Legal Advisors for Startups: What to Put in Place With Outside Legal Support Before Hiring In-House

Hello, I'm Noriaki Asato, Representative Attorney at LegalAgent.

As a business grows, there comes a point when it considers hiring an in-house attorney or dedicated legal staff. This is because requests from business departments for contract reviews increase, and the legal areas that need to be handled, such as fundraising, amendments to terms of service, and intellectual property management, expand.

However, legal work does not naturally get on track merely by hiring someone. If, before hiring, you work with an outside legal advisor to decide how consultations will be received and the review standards, and also agree on how important documents will be stored and how roles will be divided, you may be able to reduce the burden on the person who joins of having to research the history of past decisions from scratch. LegalAgent's startup legal advisory service provides support suited to each growth stage, covering not only routine contract reviews but also fundraising, terms of service, and labor management.

Organizing the Point of Contact for Legal Consultations

The first thing to put in place is a mechanism for receiving legal consultations. If it remains vague who consults on what kind of matter and at what stage, it will be difficult to prioritize work even after dedicated staff join.

Set a request form for contract reviews and a procedure for handling urgent matters. If you also decide the transaction background to be filled in by business departments and the points of contact for consultations on fundraising and the board of directors, it becomes easier for the person receiving a request to understand the circumstances.

It is entirely possible to operate request forms and review checklists from the stage at which you are using outside attorneys. By putting the entry point in order before hiring, the work can be handed over on the basis of existing procedures even after dedicated staff join.

Accumulating Standards for Contract Review

A particularly beneficial preparation before hiring is to put the company's internal standards for contract review into writing. For frequently occurring contract types, such as non-disclosure agreements and service agreements, set out clearly the clauses on which the company will not compromise and the acceptable ranges.

Typical items for consideration include setting a cap on damages, clauses on the ownership of intellectual property, and the period during which confidentiality obligations remain in effect. If you organize the advice and reasons for revisions previously provided by outside attorneys and compile the company's basic stance, it becomes easier for the person who takes up the post to understand the company's policies. If past revision histories remain scattered across chat tools and individual mailboxes, it will take time for a successor to research the past background before understanding the company's tolerance for legal risk.

Consolidating Important Documents Into a Data Room

In putting the internal legal structure in order, gather the basic important documents together. In addition to the articles of incorporation and the certificate of registered matters from the commercial register, also check the shareholder register and the minutes of shareholders' meetings. The materials covered are those whose disclosure is requested in legal due diligence for fundraising or M&A.

If these documents are classified and stored in data room format in ordinary times, they can be used as they are not only for a new staff member to understand the situation but also for investor relations and future audits. Do not stop at simply creating a new shared folder; also set rules on where the latest versions are located, which staff have authority to update them, and who may view them.

Dividing Roles With Outside Attorneys

Even after hiring dedicated legal staff, there is no need to keep every area within internal personnel alone. If you decide the scope of work to be handled in-house and the areas to be entrusted to outside attorneys, it becomes less confusing whom to consult. A realistic approach is for internal staff to take on routine contract reviews and questions from business departments, while matters requiring advanced expertise, such as fundraising, reorganizations, and litigation, are handled in cooperation with outside attorneys.

If you build a collaborative structure with outside attorneys before hiring, it becomes easier to hand over work even after the staff member joins. I think it is desirable to maintain an environment in which past consultation histories and contract policies can be shared.

Designing a Legal Structure That Uses Generative AI

Companies that are about to set up a legal structure can also try designing their work on the premise of using generative AI from the outset. One example is an operation in which routine groundwork, such as summarizing contracts, initial issue spotting, and searching past cases, is left to AI, while humans make the final legal judgments.

However, if AI is introduced while the request point of contact and review standards remain vague, a state may persist in which no one knows who checks what. Decide the procedure by which people check the AI's output and make judgments in light of the company's situation.

At LegalAgent, we support companies that have not yet hired in putting in place how legal requests are received and the review standards. I believe that putting consultation histories and the storage of materials in order before hiring makes it easier for the staff member who joins to get on with daily work.