Many tech businesses start by relying on external lawyers to handle their legal legal needs, but at a certain point, hiring an in-house lawyer becomes not just beneficial, but essential.
Why timing matters in hiring first in-house counsel
In-house lawyers are more than legal troubleshooters; they are strategic partners who can guide a company through complex challenges and support business goals.
Unlike external lawyers, an in-house lawyer develops a much a deeper understanding of the business, which allows them to make proactive legal decisions, anticipate risks, and support company’s growth in a streamlined way.
So, hiring too early can strain resources, but waiting too long can open your business to avoidable risks and increased costs. Finding the right timing is a matter of balancing these factors.
Key milestones indicating the need for an in-house lawyer
Several signals point to the need for dedicated, internal legal support:
- Operational Growth and Rising Complexity
As your company scales, so does the complexity of its legal landscape. This might include an uptick in vendor and partner agreements, customer contracts, and internal policies.
Companies often find that when contract management begins to consume significant time from other departments, or when managing external legal services becomes cumbersome, it’s time to consider bringing in a legal professional internally. - Expansion into Regulated Markets
If your business is moving into new geographic regions or sectors with strict regulatory demands (e.g., data privacy laws like GDPR), the need for real-time legal guidance grows.
An in-house lawyer will monitor compliance requirements across jurisdictions, helping to prevent costly missteps before they happen. - Data Privacy and compliance needs
For tech companies dealing with substantial amounts of client data, staying compliant with data protection laws becomes critical.
This is especially true for companies in SaaS, cloud, or data-driven fields. An in-house lawyer familiar with privacy regulations will establish a compliance program, advise on data use, and act as an internal go-to resource for privacy-related queries. - Contract volume reaches a tipping point
B2B tech companies often handle numerous contracts with clients, partners, and vendors. When negotiating, drafting, and reviewing these agreements becomes time-consuming and costly, an in-house lawyer can streamline the process, introduce efficiencies, and mitigate risks associated with each contract.
Risks of delaying the hire
Waiting too long to bring an in-house lawyer on board can expose your business to significant risks:
- Increased Legal Exposure and Liability
Without an in-house lawyer’s immediate guidance, your company may become vulnerable to legal claims, missed deadlines, or regulatory violations.
These risks increase when business decisions are made without a clear understanding of the legal landscape. - Missed Strategic Opportunities
An in-house lawyer can offer valuable input on business decisions, such as partnerships, pricing models, or compliance-related product changes.
Relying solely on external counsel usually limits this strategic perspective, as external lawyers typically lack the depth of insight into the nuances of your business. - Rising Legal Costs
Over time, heavy reliance on external counsel can become prohibitively expensive.
Engaging an in-house lawyer allows your company to keep certain processes internal and manage legal needs more flexibly, which will lead to long-term cost savings.
In-house lawyer vs. outside counsel: When to make the shift
While external counsel is often the right choice for occasional legal needs or niche expertise, at a certain point, hiring in-house becomes more efficient. Here’s how to evaluate that tipping point:
- Cost-Benefit Analysis
Hiring an in-house lawyer may involve a significant salary investment, but it can ultimately reduce reliance on outside lawyers for routine matters.
Studies indicate that mid-sized companies can save up to 30% annually on legal fees by bringing legal talent in-house. Calculate your current legal spend and compare it to the cost of hiring; if legal fees are a consistent overhead, the shift makes financial sense. - Need for Industry-Specific Knowledge
B2B tech companies face unique legal challenges around IP, software licensing, and data protection.
An in-house lawyer familiar with these areas can respond faster and with more nuanced advice than an external lawyer who may need to get up to speed on industry specifics.
Top considerations before making the hire
Moving to in-house counsel isn’t simply about filling a role; it requires careful planning and alignment with company goals. Here’s what to consider:
- Define the Scope of the Role
For many companies, the first in-house lawyer is often a generalist who can handle a variety of legal tasks, from contract negotiation to IP management and compliance.
Define what your business most needs right now, whether that’s help with contracts, privacy, or IP, and prioritize those tasks in the role description. - Budget and resources
Alongside the salary of an in-house lawyer, consider resources like legal technology and external support for specialised needs.
Modern legal tools for contract management, compliance tracking, and document storage can greatly enhance efficiency and support your new hire’s work. - Identifying the right legal expertise
Every B2B tech company will have different needs. Determine whether you need someone with strong commercial contracting experience, deep knowledge of IP law, or skills in regulatory compliance.
Finding a lawyer who aligns with these priorities is crucial to getting value from the role.
Benefits of hiring an in-house lawyer early
An in-house lawyer brings unique advantages that go beyond cost savings:
- Strategic involvement in business decisions
An in-house lawyer who understands your business can actively contribute to key decisions.
For example, they can advise on product launches with an eye on compliance, help structure deals with potential partners, and create policies to protect IP—all while aligning with the company’s strategic goals. - Improved risk management
A dedicated in-house lawyer can identify legal risks early and implement measures to mitigate them. By proactively managing risks, your company can avoid costly legal issues that could disrupt operations or impact reputation. - Faster, more efficient contract review and negotiation
Having a lawyer on staff enables quicker turnarounds on contract negotiations and review, which can improve client satisfaction and streamline business operations. No more waiting for external lawyers to respond during critical deal negotiations.
Building an In-House Legal Function: First Steps
Making the transition from external to in-house legal support requires some planning. Here’s how to lay the groundwork for a successful in-house legal function:
- Creating the Right Role: Generalist vs. Specialist
Decide whether you need a legal generalist who can cover a range of issues or a specialist with deep expertise in one area. For most first hires, a generalist approach is ideal, as they can adapt to the company’s evolving needs. - Prioritising Legal Needs
Clarify which legal areas need the most attention. This might include establishing compliance programs, handling high-priority contracts, or managing IP assets. By setting these priorities, your new hire can focus their efforts on the areas that will bring the greatest value to the company. - Onboarding Your First In-House Lawyer
Integrating a legal professional into a tech-driven culture may require educating teams on the value of legal input. Set the tone for legal as a collaborative partner, not an obstacle, to ensure the lawyer can engage meaningfully across departments.
As you prepare to bring legal expertise in-house, finding the right fit for your team is key.
An in-house lawyer adds strategic value by providing proactive guidance and aligning with your company’s growth goals.
But for many tech companies hiring a lawyer for the first time, identifying the right candidate can be challenging.
At Found Legal, we specialise in helping tech companies hire their in-house lawyers, bringing deep expertise in matching tech businesses with legal talent that suits their unique needs.
Trusted by tech scale-ups and multinationals in the Fortune 100, we understand how to align legal skills with business objectives.
If you’re ready to explore your first in-house legal hire, we’d be delighted to help you find the perfect fit to support your journey ahead: reach out to our director Mila Read for an introductory chat.