cleanup because lawyers are trained to spot risks and prevent mistakes.

2. Startup businesses in high-growth industries can benefit from an excellent legal generalist on staff

Outsourcing legal help often ties up an in-house team member who spends valuable time coordinating efforts between senior managers and the outsourced legal team. This can get expensive due to a duplication of steps where the outsourced legal team needs to be contacted, briefed of recent events, and consulted for advice. If the legal counsel just attended the meeting, you would already have your response and projects can move forward.

3. When it’s later in the game

Companies are known to wait until later to bring in an in-house legal team, but Amy recommends that startups bring on an in-house legal counsel or legal team at 20-50 employees. This way, the legal advisor is a true partner to the business rather than an outsider.

The bottom line is that the benefits of having in-house legal counsel early on in the life cycle of a high-growth startup can outweigh the costs of cleaning up legal errors. Legal generalists often advise on employment law issues, regulatory issues for the business and intellectual property protection – which is why performing a cost-benefit analysis to determine whether you need legal counsel is not necessarily the right approach. Instead, Amy recommends that founders of high-growth startups seek external advice to decide whether or not they are at a stage where they might need to hire a lawyer to join their team.



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