In the early days of a startup, founders can often feel like circus performers, frantically juggling a dizzying array of responsibilities. From building the core product to hiring the first essential team members to driving those critical early sales, there are always too many balls in the air at once. With so many priorities competing for their attention, legal matters can seem like just another unwieldy object they need to keep aloft — one more risky toss they hope won't come crashing down.
Navigating contracts, intellectual property, corporate structuring and other complex legal questions are all table stakes to getting companies off the ground, yet the mere mention of them can still induce a sense of dread for even the most seasoned founder.
Do you really need an in-house legal expert when my team is only 50 people? Where can you even find a lawyer who’s familiar with Silicon Valley jargon? How do you uplevel your Head of Legal to General Counsel? These are the kinds of concerns that are top of mind depending on what stage you’re operating in, and ones that Irene Liu has been fielding from founders for well over a decade.
Liu is a longtime legal exec who got her chops steering legal teams at scaling tech companies. She served as the General Counsel for Checkr, working within the highly regulated world of background checks, before taking on dual titles as Chief Financial and Legal Officer at Hopin, helping the company navigate the legal complexities of expanding a team from 250 to 1100+ in just one year.
These days she works as an advisor and leadership coach to several startups and is the founder of Hypergrowth GC, a consultancy that partners with tech CEOs and their executive teams to help navigate AI and scale amid an increasingly regulated landscape. She’s passionate about fostering collaboration between the fast-moving founders of Silicon Valley and bridging that with the rigid worldview lawyers tend to have.
“For startup founders, the all-consuming drive to build the next big thing often clashes with the risk-averse nature of the legal world,” Liu says.
Lawyers are trained to minimize exposure and liabilities, while founders embrace risk as a fundamental part of the journey. This inherent tension can make legal matters feel like a nagging necessity — expensive, time-consuming, yet crucial for long-term success.
But beyond just a disconnect in philosophies, navigating the legal side of a company can be a real headache for founders — it's often a total mystery figuring out who to hire and when. But in this exclusive interview, Liu sheds some much-needed light here. After working closely with founders at every stage of the startup game, she's put together a thorough guide to help answer those squishy legal questions and clear up the biggest misconceptions about working with lawyers.
“Founders have been burned by law firms in the past, so I get their wariness to spend more time with legal. But you want your business to be done the right way, especially in highly regulated spaces. Having a trusted legal partner who knows your business in and out can be the key hire that makes or breaks your startup.”
Liu breaks it down into a simple three-part roadmap for founders to follow as their startup grows. She kicks things off by dishing out her best advice for pre-product-market fit founders. Then, for those mid-tier startups that have found their groove but haven't totally blown up yet, she lays out some solid recommendations for laying the right groundwork to bring on a full-time legal hire down the line.
With Liu's straightforward, founder-focused breakdown, taking those first steps into the legal world doesn't have to feel like wandering through a dense fog without a headlamp.
The 0 to 1 phase: Stick with outside counsel
The earliest days of a startup's life are some of the most exciting — you're deep in customer discovery mode, trying to validate if you've hit on a billion-dollar idea. There's nonstop brainstorming and it's a real adrenaline rush onboarding your first customer or shipping your MVP. But the pre-product phase is also chock-full of legal hurdles to clear.
Incorporating the company, setting up an equity plan, creating and patenting an IP, all of that work comes before a single person is hired, and it’s essential to do right.
“But at this stage, founders do not need to hire anyone in-house,” Liu says. Instead, she recommends focusing on finding outside counsel who can help as quickly as possible.
To do that, Liu strongly encourages founders not to farm out the work of finding a law firm. “I get founders coming to me all the time asking me to be their ‘legal translator’ as they are going through this process,” Liu says. “But everyone is capable of working directly with lawyers, even without any background in the law. Also, only founders hold the power to know when they feel understood, which is crucial to any relationship with a law partner.”
Here, she answers the most common questions from founders approaching this process:
How do I find the right law firm? What should I be looking for?
With a million and one other things on a founder’s plate, it can be tempting to start a lawyer search by firing up Google, thumbing through the digital pages, and blindly choosing a result. But founders can avoid hours and hours of misaligned calls by watching out for a few red flags that a lawyer will be a headache to work with later on.
It all starts with shopping around. “Consider talking to more than one firm or one partner before making a hire, especially if it’s an area where long-term relationships will be important,” Liu says. “Most partners and law firms will do at least one preliminary call for free before they put you on the clock and start charging by the hour. If the lawyer isn’t willing to jump on a prelim call for free, run and find another firm.” (Tapping into your investor network is also a great starting point to get an initial list of vetted names to set up calls with, says Liu.)
Once you’ve set up a few preliminary calls, it’s a good idea to familiarize yourself with some lawyer warning signals:
- Take notes on who is spending the most time with you. “A good business lawyer should be taking the time to listen to deeply understand you and your business — which means asking you questions,” Liu says. “If they are rushing you off the phone, or even worse — refusing to hop on a call at all, nix them.”
- Don’t walk away confused. “Contrary to popular belief, lawyers can and should be able to have a conversation with you about your business in plain English,” she says. “If you are leaving the initial call feeling confused or misunderstood, that’s not on you. That’s a red flag that this lawyer and firm isn’t going to communicate with you in the way you need. If that’s the case, then walk away and find another firm that can communicate clearly with you”
One more note to consider is that there might not be a one-size-fits-all firm that’s right for your startup at the earliest stage. “You will likely work with a corporate law firm to help you with your corporate paperwork, but you’ll also work with lawyers to create your first terms of service for users, customer agreements, privacy policies, and other relevant practices for your company,” she says. “There might be a full-service corporate firm that can support all of the above or you might need different firms depending on your needs.”
Okay, I think I’ve found a law firm that works for me. What can I do to ensure a smooth relationship?
It takes two to tango. Make sure you put a little bit of prep work into how you are going to explain the issues you are working through and the context of your business, which is not far off from a mini-pitch. “When you do find the law firm and partner you like, educate them about your business and the level of risk you’re willing to tolerate so they can create a recommendation customized for you. Most startup founders have high-risk tolerance and the outside counsel you work with should be just as aligned,” Liu says.
The most important quality founders should look for before partnering with any lawyer is a genuine grasp of your business needs and a willingness to approach problems with curiosity.
Duolingo for Legalese: Your cheat sheet for communicating with a law firm
Finding the right legal partner is only half the battle, according to Liu. A huge roadblock she sees founders stumble into is properly communicating with their lawyers. “Founders are often looking for straightforward guidance and open communication from their legal partners, which is generally not the experience they receive from law firms,” Liu laughs.
Legalese is no founder’s first language. So here are Liu’s best insider practices for how to speak directly with outside counsel (and as a bonus, can help save you time and money):
- Never ask for written memos from an external counsel unless you love reading long legal memos, Liu says, because law firm lawyers will spend a lot of time researching and writing the memo and you will be left with a large bill. “Try to jump on calls wherever possible because it will be far more efficient; you will be able to quickly ask any follow-up questions that you have. It will also cost less since it takes less time to answer a question by phone than by email.”
- If you need a memo or something in writing to digest the information better, ask for a one-page executive summary instead. “Outside counsels may offer too many options and recommendations,” Liu says. “Ask them to narrow it down to 2-3 viable, best options (that aligns with your risk levels) so that you can quickly solve the issue and move forward.”
- “If you’d like to ramp your counsel on the context of the issue before the call, you can consider sending an email with the facts or the issue at hand and say you’d like a call. But you should also clarify in that email that you’d like to discuss the issue on the call so please do not go out and do research beforehand. Otherwise, you might be billed before you even have a chance to discuss the issue on the phone.”
- If an outside counsel is not responsive or slow to reply, ask them to respond back to you quickly to at least say that they received your request and that they’ll get back to you by a certain timeline. “You should expect at least speed and responsiveness for the rate you’re paying.”
Founders have to be upfront on what they need from their lawyers which is: clear communication, no memos, picking up the phone and speaking in plain English.
If you’ve deployed all these tactics and still are finding yourself hitting a wall when you’re working directly with law firms, then there’s no reason you need to stick with them.
“A founder/lawyer relationship is like a romantic partnership. The right fit often comes down to chemistry and communication,” Liu says. “Too often I see people treat their outside counsel like a mediocre romantic relationship. Sometimes, founders end up sticking with someone just because they are comfortable and their lawyer is doing an okay job.”
If things aren’t clicking with a law firm, there’s no obligation to stick with them. Break up sooner than later.
What should my budget be?
At the forefront of any founder's mind is cost. How much should founders reasonably expect to spend in the early days? In true lawyerly fashion, Liu says of course the answer will depend on the nuances of the company and the market, but some ballpark figures are good to know.
"Law firms bill by the hour, so anticipate initial setup tasks like incorporation as an upfront cost. For example, it will likely take a few hours for incorporation, but privacy policy and terms of service could take longer," Liu says. "Or maybe you want employment contracts done as well, so tack on some more time too. Ultimately, make sure you understand the rates for partners and associates. Partner rates at large law firms typically can exceed $1K an hour. Some firms will provide fee deferral options with caps at around $10-25K until the startup receives their first round of financing or ~$1M raised, but know that this just means they'll collect at a later time."
"If budget is a real concern, you can utilize an online tool like Clerky to do your incorporation paperwork for you. Once you have more complex corporate needs, that's when you'll need to go to a law firm to get more customized advice." As for ongoing needs, you can work with your law firm to allocate a small monthly retainer based on your current stage and finances.
One of the easiest hacks Liu implores all her founders to ask for is a discount upfront. "Most law firms offer a 'friends and family' discount of at least 10-15%, so don't be shy to ask for this right away," she says. "You can also ask for a flat fee around specific projects, such as developing your terms of service, privacy policy, and employment agreements so that you can have better predictability around your legal expenses."
100-person mark: Start thinking about building out your in-house team
The dream for any venture-backed founder is to open up their dashboards and see hockey-stick growth for all their KPIs. And if that is the lucky reality for your company, the headcount ticker is likely to follow a similar up-and-to-the-right trajectory. At this stage, hiring for back office functions (like finance, HR and legal) will quickly become more top of mind.
Liu usually sees this transition happen when companies have anywhere from 50 to 100 team members. “This is the turning point where most companies start transitioning from scrappy startup to setting foundations for a much larger business,” Liu says. “You can also think of this as roughly Series C and beyond.”
But operating a company in this phase is like fumbling through the awkward hallways of middle school. You are going through a growth spurt, growing out of everything from the early days — outside counsel included. But you’re not quite ready for a full-blown General Counsel or robust legal team. There’s a third option here, Liu says. And that’s to consider more fractional help, such as hiring commercial contract counsel.
“I’ve seen plenty of founders and CFOs struggle to work with outside counsel when companies reach this new growth stage,” she says. “Outside counsel rarely understands their business to the degree founders want, and law firms by nature are far too conservative in their advice. The result is that founders get overwhelmed with too many options to solve their problems.”
It’s really common around this mark for founders to believe their outside counsel is underperforming when in reality, their company’s needs have simply evolved beyond what outside help can provide.
Liu says you can think of this hire as hiring an IC product manager instead of a Chief Product Officer. “These are typically more junior attorneys with about five to seven years of experience and their sole job is to work on contracts,” she says. Their status is also generally flexible. Commercial contract lawyers can be brought on full-time and dedicated to just contracts, or you can potentially find fractional help and affordable outside commercial lawyers for about $250 an hour.
And just like hiring any mid-career level hire, this person has the potential to rise through the ranks and grow into your VP or Head of Legal one day. “Trialing them as commercial counsel is an excellent way to incubate a lawyer to startup life, all while staying cost-efficient.”
In Liu’s experience, there’s a pretty good chance that the majority of legal needs for a startup of this size will revolve around drawing up sales contracts. “Revenue will be the highest priority for a business at this size,” Liu says. “So the less friction you can put on the sales process, particularly with your agreements, the better. It’s better for your top line to bring on a dedicated lawyer who can fine-tune terms of service, master services agreement and commercial playbooks for your sales teams that allow your customers to sign the deal faster.”
If your company is in a highly-regulated space, such as fintech, health tech, or cryptocurrency, or if contracts aren’t the only legal area you are looking for guidance on, Liu says there’s nothing wrong with investing in-house earlier on. Liu’s last tidbit of advice for founders in this phase to consider is a bit of an upfront investment early on in an ops system. “Two fundamental systems that you want to put into place early on are a legal billing system to track all the law firm bills and a contract management system to track sales and vendor contracts,” Liu says. While investing in this upfront is not cheap, staying organized and on top of both of these processes will save you money in the long run.”
It’s around this stage too, where there should be a compelling enough reason to get any founder to think twice about fractional or outside legal counsel: saving money on the exorbitant legal fees.
“Any company I’ve gone into, the legal bills are always incredibly high,” Liu says. “Bringing someone in-house could end up saving you thousands in legal fees, and the right person can do the work in-house or bring more boutique, cost-effective legal solutions.”
Without any oversight on the inside, many companies end up getting over-charged, with founders assuming that’s just the cost of doing business.
When building the function from scratch, you will likely want to hire someone as senior as possible who still has room to grow, Liu says. This will be a Head of Legal — VP or Director level.
“What you are looking for at this stage is someone who has about 8-10+ years of experience, but may not have the breadth and depth of a General Counsel or a Chief Legal Officer,” Liu says. “With the right training and support, hopefully, this hire will grow into your most senior legal leader.”
Interviewing for world-class legal talent
Even at this high-growth stage of startup life, every single hire is still formative for your company. Legal is no different. “The first group of lawyers will set the tone and culture for your legal department later down the line, so look for approachability, high EQ, and strong communication skills since they will need to build relationships within the business.”
To sniff out these sought-after skills, Liu gathered a few of the trusted interview questions she’s collected over the years that have ensured she’s hired some truly business-friendly lawyers. Here are a few of her favorites:
Describe a time when you had to provide legal guidance in a gray area to your business stakeholder. How did you advise the business when they stepped into a high-risk area?
Startups routinely find themselves in some sticky situations, legally speaking. Whether it’s hiring remote workers as contractors, or laying off employees in industries where there are strong workers' rights, you want to know how your lawyer would help solve these situations, while keeping in mind business needs, like growth and budget.
🚫 Red flags: Someone who immediately jumps to identify all the risks while failing to understand the business goals. They can’t think beyond the box to try to find solutions to help you navigate the gray area, or it’s clear they’re too conservative and just focused on blockers.
✅ Green flags: Candidates should at least touch on the fact that in-house counsels shouldn’t block a deal unless something is criminal or illegal. Otherwise, it’s just a question of whether the business will accept the risk. So listen for a candidate who poses smart follow-up questions around this scenario like:
- What is the business trying to achieve with this project?
- What is the success metric and the north star?
- Is there any flexibility around those goals? I’m asking because it will give me the context around the project and will help me identify solutions to the risks associated with the project.
Digging in a little deeper isn’t a bad thing, it means you found someone interested in partnering with the business to find a solution, even if it’s a little murky.
Can you share some examples of how you've been able to stretch existing resources to support the company's growth? What strategies or approaches have you taken to enable the legal team to keep pace with the evolving needs of the business?
One of the biggest challenges for a startup is finding ways to operate efficiently while also scaling rapidly to meet business demands. You are screening for an in-house counsel who will scale and build your legal team and its operations cost-effectively.
🚫 Red flags: Someone who only scales the legal team through headcount or law firm resources, where the costs can add up quickly.
✅Green flags: Someone who can build a legal ops team in a resourceful way. Maybe they suggest creating internal wikis, templates, and knowledge bases to empower their teams. Maybe they offer to provide employee training or suggest a way to build a process that expedites the legal review of repeatable contracts. A great candidate will lean on tools to get things done faster and demonstrate a knack for long-term planning.
What strategies do you employ to stay aligned with leadership to ensure a successful partnership?
🚫 Red flags: Someone who only connects with the business as needed. What you are screening for here is an in-house counsel who regularly communicates with the business clearly and succinctly.
✅ Green flags: Someone who listens for cross-functional collaboration and regular meetings and 1-1s with business stakeholder to stay aligned with their current and future business objectives. Their communication skills should also be strong, both written and verbal. When writing, they can get their point across succinctly in bullet points, and not a full-page memo.
Tell me about a time you took on something significant outside of your area of responsibility. Why was it important? What was the outcome?
🚫 Red flags: Someone who stays in their legal lane and helps only in areas assigned to them — especially at a startup, where everyone is expected to wear multiple hats. If they’re struggling to recall an instance here or insist they remain siloed in legal work, alarm bells should be ringing.
✅ Green flags:: While startup experience isn’t a requirement, you’re looking for a candidate who brings that scrappier mindset — someone who can proactively look around the corner for where the business needs support and rolls up their sleeves outside of their legal area of responsibility. This may involve proactively helping the sales enablement team with the creation of their RFP library, building out trainings to understand all the privacy laws impacting marketing, or supporting security audits in partnership with the security team.
Lawyers by nature do things by the book and will inherently slow you down and may make you follow steps that aren’t necessary. But startups are counterintuitive to this, they have to move fast and break things. They need an in-house legal business partner aligned with them that will understand the founder mindset.
Late-stage through IPO: Time for an in-house GC
As soon as companies reach later stages of fundraising (Series C, D and beyond), the tangled web starts to grow. More complex contracts, new financing rounds, M&A opportunities, international expansion, and IPO readiness will all start to swirl around the company’s top priority list. That means a commercial contract lawyer or a Head of Legal will no longer cut it. “At this stage, companies are ready for a General Counsel or a Chief Legal Officer,” Liu says.
GCs typically have deeper corporate and board, risk management, legal strategy, and team management skills than VPs of legal, says Liu. The best ones also have the experience and the broad expertise to spot issues throughout the company and are equipped with leadership skills to take a late-stage company through IPO and beyond.
But the lesser-known use-case for having an all-star GC on your executive team is leaning on them as a strategic business partner. Liu shares two unexpected superpowers your top in-house lawyer holds:
- They can help close deals faster. “When I was at Hopin, I helped close six M&A deals and two financing rounds in just one year,” Liu says. “All of these deals were massive growth opportunities for us.” Because General Counsels often oversee the entire lifecycle of a strategic transaction like M&A and financings, they can be a thoughtful business partner to the founder and CEO to help them understand the deal terms.
- They can be a trustworthy face to talk to customers. “Especially for regulated spaces or when selling to enterprise customers, GCs can speak directly to customers about compliance and other product concerns they may be having. It’s an excellent way to get more deals done faster.”
To help CEOs familiarize themselves with more of what a GC (and their legal team) can do for a company, Liu references just a few of the projects she and her team implemented in her roles at Hopin and Checkr:
- Create FAQs to answer questions from key functional stakeholders, including marketing, sales, and people teams.
- For customer agreements, build or revamp agreements to reduce redlines and speed up the sales machine.
- Write cover letters, customer FAQs, and email templates for sales teams so they can communicate directly to potential customers without waiting on legal.
- Conduct regular onboarding training of employees and functional teams (such as marketing and HR) to empower them with your agreements and process.
- Create a legal Slack or another quick communication channel so lawyers can easily be reached by the team.
If an IPO is near…
“If your GC or VP of Legal is currently reporting to someone other than a CEO, make sure you change the reporting structure ASAP so they report directly to the CEO because you will want a trusted advisor on your side without any conflicts in a highly visible public company,” Liu says. (She points skeptical founders toward this cautionary tale from “The Hard Thing About Hard Things.”).
“Giving a GC or Chief Legal Officer a seat at the table in executive leadership meetings is more than a gesture, you will need them to be in tune with the business at all times, during both the good and the bad, to help the company more quickly.”
Wrapping Up: How CEOs can better partner with their legal execs
A chain is only as strong as its weakest link, and the age-old advice certainly applies to CEOs and their legal partnerships too. A founder CEO knows that keeping their Chief Product Officer or VP of Revenue out of the loop would be hugely detrimental to the growth of the business. But when it comes to the legal side, GCs are often put on a need-to-know basis. They only get brought in when there's a crisis or thorny problem to disentangle. But this is the exact wrong approach, and a surefire way to guarantee your in-house counsel is less helpful to you and your business.
With a little fine-tuning on a CEO's part, a lasting and trusting relationship is absolutely possible. Liu lists some concrete tactics that CEOs can use to promote this kind of trusting relationship:
- Hold regular 1:1s with your GC as you would with any other executive on your team to discuss business goals, priorities and projects. To ensure even more alignment between you and your GC, make sure to include them in your regular executive meetings, particularly for corporate governance purposes.
- Discuss and calibrate the level of risk you are willing to accept for the business. This will help your GC make decisions and develop processes based on your risk level for business.
- Foster cross-functional 1:1s and communications between the GC and other C-levels and functional teams so that the GC (and their team) can quickly align and learn the company’s business, technology, and history to identify what the most pressing issues are and what changes ought to be considered.
- Give the legal team access to the GTM team so they can build empathy for the function and nurture a better partnership with the sales team. In the same spirit, allow the legal team to train new employees as part of onboarding, particularly for new sales team members and if your business requires certain compliance trainings.
- Set a budget that will allow GCs to get outside help when necessary. “Not all lawyers are experts in every area of the law,” Liu says. “Typically, GCs are generalists who can spot any topic at hand and ask the right questions. But when dealing with nuanced cases or international jurisdictions, they’ll need to leverage external counsel. and build out their legal operations to support the business.”
“A good General Counsel can be a game-changing resource for CEOs, but many just don’t have a solid understanding of what would make a partnership great,” Liu says. “To be a successful and trusted business partner, GCs should be focused on propelling the business forward, and not just on mitigating risk,” Liu says. “But in order to do that, they need to understand the business metrics and the biggest revenue drivers.”
The two biggest olive branches a CEO can extend to working with any General Counsel are transparency and communication. Loop in your legal team, and make a conscious effort not to block them out. You’ll end up with a strategic business partner in your corner and faster growth for your company.
Those founders who can crack this code and find the right partner who can meld world-class legal expertise with an unwavering commitment to business growth will be extraordinarily well-positioned to leave an indelible mark on their industry. The future belongs to the startups that reimagine "legal" not as a roadblock, but as a catalyst for scale.