Recently shortlisted as a nominee for a 2023 L.A. Times In-House Counsel Leadership Award, Jonathan Franz has had an eclectic career as an in-house counsel — spanning Hollywood, global architecture, and most recently Silicon Valley.
“I've been doing the same thing for 12 years but across different verticals. That adds an extra layer to my practice because I can reach into my toolbox and pull from different experiences. For example, when I’m structuring a license, I think about how they do it in Hollywood versus how it’s done in the tech world and look for opportunities to improve the status quo.”
He started out as an attorney at Best Best & Krieger LLP and quickly made the jump to an in-house position at Thinkwell, an experience design and entertainment company. After climbing up the ladder to become Head of Legal Affairs, he joined NBBJ Design to explore global architecture.
Now, he heads a 3-member legal department at Crunchbase, where he supported its growth from a Data-as-a-Service company to a leading SaaS provider of sales intelligence and research solutions.
“I was the first in-house legal hire at Crunchbase and when I came in, they had been working closely with an outside law firm. Though I was initially engaged to streamline the company’s contracting motion, my role expanded almost immediately.”
In our conversation with Jonathan, we explored his career progression, the expansion of his role at Crunchbase from a corporate counsel to heading the legal function, and how GCs and heads of legal can support the business through economic highs and lows.
Supporting rapidly growing businesses as a GC
As the first in-house legal hire at Crunchbase, Jonathan came in on the heels of a $30M Series C funding, during a period of great growth within the organization.
“Like most in-house attorneys, my practice is focused in four areas: corporate, commercial, claims, and compliance. I went from only doing commercial to now handling all four buckets at Crunchbase. In a perfect world, I would give 25% of my focus to each of those areas. In reality, commercial takes 95% and I have to fight and claw to get time for everything else.”
The evolving role of the in-house counsel
If you’re the first in-house legal hire at a company, internal teams will start looking to you for answers to legal dilemmas. And even when they don’t, you might find yourself catching red flags in current processes that could potentially put the company at risk.
Jonathan’s role expanded from primarily assisting with sales contracts to acting as a GC within the first six months of his time at Crunchbase, though he officially became head of the department at the two-year mark.
“When I came in, there were 45 people in our revenue ecosystem, including Sales, Customer Success, and Business Development. I was hired to support them, streamline processes, and reduce contract cycle times. But the reality of being an in-house attorney is that you still have to support every other internal function group.”
For him, it was an organic process that started with answering questions from internal teams on the legal aspects of certain policies and practices.
“When you have different teams coming to you with questions and ideas that could impact risk, you have the responsibility to educate. For example, if your company’s finalizing an email integration, Product might ask what data they can access and how they can use it. Sometimes these ideas can be red flags from a legal perspective and you’re ethically obligated to put the right framework in place.”
Enabling growth while protecting business interests
“When I started with Crunchbase, we were primarily a Data-as-a-Service company — a one way street. We had a big bundle of data and people found that information insightful, so they would license it from us and leverage it internally or externally.”
When expanding the scope of products for business growth or building SaaS applications, the in-house counsel plays a big role in managing risk around leveraging data.
“About six months into my tenure at Crunchbase, we launched a dedicated Software-as-a-Service application. In addition to pushing information to our customers, we also started pulling information back from them. From a legal standpoint, your spidey senses go up because that suddenly brings a wave of regulatory considerations — what kind of customer data are you processing? What can you do with it? Can you keep it or do you have to get rid of it? What rights do individual data subjects have with respect to that data? I worked hard to ensure we had the right controls in place to remain compliant and maintain customer trust.”
While the Product team or business executives might have considered some of these questions from an execution perspective, it’s up to the in-house attorney to advise them and put frameworks in place that protect the business from potential risks.
Navigating global legal environments
“I was at Thinkwell during a time of unprecedented growth. We went from 75 employees in one brick and mortar office in Burbank to five different offices around the world, including a wholly foreign-owned enterprise in Beijing and branch offices in Abu Dhabi and Riyadh.”
If your organization operates on a global scale or is ramping up for international expansion, this period could prove as challenging as it is exciting.
“Each continent has their own way of doing things. For example, the UAE is famous for not actually redlining the body of a boilerplate contract but doing it via an exhibit with the agreed upon deviations. From an interpretation standpoint, that can be more challenging but that's just how things are done there.”
An in-house counsel must be agile, quickly adapt to different legal environments, and stay conscious of regional practices.
Supporting funding efforts
Every business needs money to function, and a large part of the in-house counsel’s work is allocated towards ensuring that the business has what it needs to bring in this money — whether that’s by enabling sales contracts or supporting funding rounds. At Crunchbase, Jonathan’s team recently supported a $50 million Series D round.
“I was responsible for helping outside counsel negotiate the stock purchase agreement as well as leading legal due diligence. For the latter, we created a cloud-based data room and Google spreadsheet to track and assign each round of requests. When I had the due diligence call with investors' counsel, I could quickly click into documents from the dashboard when they asked about something rather than having to go off of memory.”
The in-house counsel’s responsibilities don’t end at the paperwork surrounding raising funds — they must also ensure compliance post-funding.
“When we signed our Series D, we made contractual commitments to our newest investor and board member to do certain things from a compliance standpoint. It took thousands of hours of work, but we rose to the occasion and I’m committed to continuously improving our compliance program.”
Preparing for business lows and economic downturns
“It is an interesting time from a VC and PE standpoint. We're seeing a lot less activity in the market.”
GCs play a significant role in enabling strategy and decisions to help businesses navigate turbulent times. Jonathan outlined a few key areas where his team is working to ensure smooth business operations in today’s unstable economic environment.
Strategizing to reduce churn and increase ARR
“Everyone is feeling economic headwinds right now, especially if you have a business-to-consumer side to your business. SaaS subscriptions are the first thing to go. We have a self-serve side too, and we’re seeing some churn in that area because customers are feeling the effects of high inflation. I would characterize it as a real threat.”
Jonathan’s currently focusing on helping the business reduce this churn, meet growth goals, and make up for the dollars exiting the business. To do this, they’re trying to make the product experience stickier and create healthy ARR through new product offerings.
“We're getting ready to launch a new product, which I'm excited about and will go a long way towards helping us achieve this goal. And in order to launch that new product, there are a ton of integrations and partnerships my team is working on behind the scenes.”
Managing compliance and planning for the future
“We’re no longer a Series C company. We’re at Series D, and that carries with it more responsibility.”
Jonathan emphasized that one of his current areas of focus is helping the business become profitable and avoiding the necessity of further funding rounds.
“We closed our Series D back in June 2022. This puts us in a strong position today and we’re hoping to chart a path towards profitability so we don’t have to fundraise again.”
Besides that, his team is getting ready for upcoming audits and focusing on staying on top of regulations.
“We’re getting ready for CPRA, which starts being enforced July 1st, and we've started the audit period for our SOC 2 certification. So our primary areas of focus right now are to make the product stickier, have healthier ARR growth, and get ourselves as compliant as possible.”
Fostering an entrepreneurial culture within the legal function
“When I came in, I was after two things: One, I wanted to reduce cycle times to close more stuff more quickly. And second, I wanted to improve contract hygiene to better manage risk.”
The in-house legal counsel essentially has one job: to enable the business in generating revenue while protecting its interests. Jonathan advises GCs and heads of legal to approach this task with an entrepreneurial mindset.
Mitigating risks that actually matter
Jonathan has an entrepreneurial way of looking at risk.
“To me, a risk only matters if it's material. If it’s immaterial, I don’t care about it.”
To be material, Jonathan explains, it has to meet two conditions:
- It has to be likely to occur.
- It has to be costly.
“If it's likely to occur but it's not very costly, I probably don't care. If it's unlikely to occur but, man, if that meteor hit the earth today, it would be bad — I also don't care. It's just not likely to happen.”
With this entrepreneurial view of risk, the legal counsel can ensure they’re focusing on eliminating risk that actually matters, instead of chasing every possibility.
Building trust and credibility with other functions
In an effort to protect the business from all angles, legal often ends up garnering a reputation as the department of no. Instead, Jonathan recommends a more pro-business mentality.
“One of the ways I build trust is by demonstrating to stakeholders that we evaluate risk thoughtfully and intelligently. We understand we are not, for example, a closely-regulated Fortune 50 pharmaceutical company. So we have a bit more freedom, but we exercise it responsibly.”
He mentions that he hardly ever says no to an idea.
“The right answer is always ‘no, however…’ or ‘yes, but…’.” Always find a path forward.”
This helps him ensure that if he ever does say no, his stakeholders trust his advice and don’t push back.
“I've worked in roles for different companies where I've had to negotiate twice. First, with my internal stakeholders to convince them why the thing we're doing is the right thing and then with the counterparty.
That doesn't happen at Crunchbase because they trust me. They know I'm pragmatic and business-friendly. So, if I say I'm concerned, they're concerned too because they think, ‘Oh, this actually might hurt our business.’”
Being a businessperson as much as a legal counsel
“As an in-house counsel, you have to be business-minded because you're part of the brain trust.”
According to Jonathan, the role of the in-house counsel doesn’t stop at legal strategy but also extends to recognizing and flagging potentially harmful business decisions that may not strictly be related to legal. He promotes the philosophy of “if you see something, say something.”
“I saw our team was doing a large license deal with a big tech company and they had proposed seat tiers with a different fee every 10,000 seats. And while they thought this would give the licensee more flexibility, this actually ended up promoting the wrong behavior where the customer would try to get as many seats as possible within a tier and not a single more since that would mean much higher fees.”
He recommended the business move to a per-seat pricing model, which is what the customer had initially asked for.
“There was a $250,000 swing in ARR comparing pricing per seat vs. giving them that tier flexibility. I might have been out of my lane there, since this was strictly a commercial issue, but I’ve been around long enough to recognize unintended consequences.”
Becoming a true partner to the business
“You have to start by listening. If you don't do that, you'll end up talking in the wrong direction and not managing risks that actually matter. So, listening upfront, in my opinion, is the best way to build a relationship with business and counsel internal stakeholders.”
Achieving 80%, not aiming for 100%
The biggest piece of advice Jonathan had for GCs is to stop always aiming for perfection when you’re in an in-house role and focus on executing by being “good enough”.
“The reality of being a general counsel is you've got so many irons in the fire and so much stuff coming at you that if you're trying to do everything perfectly, you're missing other items. You’ll start to become a blocker and then people will just avoid you.”
Turnaround times are crucial for closing contracts and legal teams must avoid being perceived as a blocker in achieving business goals.
“Eventually, if you're on a two or three day turnaround time — or heaven forbid, a week’s turnaround time — your stakeholders will start working around you. All of a sudden, there will be a ton of stuff no one ever shows you and you'll find out after the fact that the company did that partnership, made that commitment, or signed that document with risky language without any legal review.”
To ensure this doesn’t happen, Jonathan recommends letting go of perfection and instead making do with reaching 80% and dealing with the biggest issues.
“Get in fast, flag the biggest risks, manage those risks, and move on to the next thing. But see everything so you're not missing anything material.”
Using a CLM and internal systems to ease handshakes
“The first thing I did when I came in was overhaul our boilerplates and simplify them. For example, I combined internal and external data licensing templates into one boilerplate contract, so there’s minimal room for error and it’s more user-friendly.”
Mainly, Jonathan was focused on creating a contracting system that allowed for quicker turnaround times and easier collaboration between stakeholders.
“Leveraging a CLM has been key because it has reduced a lot of friction from handoffs between legal and business. Rather than going back and forth over email, Slack, Word, Zoom, DocuSign, and a whole tech stack, the CLM acts as a single source of truth.”
Implementing a CLM has resulted in crisper handshakes between stakeholders, reducing cross-functional friction.
“And that's why what you do at SpotDraft is so important because that's what in-house GCs and legal heads need the most: A way to streamline their contracting motion.”
Jonathan also mentions the importance of having internal systems in place to reduce back and forth between teams, especially when requesting legal review.
“We have a whole intranet with resources and a legal services request form with 10 different questions so we get all the information upfront and don't have to go back to ask follow up questions.”
Going in-house and speaking business
“If you're in a law firm and you get that call to go in house, it's exciting. But it's a big change. It's nothing like your practice when you're on the firm side.”
For in-house lawyers, speaking the language of business is key. Instead of contributing purely legal knowledge, GCs have to act as a bridge between the legal and business world and support the organization to achieve its end goals.