Is there a right time to get your legal team on board as a startup? In the 12th edition of LegalMatters, we discuss with Jamie Hurewitz, Head of Legal at Mattermost about the right time to bring in a legal team.
Started as an attorney at a law firm, although she wears many hats today. From being an advisor at Deel, mentor at Techstars, she is also an investor who also shares all her experiences about scaling all remote, high-growth, SaaS companies.
She believes that there is no startup that is hundred percent compliant and legal teams should be the ones watering the trees of creativity and passion everyday, preventing the company from facing any roadblocks.
I went to college and had no idea what I wanted to do. I did all of the general education credits the first two years, after which my advisor said that it was time to pick a major. Thinking that business was practical, I chose a business major. I did business administration because it was general but yet I still had no idea what I wanted to do. When I started college I was just 17 years old and not a lot of people know what they want to do at that point in life.
In my junior year while taking classes in my business major, I enrolled in a business law course which I really enjoyed. I built a close relationship with the professor, who eventually became my mentor, and I was forced to use my brain in a different way. I understood the logic and enjoyed the different way of thinking. This is what started my path towards going to law school.
I've been the type of person who's always worked hard for what I've gotten. I've not been one to use connections. I'm introverted and have always wanted to do things on my own, not relying on anyone else. I also do not take “NO” for an answer. I have always been ambitious and persistent when it comes to pursuing my goals.
I originally planned to go to law school and wanted to do something in the child advocacy area - in college, I was heavily involved with volunteering with children who were wards of the state and did volunteer work with many underprivileged kids.
Realistically, when I was nearing the end of 2002, the economy was awful. There were not a lot of jobs out there and I had a tremendous amount of student debt. So the realization was that I was never going to find a job that would allow me to pay for my student loans. And there weren't a lot of jobs. I probably sent out hundreds of resumes at that time. I was trying to find my first job.
It was the second semester of my second year of law school that I ended up starting the joint degree program, which was the JD MBA, so that I could continue schooling and then work towards continuing my business education because I knew that I would need to go into some sort of business law career, as opposed to going into a public interest career.
I also feel that my decision to obtain an MBA has helped me with my credibility as a business partner with my clients and being able to align with the business side as opposed to just being the typical lawyer.
I am now in my final semester of an executive LLM program at Georgetown Law Center. The program is a distance learning program, and my focus of study is securities law and financial regulations. I enrolled in this program to help fill the gap in my experience having not previously taken a company public. Unable to make up for experience I do not have, I chose to replace it with the knowledge I learned in this program, studying under some of the leading experts in their field on various relating subject matters.
I was fortunate to gain litigation experience during law school while working at the county attorney's office in the child support enforcement division. I appeared in at least 10 to 20 hearings a week, which proved to be a beneficial experience.
This experience helped me land my first job out of law school which was at a medium-sized litigation law firm, by the name of Meagher & Geer. I practiced in the area of commercial litigation, for about two years during which I realized that litigation was not for me. I don't enjoy conflict. I'm a middle child and I’m a peacekeeper. I like to work and resolve problems and build relationships, not be in the middle of conflicts.
The end of those two years happened to coincide with the birth of my first child. Litigation is not a great practice to be in if you want to have a family and a life. So I transitioned into a position with US Bank, within their procurement department as a Contract Analyst.
I took that role for the purpose of getting the transactional experience in reviewing and negotiating contracts. I knew that I needed to have that experience since I didn't have any in-house expertise and it was a way of transitioning towards an in-house role. I would later take the experience learned here to advance into an in-house counsel position later in my career at a different company. Throughout my career I have often found that it is easier to move up by moving out as opposed to attempting opportunities for promotion, mostly because the legal organization is typically relatively flat at most companies so there are so few opportunities for advancement.
It varies from company to company. It depends on what industry you're in, what your legal risks are, what your product is. If you are running a company in a highly regulated industry, then you may want to get an attorney earlier on to help you navigate the regulations. This will help to ensure that your product and/or the services that you are providing are compliant, otherwise, you may have some costly compliance issues and could end up spending money unnecessarily.
If you are not working in a regulated sector, it may not make much sense to hire inside counsel right away and you might want to wait until your legal spend on outside counsel is costing more than it would cost you to hire in-house counsel.
I would say that when you do hire your in-house legal team - do not think about your in-house counsel as just another lawyer. An experienced in-house counsel should have an excellent business acumen and can help with business strategies, risk assessments, product ideas and much more.
Overall, my advice would be to look at what your business does and decide from there.
"One thing that I always tell attorneys looking to make this transition is that there is no expectation that startups will be a hundred percent compliant with all laws at the early stages of the company. That’s not the business they're in.
Their business is to first develop a product that’s marketable and through which they can scale. Compliance is most likely the last thing on their mind."
In an ideal world, you have the attorney up front, who's making sure everything along the way is perfect. But there are even large companies such as Facebook and Twitter that are not hundred percent compliant because there’s no such thing as total compliance.
As soon as the in-house attorney comes in, their job is to assess the current status and begin working, cleaning things up; because that’s what they’re brought in for. They tighten up the processes and build out the legal and compliance program, but there needs to be a balance so that the start-up can continue to grow and scale. You should not go in expecting full compliance right away or it could end up paralyzing the business.
I was with the company while it scaled from 150 people to around 1200 team members in over 60 countries and that was a tremendous learning opportunity for me. It was my first opportunity to work completely remote - which in some ways has been life changing for me.
As an open source company, transparency is obviously a key value. Iteration is also one of the core values of GitLab. Their software is updated monthly. Each release is not necessarily meant to be the best. They just keep developing, building upon it and improving as they continue to release new versions, it is a part of their value. It’s all about moving forward, figuring out what’s not working and changing things quickly so that you’re not stuck within cycles of dysfunctionality.
I learned a lot from the values at GitLab, but iteration is one that particularly stuck with me. The idea that we should be continuously improving ourselves has always been important to me, hence all of the education and degrees I have pursued. But the idea of not having to be perfect and making decisions more quickly and efficiently with the idea that I could always act on it and improve upon the outcome later because there really is not much that is really permanent helped me to become more decisive and willing to take more risks.
Well, for me, when this pandemic happened, nothing changed. I've been remote since 2017 with GitLab.
The one good thing that has come out of the pandemic is how fast it has pushed remote working forward. It has pushed a lot of companies and attorneys who would normally not allow their workforces to work remotely out of their comfort zones, but they seem to be adapting to it very well.
I share a lot of my learnings about running remote legal teams with in-house attorneys through a listserv I started, which grew a lot during the pandemic. Attorneys who support remote workforces are welcome to sign up at https://www.allremotelegal.com/contact.
I would say get as much variety of experience as you can. Even if you are assigned to a focused role, always try to reach out and get as many different experiences as you can. Having a variety of experience will help make you more marketable. It is easy to get pigeonholed into one area early on in your career but then it makes it more challenging to move around.
One thing that is also worth mentioning is that so many startup founders are incredibly talented and have a lot of passion for the work they are doing.
"Don’t be the one to put that light out. As an attorney, we have the reputation of being naysayers, roadblocks and heartbreakers, but in the startup business that does not have to be the case."
We can be just as effective in our roles by being there to guide them and give tiny doses of reality and letting them make the final call. But never put the light out on creativity and passion, as long as it is not illegal. That has always been my motto: I look good in orange but I will not wear stripes or a jumpsuit for anyone.