Challenges in transitioning from the law firm to the small, privately-held company (Part 1)

The GC of Stego Industries draws from his own experience to highlight the challenges present in moving to a privately-held company

The transition from private practice to in-house legal counsel is filled with new challenges and new opportunities. Gone are the billable hour timesheets, issues with non-paying or slow-paying clients, and all of the other juggling that goes along with managing a Rolodex of clients. However, new issues are certain to arise, such as department budgeting, finessing your interactions with the board of directors and other executives/owners, and management of outside counsel, to name a few.

This piece is intended to highlight the new challenges present not for an incoming Fortune 1000 in-house lawyer, but instead those of us who transitioned to a relatively small, privately held, and in my case, family-owned company.

In many ways, the switch from a private civil litigation practice to in-house counsel at a family-owned and family-run company may even be a more drastic change than from a law firm to a large corporation. This two-part piece will discuss a handful of the hallmark challenges I have encountered and tips for navigating these waters for others similarly situated. Part 1 (below) will focus on how critical it is to properly set expectations. Part 2, coming in July, will discuss the importance of effective communication strategies within the company.

Setting expectations

It’s safe to assume that a large corporation with a history in dealing with both inside and outside counsel inherently has some basic understanding of the function of a newly hired in-house lawyer will contribute. In other words, both a framework and, even more importantly, the setting of expectations are done by the business. Conversely, it is critical that lawyers entering a small company that has only dealt with outside counsel on an infrequent and as-needed basis, and never employed a fulltime lawyer, play a major role in clearly and consistently setting those expectations.

Hired as general counsel in 2012, it only took a few weeks for this issue to be highlighted for me. I was sitting around a table with a group of our company’s most senior strategic planners, and an intellectual property issue arose regarding the filing of one of our foreign trademarks. I generally explained the issue and what we needed, and concluded that I’d wrap this up with our outside IP counsel. In my head, this was precisely my job — distill down and explain the legal issues to the relevant company stakeholders, then either resolve it myself or utilize outside resources. Yet, my conclusion caught one senior employee (we’ll call him “Bob”) by surprise and he responded, “Wait, that’s not something you do?”

Up to that point, my entire career had been spent in civil litigation. Although I had litigated the enforceability of various pieces of intellectual property, I had zero transactional, let alone international, trademark expertise. Considering the company had just completed an over three-year lawsuit defending a trademark, which it ultimately lost, a result that maybe more than anything else triggered my hiring, I thought this area was “best left to the experts.” This was my job, right? I viewed my role as comprised of three primary components: advising on all strategic company matters from a legal perspective, perform as many legal tasks as is reasonable and efficient (both those previously executed by outside counsel and those previously neglected), and facilitate outside help for legal matters outside of my scope and ensure that those resources are as efficient as possible.

Upon reflecting on “Bob’s” question later that evening, it occurred to me that both the company and I had failed in clearly setting expectations within the company, and in particular this strategic group of employees. In a company with limited legal experience and expertise, an understanding of exactly how I fit into the overall company framework was important. Otherwise, “Bob’s” question was completely valid. “Bob” knew the company had just spent hundreds of thousands of dollars on outside counsel per year over the previous few years, and probably assumed by bringing a lawyer in-house, the company’s legal bills were a thing of the past.

Immediately thereafter, my top priority became bridging the gap between my expectations and the unknown expectations of others within the company (See Part 2 regarding the importance of effective communication). These one-on-one conversations allowed me to not only communicate the expectations, but also build relationships with many employees throughout the company framework. The direct and concise method of communication paid, and continues to pay, substantial dividends in my position. Once those parameters were established and expectations properly set, misunderstands have been minimal and communication continues to be productive.

Regardless of the size of your organization, it is an extremely valuable exercise to both reflect on your personal understandings and expectations for your role, and reach out to confirm no uncertainty exists, then bridge any gaps if necessary.

In executing this strategy, a combination of having done my homework on the issues, challenged myself to a far boundary of what I should be responsible for, and humility on that which I should not, worked well to communicate the message. With those boundaries and expectations set initially, it gave me an opportunity to educate the core group, and also avoid misunderstandings down the road.

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Michael R. Tucker

Mike Tucker is General Counsel for Stego Industries, LLC, located in San Clemente, California. Stego is a construction products innovation and marketing firm. Prior to...

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