COOs, CFOs: How to Structure Legal Operations

If we’ve learned anything from the tech industry in 2016, it’s that growing companies need to carefully consider what departments to scale based on quantifiable metrics.

Midsize businesses face more complex legal issues as they surpass 50 employees. COOs and CFOs that have been overseeing legal need to spend their time and their companies’ money on projects that impact the bottom line as the company scales.

C-level executives who most successfully cut legal costs while maintaining quality use legal technology to cover basic business law needs like contract negotiation, employment, patent registrations and immigration. They still use their law firms for more complex matters like litigation and large M&A transactions, but they move away from using their big law firms for everything. They use legal tech and new technology like eShares and Zenefits to complement their big law firms.

Midsize companies have more financial resources than startups but also face more complex legal issues and regulations.

They look beyond the status quo and don’t pay Big Law rates for advice and day-to-day legal matters.

Small businesses and startups typically do the bare minimum, covering their legal needs as inexpensively as possible in order to devote more financial resources to business or software development and other initiatives that have a greater impact on the bottom line.

Giant companies, meanwhile, typically have robust in-house legal departments, as well as cadres of outside counsel, to handle the plethora of legal issues, both internal and external, that are unavoidable for companies of their size.

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Unique Challenges Midsize Companies Face

  1. Midsize companies can’t act immediately on every potential legal issue but have to know when to address the matter while its still manageable, before it snowballs.
  2. Their legal needs aren’t large enough to require an investment in an in-house legal department.
    They can’t risk using legal technology that produces low quality legal services.
  3. They can’t slow down to find, vet and onboard new attorneys.

An effective strategy for structuring legal operations requires a constant balancing of considerations. Midsize companies need to conserve both the management team’s time and the business’s money. They have more financial resources than startups but also face more complex legal issues and regulations. Midsize companies have to carefully balance efficacy against budget constraints.

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