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By LegalEdge News

Legal Resourcing – options for scaling companies

Summary from a Startup CFO breakfast briefing where Helen Goldberg, LegalEdge’s co-founder and COO, led the discussions around legal resourcing options (Wednesday 12th June 2024).

When you need legal support, what are your options and what are the differences between them?

Just like for finance/ accounting, there isn’t a one-size-fits-all approach. Use the right resource for the right job:

Law Firms

In-house Counsel

Legal tech/ platforms/ AI/ self-serve 

When should you always get lawyers (internal or external) involved?

Those things that are going to be deal/valuation killers when due diligence uncovers them pre-fundraise/ exit because they’re hard, expensive, or sometimes impossible to put right.Examples include not having proper controls around share, option management, ownership and, for some companies, IP ownership (ie. proprietary tech, brand names, etc). It will depend on the type of business and how it’s valued, but could also be, for example, if the business model is based on doing something likely to cause big-ticket litigation as it grows, or relies on being regulated but can’t build in a compliant way, or it’s only profitable by using off-payroll staff who are employees (according to IR35), etc.

When should a business think about hiring an in-house lawyer?

Again it depends on the nature of the business, if you are regulated (FCA, pharma, etc) or you have a lot of contracts that are bespoke/ negotiated, you will likely need to hire sooner than, for example, an e-commerce business. But in most cases, it should be as soon as possible, and certainly when the management team are spending too much time on contracts / legal issues/ legal ops (management). If you use a fractional in-house lawyer, they should tell you when the volume of their work means a full-time hire would be of better value. They should then help you hire, do a hand-over, and then support after if needs be.

When it comes to who to hire, what are the key considerations?

Your first legal hire should be an in-house lawyer who has successfully set up and run a legal function before, ideally in your sector. The level of hire is also an important factor, too senior and they may not be close enough to the detail nor want to get their ‘hands dirty’, too junior and they may not be able to operate with enough autonomy to take decisions off your plate or may need too much supervision.

When it comes to legal tech, we hear about legal GPTs, contract review software etc. How useful are these things and how should they be (or not) used?

There is a lot of great tech on the market from AI contract review software, to cap table platforms, to CLMs, to legal front door ticketing systems, to template providers, to risk and data management platforms, etc.As general guidance, like any tech, these tools need a business use case and cost-benefit analysis first. They also need the right people to implement, manage and oversee their use. They won’t replace a good in-house legal function, but can certainly, if used properly, help with efficiencies.

Get in touch if you want to discuss your current legal requirements and the resources you currently have in place – it’s one of our favourite topics and we’re always happy to chat about what good legal support can and should look like.

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