Life at a startup moves fast. What begins as an idea quickly turns into building a minimum viable product, hiring talent, attracting customers, and eventually raising capital. 

From product development and hiring to fundraising and expansion, every phase of a startup's lifecycle has legal considerations that often take a back seat to growth priorities. 

The fact is, when they're still trying to build the core project, most startup founders put legal concerns on the back burner, trying to handle business formation, contracts and documentation themselves. 

With so many considerations and hires to make, keeping a lawyer on the payroll isn't usually part of the plan.

That's precisely why fractional general counsel has seen a dramatic rise in popularity with early stage companies. It's a model that's tailor-made for startups: Experienced legal professionals work on a part-time or as-needed basis to solve a growing company's legal needs and, very importantly, create a solid legal foundation that allows companies to scale faster when that time comes. 

What is a Fractional General Counsel?

Traditionally, tech companies had two options when it came to meeting their legal needs: hire a full-time legal team or turn to outside counsel when an issue arises. 

Fractional general counsel services change the model, giving startups ongoing access to experienced legal leadership, without the expense of full-time in-house legal counsel.

Hiring a single attorney full-time usually requires a substantial investment in salary, benefits, and in Silicon Valley, often equity compensation. 

Working with outside legal counsel can be cost effective for isolated, one-off legal issues, but can add up quickly when legal guidance becomes ongoing. Outside attorneys also require time to get up to speed with your company and its situation, which makes it difficult to get immediate strategic advice.

Instead, fractional GCs, who are often former in-house GCs, typically use a retainer or subscription model that gives a company access to their services anywhere from a few hours a week to a few days a month. They can also be brought in for the duration of a specific project or initiative, or to help prepare for a fundraising round.

During that time, they become familiar with the company's product, leadership, and long-term goals. Ultimately, they're there to help guide a business through its decision making and legal challenges. 

It's a model designed to fill the gap between relying entirely on expensive outside law firms and hiring a full-time legal team, while still giving a company access to highly skilled legal help. 

One important thing to keep in mind is that a fractional general counsel will have limited availability. The very nature of the model means that they will have other clients and their time will be split.

The Legal Challenges Startups Face

Many founders are so heavily involved in the day-to-day grind of launching their company that they underestimate the legal challenges that startups face. 

Even at the earliest stages, there are so many issues to consider that legal consulting services make practical sense. Working with a part-time general counsel early on lets your professional relationship grow together.

From day one, founders need to consider their specific business formation, founder ownership agreements and equity stakes. Founders who opt for legal consulting services early on create a stronger legal foundation for their company to build on. 

Once a company makes its first hires, they will need help with employment and contractor issues. Startups work with many different vendors as well, and those relationships need contracts as well. 

Then there are issues like intellectual property protection, AI governance, data privacy, and cyber security. Trying to navigate these highly specific areas without legal help opens the potential for issues that complicate operations and slow growth down the line. The longer you wait to address them, the harder these issues will be to solve.

Most startups approach all of these issues from a reactive position. They try to handle them internally, but with so much happening at once, these issues deserve more attention. Outsourced general counsel helps founders get that help before costly problems arise.    

Why Fractional GC Services Are Becoming More Common

Turning to fractional GC services brings immediate benefits to startups. 

Cost Efficiency

Hiring legal counsel full-time doesn't come cheap. The cost to bring an experienced attorney in-house requires executive-level salary, health insurance and benefits, often including equity compensation. That can quickly exceed hundreds of thousands of dollars, and doesn't even account for the cost of the potentially months-long recruiting process.

Because fractional GC service engagements are based around a client's needs, startups get access to senior legal expertise without the commitment of a full-time executive-level hire. That creates a significant cost savings potential, and is one of the biggest drivers of the surge in the popularity of part-time general counsel. 

Strategic Legal Guidance

Startups most often turn to outside counsel when they are preparing for major transactions or for litigation. But there are hundreds of strategic and legal-adjacent questions that founders may have in the meantime. 

Fractional legal consulting services can answer broader questions about the business that probably wouldn't be asked of a law firm working on an hourly basis. Questions about what legal risks to prioritize, whether or not a customer contract is acceptable, or how well the company is prepared for due diligence are much easier to get answered when you have a consistent working relationship with an outsourced general counsel.

Flexibility & Scalability

The needs of a startup often change from month to month. An organization might need help with employee contracts for one or two months and then not have any major legal needs until preparing for fundraising six months later. A full-time legal hire might go mostly unused during that time, but a part-time general counsel's support can be scaled up or down as needs change. 

Faster Decision Making

Having a trusted legal partner available to advise can help leadership make faster, better decisions. Fractional general counsel often participates directly in leadership discussions, which allows the company to tap into their experience and insight and build momentum.

Building Infrastructure for Growth

A fractional GC helps startups create repeatable systems that make growth more manageable. They standardize customer agreements, employment documentation, compliance policies, and intellectual property protections. They also help establish operational processes for review, approval, execution, and storage of agreements, creating greater consistency throughout the organization. 

With these critical pieces of legal and operational infrastructure already in place, companies don't have to recreate processes from scratch every time they hire a new employee, sign a customer, bring in a new vendor, or raise capital. That reduces future friction and speeds up decision-making, helping startups scale more efficiently. 

Investor Expectations

When startups begin seeking investment opportunities, having a legal partner is essential. A fractional GC can help an organization prepare for questions about IP ownership, cap table management, regulatory compliance, and data privacy controls before investors begin doing their due diligence. Proactively addressing these areas can help reduce delays and increase investor confidence.

When Should Startups Consider Part-Time General Counsel?

A startup's legal needs differ greatly depending on what stage the company is in. Many startups operate for years before they reach the point where they can justify full-time in-house legal counsel. 

So when does it make sense to work with a fractional general counsel? 

Startups should start to consider fractional GC services when legal questions become a regular part of business discussions, rather than an occasional issue.

For example, companies that begin experiencing rapid customer growth may need a lawyer to draft customer agreements and terms of service. When preparing to enter a large hiring cycle, companies need their employee classifications and HR infrastructure to be in place. A fractional GC service can get all these areas shored up. 

In some cases, rapidly growing companies need an interim general counsel to provide temporary legal leadership until a permanent hire is made.

Another crucial time to seek legal help comes when a company is preparing to enter into foreign or highly regulated markets. These markets may require special permits or licenses to operate, and can introduce new data privacy, employment, tax and regulatory obligations. Patents, copyrights, and other intellectual property assets must also be protected, and compliance with local data privacy and cybersecurity laws must be ensured. 

When preparing for fundraising, fractional general counsel helps ensure that the company is prepared for investors who will conduct due diligence, leaving no details overlooked. 

What to Look for in a Fractional GC Partner

Choosing the right partner as your fractional general counsel means more than just finding someone to provide corporate legal support. You need a strategic advisor who aligns legal strategy with business growth.

One of the first qualities to look for in fractional general counsel is prior experience working with startups. The legal challenges startups face are far different from those of more established companies. The more startup experience they have, the more likely they are to have seen problems like yours before. 

You'll also want to work with a fractional GC that has significant knowledge of the technology industry. This is especially important when it comes to understanding how venture-backed startups operate, and new and evolving legal frameworks surrounding AI, data privacy, and regulatory compliance. If their experience is in a different industry, they won't be able to offer as much help as someone who has spent years working in technology law. 

SVTech: Fractional GC Services for Silicon Valley

Startups and technology companies working in the heart of Silicon Valley need experienced legal support, but not every company is at the stage where they can justify a full-time legal team. 

They need legal advisors who understand software, intellectual property, data privacy, and venture financing. Silicon Valley Technology Law Advisors (SVTech) has been helping technology companies with customized legal guidance since 2006.

Unlike firms that primarily serve established enterprises, SVTech regularly works with startups experiencing rapid growth, exploring venture financing opportunities, intellectual property concerns, AI-related legal questions, software licensing, and data privacy obligations. 

We understand that the legal challenges that startups and midsized technology companies face are different from those of the largest institutions. That perspective helps our clients receive advice that is tailored for their specific business needs.

Whether your company needs ongoing fractional general counsel services, interim general counsel during a period of growth, or strategic guidance through a fundraising initiative, SVTech provides the flexible legal support that Silicon Valley startups need. 

Our goal isn't just to answer the legal questions you have today. We strive to become a long-term strategic legal partner that helps you navigate the risks and opportunities that growing companies face, so you can scale with confidence. 

To learn more about how SVTech's outsourced general counsel and legal consulting services can be tailored to your company's needs, contact us today.