The 2019 Tech GC survey: key findings

What are the biggest priorities for legal teams at high-growth tech companies? We surveyed 30 legal leaders at technology companies to find out about scaling legal process, tech adoption, and more. 

This is an extract from the 2019 tech GC survey. Introduced by Daniel Glazer, managing partner of WSGR, the report takes a deep dive into the most pressing concerns for tech GCs.

The legal leaders at high-growth technology companies were a fascinating cohort to survey. The key driver for every department and function at these companies is growth. Nothing is more important; nothing else takes precedence, so of course ‘scaling legal process’ was overwhelmingly the top concern for the tech GCs we surveyed. The revenue growth that’s a precondition of the continued existence of a high-growth tech company can only be built on robust processes, so it’s mission-critical to create legal infrastructure that will scale.

As if that’s not hard enough, tech GCs also need to lead expectant founders through all manner of minefields - due diligence, funding rounds, even IPOs. Doing this in a way that enables growth, rather than distracting from it, is no mean feat. These companies are often disrupting centuries-old industries, confronting legislation head-on, and scaling their legal workflows at a pace that would make most lawyers wince. This is not a job for the faint of heart - but as this survey shows, the tech GCs are up for the challenge.

Scaling legal process

Scaling legal process was the clear winner when it came to priorities for tech GCs, with around half our respondents identifying it as their biggest focus. This is hardly a surprise from a cohort at companies who focus so heavily on growth: as revenue and headcount scale, the legal processes that make all of that happen have to scale too.

But scaling legal process can mean different things to different tech companies. There are some commonalities: volumes of NDAs, sales agreements and employment contracts are going to increase, and need to be managed through to signature quickly in order to capture revenue and talent. However, for some companies, scaling legal process means frictionless cross-border legal services; for others, managing IP at scale.

One reason why legal processes that can scale are overwhelmingly important to get right in high-growth companies is that ultimately, a process that can’t take the strain is a risk nightmare waiting to happen. Whether that’s contracts going missing leading to missed deadlines and financial loss, or unmet regulatory requirements leading to a fine or lawsuit, lawyers need to be sure that their processes are robust enough to handle a future with 50x the revenue, but only 3x the total legal headcount.

Another reason is that when key events arise, like a fundraising round or an IPO, a worst-case scenario is that the company is blocked from moving as decisively as it might want to by legal processes that didn’t scale properly. This can lead to expensive outside counsel being retained to crawl through documents and unearth proper audit trails.

Lawyer morale

Aside from the company’s health, lawyers’ own wellbeing and job satisfaction will feel the pain if legal processes don’t scale. If a Magic Circle associate leaves a well-paid role in private practice to join an exciting tech company, only to find that they spend their days and nights crawling through low-value PDF contracts and shuffling emails around, they’re unlikely to stick around too long before looking for a new challenge.

The final thing to consider is the impact of creating legal processes - any legal processes - that don’t scale, and then attempting to change them later. One reason why tech GCs as a group are one of the industry’s leading indicators, in terms of behaviour, is that they typically have fewer legacy processes to unpick, and more of a blank slate when it comes to creating better workflows. However, if an in-house counsel ignores a problem early on when there are 70 employees, that minor issue is going to be exponentially harder to fix when employee 1000 is signing on the dotted line.

It’s for all these reasons that legal operations has seen such growth as a discipline. Borne out of west-coast tech companies, legal operations recognizes that if legal as a function is to keep pace with the dynamic teams alongside which it sits, getting process right is pretty much non-negotiable.

Tooling and technology

Tooling and technology can transform how legal teams operate. GCs of tech companies are well aware of just how transformative it can be: their businesses are thriving, clients are engaged and tech is driving aggressive revenue growth. However, it can be a different story where internal adoption is concerned. While tech GCs are typically earlier adopters than some other in-house groups, there’s still often a resistance to change, even when that change is known to be beneficial.

This is inevitable - there are always individuals reluctant to adopt new routines and move out of their comfort zone. Lawyers are trained to be risk-averse, and unproven technology can be uncomfortable to adopt. But this can slow teams down and cause friction between colleagues and business units. And if solutions are procured but not adopted, that means no value and likely reputational damage for the legal team.

The best way to overcome this is by listening and empathizing with your colleagues. Their reasoning behind the reluctance could be valid, due to previous failed deployments, or a lack of understanding of what the tool does and why. Demonstrating a willingness to listen will at least make sure conversations begin on the right foot, and nailing down the people and process before looking at technology is always critical.

Not a panacea

If you do decide to upgrade your tooling and technology, then removing ‘plan B’ options that allow colleagues to fall back on old routines is also an effective way to achieve adoption. Integrating new solutions with existing systems of record is also useful. It’s important that new technology doesn’t obstruct people in any way from carrying out their tasks - technology is not a panacea, and is a means to an end, rather than an end in itself.

The onboarding process should be well-organised and executed, with clear success metrics, deadlines, and a detailed plan. It’s important to account for slow adopters, as well as challenges you may face along the way. A phased rollout, with plenty of vendor support, will not only allow your team to ease into a new routine, but will ultimately benefit the processes and workflows that relied previously on manual input.

If you’re an in-house lawyer looking to scale legal processes, Juro has curated a selection of the best legal software available - dedicated towards improving contract management, flexible resourcing, spend and matter management, contract review, eSigning, and more. Check it out and let us know if you’d like to find out more about the best technology for in-house legal teams.

Revenue growth

In an environment where billion-dollar valuations and eye-watering funding rounds seem to be growing more and more common, it’s no surprise that 78% of respondents identified revenue growth as their company’s biggest challenge. 65% gave it the top spot.

According to CBInsights, only 1% of venture-backed startup companies reach ‘unicorn’ status (a valuation of $1bn) and 67% of companies end up dead before their second funding round. Change management is a concern even for relatively young high-growth tech companies. Managing the transition from the grow-at-all-costs startup days to operating as a mature company with a positive culture is far from easy. 

Adding value to the business

Every in-house lawyer should be looking to add value to the business. It’s a well-worn truism that the best in-house counsel aim to be strategic partners to the business, rather than reactive gatekeepers and blockers. But how does that square with the unique pressure inside a high-growth tech company?

Ensuring that the tasks within your legal team have a positive impact on the company as a whole is important. Legal can add value to a business by, for example, proactively identifying risks that can significantly affect revenue or cost. Similarly, legal can add value to the business by helping other teams - collaborating with commercial colleagues to close contracts faster and self-serve NDAs, or helping HR teams to deliver a frictionless employment contract process for new employees. From a GC’s perspective, attempting to actually achieve this can be a headache.

Embracing self-promotion

Automating workflows and processes early on using the right tools can free up legal’s team to focus on what really matters. Aligning legal’s KPIs with those of the business and its senior leadership also tends to drive behaviours that will ensure value-add tasks are prioritized.

Often the judgement of the wider business as to whether legal is really adding value comes down to communication. Making sure that colleagues actually hear about legal’s work is a first step, and lawyers aren’t always natural salespeople, comfortable with self-promotion. But high-growth tech companies do offer opportunities for the legal function to share its successes and insights: whether that’s presenting on new regulations in the all-hands, or setting up #legal Slack channels to offer advice and self-serve documents.

This behavioural shift can reinforce the value lawyers add to the business and reshape the wider perception of legal teams. This can not only improve relationships with other departments, but also boost morale within the legal team, making retention and hiring that bit easier. If you’re looking to expand your high-growth legal team through hiring, we wrote a guide that explores the roles you need and how to hire them. 

This is an extract from the 2019 tech GC survey. Introduced by Daniel Glazer, managing partner of WSGR, the report takes a deep dive into the most pressing concerns for tech GCs.