What scaleup General Counsels are really up against

Hiring, IP, compliance, and how legal is becoming a pressure point for global scaleups.

We’ll be diving into the war stories from the frontline of hiring, IT compliance and what can go wrong when scaling... inspired by Emerald Technology’s breakout session at Scaleup GC 2025. 

Legal leads and founders came together for a no-filter, fully interactive session. The title? Confessions from the Frontline: Scaling Sins and Hiring Hell. We promised war stories and we delivered. 

From funding rounds collapsing to contractors paid out of cash machines across borders (yes, really), the session explored what can go wrong when global hiring and legal structures aren’t handled properly from day one.

Here’s what we covered: 

Horror Story #1: WhatsApp shareholder agreements and vanishing IP

Tom Bohills, Founder and Principal at Founders Law, kicked off with a confessional classic: two co-founders building a company without a formal shareholders' agreement -  just a series of WhatsApp messages outlining who owned what.

When things got serious (read: funding round), those messages didn’t cut it. Disputes over equity, roles, and responsibilities spiralled. The result? Delayed deals, eroded trust, and a major investor walking away.

Takeaway: If you’re building a business with someone, formalise it. Early. Investors won’t wait for you to play catch-up.

Horror Story #2: The lost IP that cost everything

In another case, Tom shared the story of a client who learned, too late, that their core intellectual property was legally owned by a contractor, not the company. It only came to light during due diligence.

The contractor demanded £500K to assign it back. The company didn’t have the cash. The deal fell through. The company folded.

Takeaway: No matter how early stage you are, sort your IP assignment and get formal agreements in place. If you’re hiring via a contractor or EOR model, check the local laws – not all jurisdictions automatically assign IP to the company.

Horror Story #3: Contractors, cash withdrawals, and compliance chaos

Next, Adam DeSanges, Company Director at Emerald Technology, shared a real-life horror story from a cybersecurity scaleup: 400+ global headcount, $300M in funding, and a team of full-time "contractors" in Mexico... paid in USD via cashpoint withdrawals in the US.

Legally? A disaster.

Misclassification, currency violations, cross-border tax risk. It all came to a head during Series B diligence, and the company was forced to convert, fast.

Audience interaction: Who takes responsibility when this happens? Legal or HR?

Adam’s answer: Ultimately, both. But in the absence of a mature HR function, the legal team becomes the default gatekeeper. That means understanding employment classification rules, compliance risk, and permanent establishment exposure, even if you didn’t sign off on the hiring.

Horror Story #4: Hidden clauses and cross-cultural curveballs

Our final panelist, Adam Philpott, CEO at Fingerprint Cards, shared a lesser-known but all-too-common horror story: navigating M&A processes where last-minute contract clauses get added without oversight. These hidden terms can derail deals or create downstream legal issues and they often slip through when timelines are tight and teams are spread thin.

Adam also flagged the growing importance of cultural fluency in cross-border negotiations. What feels like a minor ask in one market might be a deal-breaker in another. For GCs, that means developing not just legal expertise, but international awareness.

Takeaway: During any high-stakes negotiation, especially across borders, build in more time for review, and assume nothing. When in doubt, pressure-test contracts with your external counsel before signing anything binding. 

Hiring in new markets: what GCs need to know

The panel also turned to the real-world legal implications of international hiring and how quickly things can go wrong without structure.

• C-level hires on contractor agreements? Red flag.
• Granting options to EOR employees? Often non-compliant.
• Working with investors who suddenly want to see everything re-papered? Nightmare.

…The GC often ends up cleaning up the mess.

Emerald’s tip: You’ve got three real options when expanding:

1. Set up a legal entity (slow and expensive)
2. Use an Employer of Record (EOR) to onboard compliantly, fast
3. Or pull out altogether

The earlier you choose the right route, the fewer the surprises when diligence or funding pressure hits.

What is the GC’s role when there's no HR?

On the day, the panel  dug into the blurred lines between legal and HR in startups. They concluded, when you're expanding into new regions and your team is still lean, legal ends up owning:

• Employment contracts
• Local labour law navigation
• Data protection and onboarding risk
• Termination and benefits policy

Tom’s take: The GC should push back. But also, be ready to guide the business through risk exposure in new markets.

Audience advice: Build internal checklists, bring in trusted partners early and don't underestimate the chaos that comes from scaling without structure.

But this isn't just therapy

The panel may have joked about the breakout being "The Therapy Crouch" for legal leaders, but the insights were real.

From poor classification to ghost IP, every single story showed how the GC's role is evolving: from cautious advisor to strategic operator.

The good news? You don't have to do it alone.

Whether it's managing employment risk, structuring compliant international teams, or avoiding the next funding round faceplant, Emerald and Founders Law are here to help.

Because nobody wants their horror story to be next.

Want to avoid legal and hiring disasters?

Connect with the teams at Emerald Technology and Founders Law to future-proof your scaleup.