The startup general counsel: A primer for success

Sterling Miller knows in-house life, including leading the legal team for Sabre Holdings’ successful IPO back during the original Internet boom; three stints as general counsel of dynamic, nimble companies; and his current role as CEO and Senior Counsel of Hilgers Graben. We asked him to share his hard-won experience and thoughts on what it's really like to sit in the big chair so he can inform the next generation of first-time general counsel. Here’s what he has to say.

There is little more exciting than your first general counsel job, especially when the company is small or a startup. Finally, you get to be in charge and do things the way you have always wanted to do them. Plus, there is also the possibility of a large financial payout if the company is successful.

Still, there are challenges. To start, the entire legal “team” is likely just you. Meaning, mixed with that shiver of excitement is a very real twinge of fear; as in, what happens now, and can I handle it? The answer to the latter is almost certainly, “Of course you can!” The answer to the former can be a bit more complex, depending somewhat on your comfort level with the “Lone Ranger” role, the rocket-like pace, sometimes limited resources, and the challenge of being the only lawyer at the company.

If this sounds like something you might like to try, read on — it’s a primer on how to succeed as a startup general counsel and hit the ground running.

Set the foundation early

Before accepting the role as the lone lawyer, clarify exactly what your role will be. Are you expected to be part of the executive team and a trusted advisor to leadership and the board of directors, or will you be a scrivener whose job is to draft contracts and manage outside counsel? While it’s likely to be some combination of both, get your role, duties, and expectations nailed down before accepting the job.

Ensure that all agreements regarding your employment — including job responsibilities, salary, bonuses, equity, and other benefits — are formally documented. If the company does not provide written confirmation, take the initiative to record your understanding of the terms of the offer and any commitments made to you in written communication with the company. While this is not an ideal substitute for official documentation, it serves as a valuable record that may prove beneficial should any discrepancies or misunderstandings arise in the future. Here is what to focus on:

• Salary
• Equity grant: options, restricted shares, performance shares, phantom stock, employee stock purchase plans, etc.
• Annual bonus
• Signing bonus
• Deferred compensation plans
• 401k
• Sabbaticals
• Vacation days
• Stock purchase programs
• Health, dental, and eye insurance, along with any other benefits
• Subsidized or free lunches, snacks, etc.
• Relocation package
• Public transportation reimbursement, parking, etc.
• Remote-work opportunities
• Office space

All these elements should be front and center when you discuss your compensation and benefits.

Furthermore, it is advisable to inquire about the schedule for any bonus distributions and the methodology behind their calculation or proration for the year. It is essential to clarify whether a bonus will be partially awarded for the current year if you commence employment mid-year to avoid the assumption that bonus eligibility begins immediately rather than with the subsequent full calendar year.

Ensure that your remuneration package — including base salary, bonuses, and equity awards — is commensurate with that of your peers within the executive team. While you should understand that your compensation may not be on par with that of the CEO or CFO, it should be comparable to that of other senior roles, such as the head of human resources or the chief technology officer. It is imperative to avoid a significant disparity in compensation within the executive team.

Lastly, spend time looking at the financials — audited, if possible. While commitments are commendable, they must be evaluated against the backdrop of the company's financial stability. In the event that the organization's fiscal footing is unstable, the reliability of such assurances may be significantly compromised.

Is this really for you?

Before you say “yes” to becoming a startup or solo general counsel, you need to stop for a self-evaluation. Is this really what you want to do with your career? It takes a particular type of lawyer to be the only in-house counsel at a company, especially one just starting out. Consider the following:

• To take a job like this, you need at least four to five years of experience — and more is definitely better.
• How ready are you to give up the perks and lifestyle of working at a law firm or a big in-house department? In this new job, you must be almost completely self-sufficient and ready to work long hours to ensure you get everything done.
• Prepare to exercise flexibility and swift judgment when making legal decisions. You will need to become the ultimate do-it-all generalist. On a daily basis, you will make critical decisions with less-than-perfect information in areas of the law where you have little to no background. Are you comfortable with this?
• Be ready to take on and get comfortable with more risk than you’ve ever experienced in your legal career. Your orientation will quickly become more “business” than “legal” much of the time. Developing the ability to assess risks promptly and present potential courses of action is essential. Ultimately, the business must make its own decisions regarding the path it chooses to take. Legal counsel — especially within a startup environment — acknowledge that the legal department does not govern business operations. This role requires a considerable degree of fortitude.
• Compensation at startup companies is often lower than that of more established peers, and much of the compensation can be in the form of equity or other vehicles that are not immediately available. Here is another risk-management issue: are you comfortable taking the risk of lower personal compensation now for the potential of a substantially larger reward if the company takes off?

Lastly, agree on what resources you will have available to do the job. In particular:

• Overall legal department budget
• Technology budget: e-billing system, contract lifecycle management system, document management system, research tools, and e-signature tool
• Outside counsel or vendor budget, and whether you have the freedom to select your preferred firms and vendors
• Administrative support
• Training and continuing legal education (CLE) budget
• Licenses or industry organizations: state bar, ABA, ACC, etc.

How to deal with a lack of resources

Unless the situation is very unusual, becoming general counsel of a startup or small company means you will need to be very frugal. Money will be at a premium, and there will be tremendous pressure to limit expenses. You may have no budget for outside counsel, or what you have will be tiny. You will receive a speedy education on how to be “legally frugal.” Here are some ways you can be scrappy and frugal in the role:

• Find a boutique law firm or solo practitioner. You can stretch your legal budget by partnering with a small firm or even a solo practitioner to help with legal work. Try to get an individual who previously worked for a “Big Law” firm and then decided to step out on their own or as part of a small boutique firm. The work will be five-star quality, but the price will be drastically lower.
• Research free CLE and seminars. You’ll be amazed at how many free CLE and seminar courses are available, either in person or via webinar. Take advantage of these opportunities to learn and hone existing or new legal skills at no cost. You typically get great materials, including forms and checklists, by attending. You can sign up for free client alerts on the websites of most major law firms. Once you do, you will often get offers for free CLE or webinars.
• Locate a free law library. Many law schools provide guest access hours to their collection at no cost. Likewise, many state and federal courthouses offer access to their law library at no cost. Large city libraries often have sections devoted to legal books and publications. Take advantage of these to make up for the lack of a library. If there is a book you use frequently in your practice, check to see if it is available for free on Google or at a discounted price — used or new — on Amazon or eBay.

If you can get the budget, get Practical Law. It is a lifesaver for a single in-house lawyer or small legal team. Practical Law can give you the research, forms, checklists, and sample policies you need to find answers quickly. You can find everything you need for just about any legal question or request put to you by the business. It’s not free, however, so you will have to pay for a yearly subscription — but I would fight for this as part of accepting the job. If you don’t already use it, I suggest signing up for a free trial.

Your first-month reading list

To be a successful in-house lawyer, whether it is part of a large department or as a solo general counsel, you need to learn the business of your company and, most importantly, how it makes money. Your education starts with getting product demos so you can see what your company’s products do and how customers use them. Next, ask questions. If you don’t understand something, ask someone to help you make sense of it. Then, make a friend or two in the business who can help guide you in learning about the company — the more friends, the better. Finally, learn basic business finance, including how to read a balance sheet, income statement (P&L), and cash flow statement.

Additionally, here is a reading list to help you with your transition into the business:

• Prioritize company strategic plans and goals. Your top priority is to obtain the company's strategic plans, both current and long-term — three to five years. You will learn an incredible amount about where the company is going — and how the legal department can best help — by understanding and thinking about the strategic direction of the company. 
• Analyze financials. Ask your boss — or someone in finance — for a copy of the company’s core financial documents, even if they are just pro forma financials. Understanding the numbers is vital to being an effective in-house lawyer.
• Obtain organizational charts. Understanding the key personnel and the specific functions within the organization is critical for anyone starting in the legal department. Get your hands on two charts:
  • The company’s overall organization chart, from the CEO on down. As you meet new people or get assignments and emails, look to see where that person falls on the organizational chart, paying particular attention to the line of business they fall under and their ultimate boss — the person who reports to the CEO for that organization.
  • A corporate organizational chart, which includes the company and all subsidiaries, parents, and affiliated companies. Understand the entire landscape because it will matter, especially when preparing contracts or dealing with litigation.
• Read “206 Ten Things You Should Know Your First Year as General Counsel.” Bob Robinson and D.C. Toedt produced this massive checklist for the ACC back in 2001, and it is jam-packed with valuable information. While aimed at general counsel, every in-house lawyer should read it.
• Use contract templates. Businesses run on the contracts prepared by the legal department. Savvy legal departments and businesses have template contracts for their primary products and services. You will learn a lot about those products and services, the company’s business model, and — more importantly — the company’s risk profile by reading through any standard template contracts. These include any terms of use on the company’s website. You may even spot ways to improve the contracts, bringing value to the table right away. 
• Learn the marketing materials. One of the first things I would do when I started a new in-house position was ask for any materials the company used to market its products or services to customers. To understand the business you are working for, you need to know the products and services it offers in the marketplace. Reading the materials about the company’s products and services should be a priority. If you have trouble locating them, ask someone in marketing or product development to help you.
• Know all company policies. Whenever you join a new employer, they give you a lot of policies and procedures to read. While it may be common practice for some to acknowledge receipt and understanding of these documents without thorough examination, it is imperative for in-house legal counsel to diligently read and fully comprehend all the company's policies and procedures. This comprehensive understanding is crucial to effectively perform your duties and provide accurate legal guidance to the organization. These are usually located in one place online, like the HR intranet site. Here are some of the in-house policies you should read:
  • Employee handbook
  • Business ethics policy
  • Antibribery policy
  • Sexual harassment policy
  • Antitrust policy
  • Document retention policy
  • Data security policy
  • ealth and safety policy
  • Invention disclosure/ownership policy
  • Confidentiality policy
  • Bring your own device (BYOD) policy
  • Travel policy
  • Social media policy
  • Remote work policy
  • Email policy
  • Data privacy policy — both inward and outward facing
• Memorize the rules. Read the applicable rules of professional responsibility. It may have been a while since you read them, but they are as important for in-house lawyers as they are for outside counsel. In-house lawyers face unique ethics issues vastly different than those faced by outside counsel. Be sure you understand the local licensing requirements for in-house lawyers in the state where you will be based. Some are pretty loose; some are incredibly rigid. Engaging in unauthorized legal practice and risking conflict with the state bar is an unwise use of time. Keep a copy of the rules handy or bookmarked on your browser.
• Subscribe to trade publications. Whatever businesses your company is involved in, there are likely multiple trade publications that focus on the industry, competitors, developments, government policy, etc. Seek out and subscribe to these. By doing so, you will be reading the same information the business is reading about. If you are unsure how to go about it, ask the folks in marketing or the business colleagues you start interacting with as you get assignments.
• Examine outside counsel spend. It may be zero, but the company has likely been using outside counsel for some issues. Dig into that spending — and any ongoing litigation — and determine if you have the right outside counsel. Then, find out if there is a way to reduce the spending; the short answer is almost always “yes.”

You should also look for blogs or publications dealing with your particular specialty, whether that’s litigation, contracts, taxes, employment law, etc. The bottom line is to gather up a set of sources you find useful and read them regularly.

What to focus on during day one

If you’re going to work for a startup or small company, odds are good that there is a lot to fix from a legal angle. Still, you cannot resolve it all, certainly not at once. Focus on the basics first, like where you and the company will get the biggest return on your time. Start with:

• Reviewing and updating the core corporate documents. These can include articles of incorporation, by-laws, and LLC agreements, which may have been initially drafted by the founders using self-help resources to ensure compliance and alignment with the company's evolving objectives.
• Cleaning up or preparing the “cap table.” This spreadsheet or chart shows who owns what in terms of the company's equity. It will be imperative as the company matures or takes on investors, especially regarding the founder’s understanding of getting diluted in the first round of financing.
• Establishing effective human resources policies. Doing so will address any oversight in this area and safeguard against a workplace culture that may lead to legal issues. Ensuring a professional environment is essential for the company's longevity and reputation.
• Preparing form agreements for the company’s most-used contracts. This task will install and streamline a repeatable contracting process.
• Getting on top of data privacy and data security issues. Watch out for the General Data Protection Regulation (GDPR), which applies to any company that processes the data of EU citizens regardless of the company location. Remember that more than a dozen U.S. states now have their own data privacy laws.
• Protecting the company’s intellectual property (IP). IP refers to trademarks, patents, copyrights, and trade secrets. For many small companies, IP is the crown jewel, and if it gets improperly copied or stolen, then all of the company's value falls away.
• Reviewing the company’s insurance coverage. Work to ensure the right policies at the right amounts are in place, such as cyber risk, professional liability, etc.

Perform a compliance audit

Getting the basics right is essential. A close second is general compliance — an area many startup companies tend to ignore until it becomes an issue. By then, it’s usually a big issue. As a startup general counsel, there is an opportunity early on to audit the company’s compliance program . Simply put, you will review the different compliance risks the company faces. It does not need to be complicated. Just an overview of what’s in place and, more importantly, figuring out what is missing. Here are the most common compliance risks companies may face:

• Antibribery laws
• Antitrust and competition laws
• Environmental regulations
• Sexual harassment issues
• Cyber-risk
• Government contracting
• Trade sanctions
• Export compliance
• Internal theft

The list will change depending on the type of business you operate and its geographic location — interview employees from across the different lines of business and staff groups. As information about compliance risks is collected, create a work plan setting out the risks, the various objectives regarding each identified risk, and timelines or deadlines to complete those objectives. It can seem daunting to start from scratch, especially when conducting this audit on your own. Don’t try to identify everything right away. Start with your company’s three most significant compliance risks and address those first. You can embellish the program after you’ve dealt with the most immediate issues.

Get the right technology in place

Above, I mention getting agreement on your technology budget. While you will not need everything on day one, you cannot run a modern legal department — large or small — without the right technology. Here is what I would ask for, even if the ask is to stage the purchases over time:

• Practical Law. This resource is the best for in-house lawyers, especially those working as solo general counsel or part of a startup.
• HighQ. Contracts are the lifeblood of the company and the most considerable value add from the in-house legal team. But without a basic contract management system to organize everything — to ensure you can find what you need when you need it — and track and manage critical contractual obligations and deadlines, the business will suffer.
• Spend management solutions. You may not need spend management at first, but as your roster of law firms and vendors grows, you do not want to be using paper invoices. The proper technology allows you to manage invoices effortlessly and pull data about spending metrics — both are essential to a modern legal department.
• Document management systems. Another table-stakes piece of technology for any 21st-century legal department is document management. It doesn’t have to be fancy, just reliable. SharePoint is fine. As is Box, Dropbox, etc. Or, you can go with something more aimed at in-house legal teams. The key is finding something secure that you can access wherever you may be, at any time, and on any device.

Learn to prioritize properly

If you take this job, it will be imperative for you to master two critical skills: prioritization and delegation. Given the extensive responsibilities associated with this role, it is essential to understand that the volume of tasks will exceed what one could accomplish working around the clock every day of the year. Therefore, effectively managing priorities and assigning tasks to others will be crucial to your success in this job. So, come prepared to hone your ability to decide what you need to do now and what can wait. When it comes to setting priorities, look at everything on your plate today and do the following:

• Find out what is most important to the business leaders. Their priorities should, for the most part, be your priorities.
• Learn what’s important to your boss. Make sure they know what you are prioritizing and why — and that they agree.
• Focus on the most important for today. Look at your prioritized list and pick the three most important things.

This method will ensure that you focus your efforts on the most valuable work versus the less valuable and, over time, will pay off in terms of productivity.

A checklist can also help you prioritize projects properly. Here is one I came up with:

• What needs to get done? List all the projects that need your attention.
• What does the business think is important?
• What do I think is important?
• How urgent and essential is each task?
• Which deadlines matter?
• What is the impact of the task on the business?
• What is the point of diminishing returns on your time?

Revisit and adjust your list daily.

Become comfortable with delegating

Even if you are the only lawyer, it doesn’t mean you can’t delegate. Hopefully, you have an assistant who is capable of undertaking a variety of tasks that extend beyond answering phone calls and coordinating your calendar. Even a virtual assistant will be helpful if you cannot afford a full-time one. If you can, tell your assistant to let calls roll to voice mail and that you will keep your own calendar. Figure out what tasks your assistant can take on for you, particularly ones that don’t require a law degree.

Additionally, evaluate if there are colleagues within the organization who could assume some of the duties allocated to the legal department. It is vital to delineate and maintain the boundaries of the department's responsibilities. While collaboration is valued, ensuring that the legal team is not inadvertently becoming the repository for tasks outside its purview is crucial. It is advisable to assert this stance firmly and seek an explicit understanding of these matters prior to commencing your role.

Similarly, you may be a department of one, but you are not alone. Focus on ways to build a network of in-house or outside lawyers that you can talk to and bounce ideas off of. Building such a network allows you to “expand” your department without adding headcount. Consider joining organizations like the Association of Corporate Counsel and tap into its local chapter. Look for legal message boards and listservs where you can post questions, ask for forms, etc.

Other groups like Tech GC, Ready Set GC, and In-House Connect can provide you with support and a sympathetic ear. Likewise, many metropolitan areas have organizations comprising general counsel that meet regularly, discuss topics of interest to the group, and encourage members to email the group with questions or seek forms or recommendations, etc. Or create your own general counsel organization for small or startup companies to accomplish the same results. The point is knowing that you can have a network of in-house lawyers in similar positions who can help and share resources.

Find ways to “yes”

People sometimes perceive that in-house legal counsel may inadvertently hinder transactions due to an overly cautious approach. This notion can occur when attorneys align the company's risk profile with their personal threshold for risk. As a general counsel for a new startup, it is advisable to maintain a supportive role in risk assessment. Except in rare situations, the focus should be on providing comprehensive legal advice to enable the appropriate decision-makers to weigh and decide on the risks involved in business endeavors.

Learning to say yes starts with recognizing that the legal department is there to serve the business. You have two goals: value creation — “yes” — and limiting value destruction — “no.” The hard part is balancing both, especially when it comes to things the business wants to do or contracts they want to sign, no matter what you think of the same. Come to the role with the mindset to lead with “Yes, we can do this” instead of “No, we cannot.” This ideology can be a real change for most lawyers. Here’s how to do it:

• Accept that the legal department doesn’t run the business. Your role is to advise the business on risk and legal issues; it ultimately decides what it wants to do with that advice. 
• Listen to the client. Pick up the phone and talk to your business colleagues. Take the time to truly listen to what they are trying to accomplish and what they need, and then take your time to calmly explain the legal side of the equation and what you think you need to do to best protect the company. The odds of the lawyers and the business aligning on the path forward — getting to yes — are much higher if you ditch email and pick up the phone.
• Don’t fight unproductive battles. You must be able to look at a draft contract or redlines to a contract and figure out if the business can live with the wording proposed by the other side. If so, don’t wordsmith it. Don’t argue about it — accept it and move on.
• Understand how the business works. Your ability to be effective in drafting, analyzing, and getting deals done increases exponentially with your business knowledge. Keep and maintain solid relationships with the various business units and business leaders you support. Talk regularly with your clients and ask them to attend meetings like sales kick-offs, staff meetings, etc.
• Avoid “no” as much as you can. Don’t run from a challenging deal or problem. It’s rare that the answer to a difficult situation is, “No, we can’t do that.” Instead, the answer is more likely, “No, we can’t do it that way. But here is an idea that might get both sides what they need.”
• Utilize templates to speed things up. Start creating as many form agreements as possible. To the extent the business can use templates that do not require additional input from the legal department, you are well on your way to “yes.”

When it comes to getting to yes, everything starts with ensuring the business knows — or reminding them — that you want to get things done. Bring this can-do attitude to the table when you start in your new role.

Create a “not-to-do” list

Getting to yes is important, but given that the role will stretch you in a hundred different directions, you cannot say yes to everything. In addition to developing a get-to-yes mentality, you must focus on the right priorities. One way to do this is to create a “not-to-do” list to help you know where you will not spend your precious time.

A not-to-do list is a strategically compiled catalog of tasks deemed non-essential and unworthy of one’s time and effort. It is the opposite of the “to-do” list. Instead of setting out tasks or goals you aim to accomplish, you list or outline tasks, activities, habits, etc., that you intentionally choose to stop doing — or avoid altogether. The goal is to boost your ability to get important things done by identifying and eliminating non-essential tasks and creating an ordered way to identify and stop doing them.

As you assemble your list, be realistic about what you can truly accomplish. Just because a task is not to your liking does not warrant its inclusion on your list of objections. Likewise, things that you enjoy doing may go on the list because they are low value, or you should delegate them so you can focus on higher-value work:

• Don't overload your list with too many items at once. Start with a few things you want to stop doing or change and expand your list gradually.
• Set boundaries for tasks you cannot eliminate entirely. For example, limit checking emails to specific times of the day or no more than two low-value contracts per week.
• Know that it’s okay to fail. You may be unable to stick with your not-to-do list sometimes, but that’s okay.

This process is about the long game more than it is about today. If you are consistently looking to stop doing low-value or time-wasting tasks, then over time, you will be able to focus on more meaningful and higher-value work — and that’s where the big leaps in productivity happen.

Taking — or wanting — a job as a solo attorney or startup general counsel takes a unique set of skills. In particular, it requires turning frugality into an art form and learning to take way more risks than you are used to. It also demands that you work at a lightning pace and learn to focus heavily on priorities. If this sounds appealing to you, the rewards can be significant. But know what you are getting into and lock down the details before you accept.

If you can get Practical Law as one of your technology tools, you will head into the role with the best resources available to in-house lawyers.

Sterling Miller, HILGERS GRABEN PLLC

Sterling Miller is a three-time General Counsel who spent almost 25 years in-house. He has published six books; his newest is “The Productive In-House Lawyer: Tips, Hacks, and the Art of Getting Things Done.” He writes the award-winning legal blog Ten Things You Need to Know as In-House Counsel. Sterling is a frequent contributor to Thomson Reuters as well as a sought-after speaker. He regularly consults with legal departments and coaches in-house lawyers. Sterling received his Juris Doctor from Washington University in St. Louis.