From Startup Through IPO: Insights on the General Counsel’s Journey of Transformation

As a company moves through its lifecycle from startup, to more mature private company, to a company preparing to go public, to an established public company, the role of the General Counsel has to change as well – from building and managing and setting expectations for a team, developing relationships with management and the board, and even the GC’s own development from a transactional, function-specific role to a more strategic advisor. While in the startup phase, General Counsel may find themselves filling a more functional, transactional role, but as the company grows, the GC must adapt to the changing needs of the business and transition into an executive leader and business partner.

In the GC Advantage^SM webinar, “From Startup Through IPO: The General Counsel’s Journey of Transformation,” Lora Blum, former Chief Legal Officer and Secretary of Momentive.ai, Gary Spiegel, former Senior Vice President and General Counsel of Anaplan, and Sharon Zezima, former Senior Vice President, Corporate/Business Development, and General Counsel of GoPro, joined me for a conversation regarding the General Counsel’s transformation as a company grows and matures. This article is a summary of our discussion.

Evolve the View of the Legal Function and GC Role

Legal teams and General Counsel with strong business knowledge are well-equipped to adapt to the company’s needs as it matures. The GC’s duties expand as there are gaps in the organization where legal work is needed to continue to move the company toward its strategic goals. By educating the executive team and personnel, the GC can evolve the view of the legal function and the GC role. Lora gave the example of how management initially tasked her with handling privacy and GDPR. She had to coach the company about why these changes were taking place, which in turn helped her expand the reach of the legal team.

As a company matures, the legal team can become more of a partner to the business. One way to move the legal team to the fore is by successfully taking some functions in-house. General Counsel can also maintain and share a presentation to answer colleagues’ questions about the legal department’s operations and how the team partners with the business. In addition, an IPO serves as a valuable publicity opportunity for the legal team. Lora shared how an IPO helped her colleagues understand how legal supported the organization, serving as another opportunity to educate others about the legal team’s services.

Advance the GC Role

Changes in the size of the company, the size of the legal team, and the transition to being strategic all require the General Counsel to grow in the role. Rely on previous experience and knowledge to evolve the GC role and learn to be a leader by:

• Using the IPO as an opportunity to grow. The IPO experience encourages individuals to think more broadly about how the legal team fits into the organization’s goals beyond traditional legal concerns. A first IPO experience also presents an opportunity to develop tools for the GC role by building confidence and demonstrating the ability to manage in uncertain times.
• Progressing from being functional to being strategic. As the business increases in complexity, the GC supports decision-makers and ensures decisions align with the company’s strategic objectives. Therefore, General Counsel must transition from serving a functional role to being an executive leader who helps run the company. Use the experience of providing support to others to get a holistic view of the company and what is happening. Find ways to be more strategic, and use influence to speak up, when necessary, even outside the legal lane.
• Getting comfortable being uncomfortable. There will always be ambiguity; let go of worrying about it. By becoming more aware of the company’s needs, concentrate on taking advantage of opportunities to function in areas where there is no correct answer and use those situations to practice being a strategic advisor. Find tools—the company’s cultural strength, financial position, or reputation—and leverage each one for its strength. Moreover, know it is possible to find answers, especially by understanding the company well. Over time, confidence will grow, and the unknown will be less daunting.

Develop the Relationship with the Board

A growing, evolving company requires a board with the ability to transition to meet the company’s needs. Directors also change as the company matures and needs individuals to take on the high-stakes role of public company directors. To develop a relationship with the board:

• Build credibility early on. As more complicated concerns arise, the board already knows they are receiving the best advice through the most effective communication provided. Keep information about legal issues concise and focus on the issues that truly matter so the board understands which ones are critical.
• Cement the relationship with the board before going public. The IPO process brings the General Counsel closer to the board, which can help the development of the relationship. Use the IPO readiness process to learn where support is needed, train the board on working with a GC, and educate the board about the GC’s role and value.

Strategically Build the Legal Team

When first brought in as a GC, focus on completing the work. However, make a plan for the future to address the continued obligations of the legal team. Understand where the company is and where it is trying to go, then combine this with the knowledge and experience to think ahead. Ask:

• What is the company doing?
• How can legal support that in-house?
• Should outside counsel support it?

Build a Resource Plan for the Legal Team

Build a resource plan showing how the legal team should look over the next 12 to 18 months. Using benchmarks from other companies, include what the team will need for the IPO and then once the company is public. Build out a broad range of advisors in the resource plan because it is not possible to be an expert in everything.

Management support is also easier if the resource plan evolves during every budget cycle. This ensures the resource requests address the company’s strategic objectives. The plan should note how the resource allocations align with the goals and whether the legal team is prepared. Sharon identified the resource plan as one way she established her credibility as a thoughtful leader because she took the time to connect the legal team’s needs to the organization’s objectives. Likewise, Gary recounted that a carefully crafted resource plan is crucial when handling the budget pressures of a private equity buyout.

Learn the Team and Build Functional Expertise

In the beginning, build more functional expertise to make sure each function within the company is well-represented by legal. If inheriting a legal team with the GC role, understand what the team does and aspires to achieve, all while considering which functions require support and how legal is viewed within the organization. Learn how to work with and learn from people who know more about the GC’s management areas.

Leverage the IPO and other Opportunities to Learn the Business

The IPO can provide the GC with a fresh view of the business, even after being with a company for some time. Understand where the CEO envisions the company going while explaining the vision to the market. Analyze whether the legal team is prepared to support the organization while moving toward this vision. Harness this information to be proactive, rather than reactive, in the hiring process.

Keep abreast of what the other functions in the company are doing and how initiatives may affect the legal team. One way to leverage these opportunities is by getting the department invited to planning meetings.

Ensure the Right Deputy is in Place

The IPO readiness process can consume the GC, so a strong deputy can pick up the slack to ensure the legal team continues functioning efficiently and optimally and the GC spends more time on executive duties once the company is public.

Proactively Address Concerns with the Legal Department

If there is dissatisfaction with the legal team, learn why management or others are dissatisfied and remedy the concerns. Sharon noted a survey she conducted at the beginning of her time as GC for GoPro and made improvements based on the survey, which increased satisfaction with the team.

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