Philosophy

Tl;dr early stage startups need a fractional GC more than anyone. Fractional GCs enable lean legal practices with a more relevant skill set and a better, lower cost structure.

The idea that “because startups don’t have a lot of legal needs, they don’t need a GC” is backwards.

Seed and Series A founders are navigating, without inhouse counsel, a tension between sending everything to an expensive firm vs. executing on important early decisions on IP, finance & equity, internally on their own.

Do the GC, just do it fractional, or part time.  They will (1) enable your team to appropriately self-service, (2) fulfill 80% of your remaining needs themselves, and, (3) identify special matters, using their industry experience and connections to source and/or manage the perfect solution for everything else.

Makes sense, right?  Still you might ask--how’s that different than working with BigLaw?  Three answers:

1. Subject matter expertise geared towards generalized legal and business acumen: The GC trades knowledge of legal edge cases for expertise in everyday advising, contracts, corporate governance, legal process strategy & implementation, and upside realization. Those focuses are directed to minimize your time, mindshare, and costs, while maximizing your revenue opportunities.

2. Unbundling means lower costs. BigLaw forces you to bundle the deep experience & value of their partners with the mark-ups and relatively low experience of fresh-out-of-law-school junior associates and support staff, overhead, and more. This makes them invaluable for tough questions and tablestakes matters, but less value-effective for day to day stuff.

3. Fixed pricing is more predictable and avoids incentive perversion. The billable hour makes sense for bespoke work, but if you’re lucky, your GC will offer fixed costs, which are better for (a) standard tasks, and (b) incentive alignment in issue spotting, project scoping, and third party vendor selection / management.  Otherwise, you’re traveling with a tour guide who's getting a kickback on every experience he takes you to.

First, shop by word of mouth--especially from startup gatekeepers (e.g. investors, accelerators, accountants). Googling is tough because many brand leaders in lawyer curation are compromised by their incentive structure.

Shop for these credentials, in order.

1. # years focused on startups. Ask for a list of sample clients.
2. # years law firm experience, and at which firm. Search Vault for data on firm quality.
3. Don’t index on law school.

Once you have a short list, engage multiple candidates--most startup lawyers waive their retainer, and working with them is the best way to experience the relationship before cutting other leads (assuming there is no utility role for those runners-up).

Second, know how to evaluate your GC’s success. Especially, see if they think, talk and act like a business owner. This means:

1. Giving ROI-weighted advice. Admittedly, it’s hard to quantify ROI in legal. You can, though, drive it qualitatively as: (upside - (probability of liability * damages associated)). A good GC will let this framework drive how they communicate and what they spend their (and your) time on.
2. Working off legal roadmaps. These maintained plans are what prevent you from getting lost in a world of amorphous legal deliverables with low ROI--even better when your progress on that roadmap is tracked real time with a system of record that’s tied to billing.

3. Caring about your experience. Does your GC lead with a concise tl;dr, a clear recommendation, and discrete next steps? Do they use the same software stack as you? Do they set SLAs, solicit NPS, or ask how you’re doing?