Eight Roads on how legal can enable investors

In this series of interviews with legal's key internal clients, we learn all about what effective collaboration looks like, what 'excellent' looks like, and what ultimately they want from their legal colleagues. Read the whole collection here: Enabling The Business

Alston Zecha is a Partner at Eight Roads. Eight Roads is the global venture capital firm behind businesses like Alibaba, Cazoo, Hibob, Made.com and Juro. Alston was previously co-founder of mobile payments company SumUp and has been an investor, operator and advisor in the tech industry for nearly 20 years.

What’s your experience working with lawyers?

In-house lawyers add tremendous value to the development of the organization; they can think of questions that help business scale naturally.

I’ve also worked with lawyers who aren’t sufficiently commercial or appropriately flexible for the needs of the scaleup environment.

When is the right time for a startup to hire its first lawyer?

It’s more an art form than an exact science. The typical rule of thumb is to hire a lawyer when your legal costs are one and a half to two times the cost of potentially bringing that work in-house.

This often corresponds with companies that have between 75 and 150 employees, or are between $5-10 million in ARR.

What makes a good first lawyer for a scaleup?

The basic criteria on paper is clear: time spent at a well-regarded law firm, in a practice area that requires relevant knowledge for a scaleup environment. In-house experience is always a plus.

Most importantly, lawyers need the right attitude and energy to work in a dynamic scaleup.

This means:

• Being sufficiently or appropriately commercial
• Being flexible
• Understanding where the company is on its maturity journey
• Having a strong level of emotional intelligence to appreciate the adolescent, constantly changing nature of a scaleup business

Lawyers need to be able to figure out the processes they need to codify, and what they can leave as is until the business matures

Having that approach can be challenging for lawyers moving in-house - how can they get started?

I would definitely recommend getting some level of in-house experience before you join a scaleup.

Once in the role, being engaged within a community can be really valuable - having that opportunity to network and talk to others in your field is what the startup and scaleup experience is about.

Don’t try to reinvent the wheel; even though you may be sole counsel, and the role itself can be isolating, there are so many in-house lawyers out there who have faced many of these scaleup challenges themselves.

Finding a good cohort of people to share thoughts with both internally and externally through a wider networking community can really help.

Being an in-house lawyer is hard enough. Don’t do it alone - join our private community of in-house lawyers at scaling businesses for exclusive content, peer-to-peer networking, the hottest jobs, and events with the brightest minds in legal.

What soft skills are valuable for in-house legal teams?

A 10x mindset is necessary in a scaleup environment - in-house lawyers need to be able to figure out the processes they need to codify, and what they can leave as is until the business matures.

Thinking about process and systematization doesn’t come naturally to some lawyers, but you need to have an appreciation and understanding of the value something like legal operations can bring to your function.

You also need to create the right degree of legal ops capability for the size and stage of the company; looking at where the business is today, and where it needs to get to in the next year or two.

This strategic collaborative mindset is only growing in importance; getting the right people, processes and systems in place is essential

What do you want from the lawyer during an investment round - what does good look like?

Sometimes the smoothest interactions are the ones where we don’t engage too much with the business’ legal team, and we can throw most of the work over the wall to our legal advisors.

In those situations, it’s clear that the in-house legal team already knows what they need to get ready in terms of the legal due diligence, documents, questions, and questionnaire.

Legal doesn’t need to have all the answers - that responsibility falls with the advisors - but instead they need to be a reasonable voice to advise the founders or CEO and to help all parties create a win-win.

Remember, this is not about scoring points in a one-off funding round negotiation, but to create a successful longterm partnership between the company and its investors.

Even looking at contract negotiations, the smoothest comms are those where we don’t see the legal counsel - it’s clear that they are handling everything in a sensible way, in the background.

It helps us steer clear of big conversations, all-hands meetings, and so on, which take up a lot of time and can get expensive.

Legal needs to be there, as a strategic function, but they perform at their best when they’re empowering the rest of the organization and enabling the front lines.

What could lawyers do to add more value?

Lawyers need to create strong processes that are suitable for the company’s size and stage. It’s implied in the word ‘scaleup’ - the company is trying to scale every aspect of its business. It’s trying to mature and establish really strong processes, usually for high growth.

Lawyers who come from a more institutional background don’t necessarily appreciate the value of legal operations - but in-house, you need to be much more conscious about the business processes you need to devise.

This strategic collaborative mindset is only growing in importance; getting the right people, processes and systems in place is essential, and can really emphasize the value of the business - and its legal team - to prospective investors.

Enjoyed this interview? Read 'What the business wants from legal in 2023' in full to hear from other C-suite leaders on how they interact with legal.