What Criteria Should a Start-Up Use When Hiring Its First General Counsel?

I got an email from a student posing this question to me: what criteria should a technology start-up consider when hiring its first in-house general counsel? I can definitely speak from first-hand experience! Here’s my response, but I would also welcome your comments and thoughts. Because blog comments are still off, please email them to me and let me know if I can post them publicly.

[Note: I'm assuming a start-up has already correctly decided that it needs to hire a GC. That consideration could be the subject of another whole post.]

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In addition to the standard criteria used to evaluate lawyers, like legal acumen and professionalism, I suggest the following criteria:

* past in-house experience. There is a learning curve to being in-house, and someone who has done it before will be initially better equipped to handle the speed of a start-up than someone who is trying to learn how to be an in-house counsel on the fly.

* past experience working in a start-up. Start-ups pose unusual demands on lawyers, and some lawyers can’t easily adjust. Therefore, someone who has lived through a start-up environment before will be better prepared for the unique challenges. For more on this, see my recap of my first three months at Epinions.

* willingness to be a line contributor. A start-up has a lot of routine commodity legal work. It also needs to build a lot of unsexy internal processes and needs someone to pay attention to little details–simple things like filing contracts or domain name renewals. So a start-up needs a lawyer who isn’t afraid to roll up his/her sleeves and do some mundane legal work his/herself as opposed to delegating the work to others or outsourcing the work to outside counsel.

* not an empire-builder. In the same vein, some lawyers want to build up a resource-intensive legal department, and this is the last thing a start-up needs.

* excellent business judgment. Ideally, a GC at a start-up can contribute to the overall management of the company. This requires a person who can balance legal concerns with other business perspectives. At minimum, a start-up GC needs to be able to triage and decide which of the many legal problems on his/her desk need immediate attention, can wait, or can be ignored entirely.

* someone who can grow with the company. Some companies may have idiosyncratic perennial issues where some background expertise will help, but a GC should be able to grow with the company to handle the full range of legal issues the company is likely to encounter over its lifecycle. It could be a mistake to hire a GC with specific technical expertise only in one area that is a hot button for the company today. Once that issue dies down, the company may be stuck with a GC who isn’t adaptable to the many other issues that will arise.

* the ability to say–and sell–“no.” Start-up companies–even the best-meaning ones–tend to be willing to push legal limits. However, most in-house counsel are socialized to avoid saying “no” if at all possible. A start-up company needs a GC who can say no when it needs to be said. Further, because people don’t like to hear “no,” a GC needs to be able to get others to listen when he/she says no. This means wielding the N-word wisely but also having the credibility/salesmanship to make “no” stick when it’s wielded.

* interest in the company’s products. A start-up job is usually fairly demanding, so it really helps if someone is actually interested (or, better yet, passionate) about the company’s products and services. That way, they will be more excited to undertake the sometimes-heroic efforts required to help the company succeed.

UPDATE: I got the following from Josh King at Avvo: “I would add two related points: 1) Your new GC must be flexible enough to not only deal with mundane legal work, but also to do all manner of other work that assistants, secretaries or people in other groups did previously for them. I regularly go on beer runs for the office, deliver mail and shop for office supplies, and supporting the office as a regular member of the team is critical to success in startup culture. 2) In addition to having excellent business judgment and the ability to grow with the business – I’ve never had an in-house role that didn’t morph in wildly unpredictable ways within the first 6 months – your GC must be able to match the company’s level of risk aversion. It’s a lot easier to sell “no” when you’re not wringing your hands over every little potential legal risk the company might face.”

As I told Josh in a reply email, WRT #1, I used to restock the snacks in the kitchen and sort the mail.

UPDATE 2: I got the additional comment, which I fully agree with:

“The one consideration that’s missing from your list — the most important one, in my view — is someone with the trust and confidence of the principal business person, usually the CEO. It does not have to exist prior to hiring — an investor can and often does install someone of their own choosing. But if the GC and the CEO don’t have personal trust and confidence — both ways — the GC hire will never contribute at the highest level. Trust and confidence — all the rest can be learned.”