When's the best time to get a fractional GC involved?

I was asked the other day: “when is the best time to get a fractional General Counsel involved?”.

For the purposes of answering the question, I’m going to ignore the start-up phase (investment agreements, shareholder agreement, employee options etc), and one-off transactions generally, and reframe the question as: at what point in the development of my business is the lawyer-view likely to add value?

The answer to the question depends on how much legal complexity, or important buy-side dependencies, form part of the business.

Legal complexity is things like:

• IPR

• sector regulation (e.g. financial services regulation, pharma regulation)

• selling B2B where the products/licensing are complicated

• selling B2B where your customers are large companies that want to make things complicated (e.g. banks).

Buy-side dependencies exist when your business depends on buy-side contracts which aren’t easily replaced and which are material to the business. For example, if you are starting a bank using banking technology from a single SaaS supplier, that’s a material buy-side contract that’s not easily replaced.

The more prominent the legal complexity and buy-side dependencies, the earlier it pays to get a lawyer involved in the business. And lawyers are just like other professionals: the earlier they are involved, the more likely it is that they can add value.

A caveat though. One CFO I know makes a distinction between the core function of their job (adding up numbers) and being a business partner i.e. someone who can first see the issues of the business as a CEO, and iterate them with their CEO, before applying their commercial expertise. The first function is a commodity: only the second function adds value.

GCs and lawyers are the same. It’s only if they are capable of acting as a business partner that they add value.