Union Square Ventures 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. Find out more in our eBook: What the business actually wants from legal.

John Buttrick is a partner at Union Square Ventures (USV), joining the firm in 2010. He was previously a corporate lawyer at Davis Polk & Wardwell in New York and Paris. USV is a venture capital partnership that manages over $1 billion across seven funds. Its portfolio companies include Twitter, Kickstarter, Cloudflare, SoundCloud and Juro.

When might you encounter lawyers, in your role as an investor and board member?

I’m on the board of 12 companies in financial services and legal tech. I work with lawyers when we make investments, raise funds, or we have tax or regulatory issues; as a board member, GCs are sometimes on board committees, or have responsibilities to let the board know about certain things that might require board attention, but usually they don’t formally participate in the board.

Commonly they’d report to the CEO, CFO, chief administrative officer or COO.

[Lawyers] need to be entrepreneurial in character. And they’ll need to understand that in startups, there often aren’t the resources to make things perfect

When do you think a company should hire its first lawyer?

The primary driver that compels people to hire the first in-house lawyer, often, is the spend on outside counsel. As a matter of cost efficiency it often makes sense to bring someone in-house.

The other main driver is if the company is in a highly regulated industry – financial services, for example. Rather than relying on thirdparty advice all the time, it makes sense to bring someone inside the company.

They both really come down to spend as the key factor. In the early stages of the company, legal is just one more thing you outsource. Eventually the cost means that you bring it in-house.

What makes a good first lawyer at a small business?

They’ll need a roll-up-your-sleeves, can-do attitude. They’ll need to be entrepreneurial in character. And they’ll need to understand that in startups, there often aren’t the resources to make things perfect.

Being the grown-up in the room is a key responsibility they have. You’d usually find an in-house lawyer is either a senior associate looking to move in-house or a previous in-house counsel.

The choice between them will depend on what you need. The in-house lawyer is usually cheaper, but not always. Private practice lawyers usually have to be willing to take a pay cut to join a smaller company, in exchange for share options.

Sometimes a company will develop a relationship with an outside counsel and bring them in – that network hire is also one way that lawyers join these businesses.

Although lawyers have to be the person who says ‘no’, they have to find a way to be entrepreneurial too

What other characteristics and behaviours are valuable?

Good judgement is the one thing we haven’t talked about. A lot of legal issues can be judgement calls between legal and commercial – helping the company to navigate through grey areas between the commercial needs of the company and the applicable legal issues.

Being strong in that area is really important in order to be a good in-house lawyer. Although they have to be the person who says “no”, they have to find a way to be entrepreneurial too.

But you can have one and not the other – there are people who are entrepreneurial and have poor judgement, so it’s important to get the right mix of all those qualities.

What do you think are areas for improvement? Where lawyers could add more value?

Focus on efficiency. From my perspective, that’s about picking the right work to spend your day on and making sure you’re not wasting your time.

Being entrepreneurial is key to succeeding in the role of in-house lawyer at a high-growth company – if you’re not entrepreneurial then you’re not in the right place.

To get that right, you need to do your due diligence before taking the role. Have honest conversations between both sides during the interview process, so both the company and the candidate have the same expectations.

That’s true with all hires and it’s true for lawyers. Be honest with yourself and with the other side throughout to make that process easier

Find out more in our eBook: What the business actually wants from legal.