Why Your Start-Up Will Benefit from Outside General Counsel Services
By Amanda Abbott, Esq.
If you are a start-up founder, legal services will be a necessary business expense. According to a survey conducted by Kruze Consulting, a CPA, tax and consulting firm, 140 start-ups spent a total of $18 million on legal services over the course of one year. That equates to $128,571 per year on average per startup – a lot of money when keeping costs low is crucial to the company’s launch and initial viability.
Many start-ups seem to use large traditional law firms almost by default. However, I frequently hear from clients that not only is the traditional law firm model expensive, but often behemoth firms do not provide start-ups with the practical, solution-oriented services truly needed on a day-to-day basis to kickstart operations and move forward quickly. One potential solution for managing and streamlining start-up legal needs is hiring an outside general counsel who can serve not only as a legal advisor but as a business thought partner. If you don’t have tight reins, your start-up’s legal fees can easily end up costing an entire year’s legal budget on one or two projects or transactions.
Other than controlling costs and avoiding unexpected budget variances, there are multiple reasons why an outside general counsel (GC) is an intelligent option for a start-up. Engaging an attorney who specializes in your industry means they are well-versed in the terminology and bigger picture. This core specialization allows your outside GC to hit the ground running not only on contributing to key transactions and with advising capabilities, but also to liaise between your team and other types of specialized attorneys such as patent counsel, employment lawyers, and government agency regulators. I have found the legal counsel liaison role a GC provides to be a major cost savings for the client. In addition to the above, since outside GCs typically focus on a few primary clients, they can craft their representation to meet the unique needs of your start-up.
It is well known that historically start-up boards of directors or investors push toward a law firm name with national recognition, and sometimes want to direct work to friends and colleagues at large “prestigious” firms.
But isn’t your start-up more progressive than that?
If all of the funds and opportunities were funneled to big pharma and decades old medical device companies, for example, where would your start-up be today? There is an assumption that big names will provide the best legal services. Of course, this is not always the case. Yet the attendant legal spending may result in little resources left to address the more nuanced legal questions and situations that will definitely arise with new companies that tend to pivot constantly to keep up with the pace of innovation.
Vanst Law is a start-up in the legal field, comprised of attorneys with deep experience and a desire to deliver exceptional service and results while, through its business model and transparency, changing the legal services market for the better. Utilizing an outside general counsel with experience working with start-ups and healthcare industry veterans alike gives you the opportunity to be part of the change needed in another industry, and work with like-minded professionals.
You cannot afford to sign unbalanced agreements or inadvertently give away intellectual property (IP) and other rights, or take on resource draining obligations. A GC in your corner will be a necessary ally to protecting the interests of your fledgling company. Know what you really need, which is quick turn-around, lawyering only on the important issues, and help knowing what you have and don’t have as far as agreements.
Make the case to your board of directors and investors that outside GC services from a boots-on-the-ground firm will serve your start-up’s needs at a lower rate with the same or better quality. You will receive more of what you need, and less of what you don’t, which only equals saved time and more profit to your start-up business.
Amanda Abbott is a partner at Vanst Law who specializes in healthcare and life sciences. She provides uniquely pragmatic yet comprehensive legal services and strategic guidance to clients. Amanda’s partners are known for exceptional legal services in the areas of real estate, employment, environmental, land use, corporate governance, tax, and business litigation.