Many initial issues of a startup follow them in the later stages of its growth. Some of the most common ones refer to the intangible side of the infrastructure of a company, as detailed in the previous post - Goodlegal for startups.
We can name some of the most common and visible:
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contractual framework with the customers, vendors, and partners (with additional layers of complexity when there are affiliate and tech, and commercial partner programs launched);
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financial side of the operations, meaning the practical implementation of the business strategy where a company needs to make sure it has the financial infrastructure safely up and running, irrespective of the sales model (b2b, b2c) and payment method;
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sales operations of the organization, which need to be in sync with the contractual framework and financial infrastructure;
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legal operations which support with technology the contractual framework and the involved financial and sales-related elements of the process;
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corporate compliance, which is the backbone of the company's legal compliance, meaning all the corporate policies and procedures regulating all of the company's activities, those described in points 1-4 above and others such as employment, procurement, support, regulatory, etc.
All these matters can and should be proactively tackled by a company. Nevertheless, even today, these matters are approached reactively and only when they cause negative disruption.
When a company goes beyond the startup stage, these items become not only a legal liability which is somehow manageable at the startup level when there are only a few interested parties in how legally compliant a company is but also a major operational hurdle preventing the company from growing and handling its business efficiently.
At a scaleup stage, there are far more interested parties in how a company is doing business and how compliant that company is within the industry and in relation to its customers and partners. From venture capitalists to public authorities and from customers to competitors and partners, all eyes are on how well that company is handling its newest role on the market and how well it is managing its inherent startup liabilities (for example, initial lack of a contractual framework, contractual legal compliance, corporate policies compliance, compliance with applicable laws, internal decision-making process and related safeguards for fraud, conflict of interests, etc.).
These inherent liabilities of any startup are dealt with reactively, and a scaleup is typically only looking to approach them based on their possible impact on its customers. Some solutions involve looking hastily at various vendors on the market to tick the box for each of the above liabilities to address any concerns a VC or a regulator might have on that specific issue.
For example, as a scale, the company already has sufficient funds to buy various tools to solve the contractual framework issues either by hiring an expensive external law firm (they are all expensive irrespective of the growth stage of the company) or by hiring an in-house lawyer which is more cost-effective but harder to find as you typically need a rockstar (a well-versed generalist lawyer) capable of juggling with different legal matters ranging from sales contracts to employment and corporate issues. Irrespective of the approach taken, hiring a law firm or an in-house lawyer is only the first step in solving the issues.
The second step is to find the right tools and put in place the right processes to make that (expensive) legal support as efficient as possible across multiple teams (and thus reducing budget pressure), such as finance, sales ops, etc.
To achieve these objectives, scaleups spend an unreasonable amount of time and money to assess various tools and vendors (with related internal complexities: organizing RFPs, allocating budget, implementation, and training, syncing with other departments, etc.) to be able to tick the above compliance boxes which suddenly become vital. No one wants to use or invest in a company's products or services if that company does not have its legal compliance figured out.
Thus, for contracts, a company under the above assumptions will evaluate a Contract Lifecycle Management tool (Conga, Ironclad, ContractPodAi, ContractBook, and others) for various compliance issues such as privacy or corporate it will assess industry-specific tools such as privacy and corporate management solutions (OneTrust, Diligent Entities, etc.), for internal approvals it may use the above tools related to their scope (workflows and approvals for privacy -OneTrust, for contracts -Ironclad, and so on) or it may go with a more generic solution already in use by other teams such as Atlassian or another project management tool such as Monday.
Improvising and spending money and time to make nonspecific legal tools viable for legal compliance purposes, which not every company is able to do for various reasons (some companies opt in for fully externalizing their legal and compliance functions to law firms while others internalize it by creating in-house legal teams with the centralized or decentralized type of approach, depending on the company specifics) is delaying that company's growth and expansion.
Each model and its derivations come with specific challenges, but irrespective if you use a law firm for everything or an in-house legal team, or a mix of the two models, the need for properly empowering those teams to support the company is the same: (i) digitizing their work, (ii) ensuring audit for all workflows, documents, policies, and contracts, while maintaining (iii) an agile stack of tools used to achieve the above.
As you can already notice, we are talking again about several tools with various functionalities overlapping each other for roughly achieving the same outcome but by using different means.
This is not how the legal tools ecosystem in a company should evolve, based on a reactive approach, by onboarding multiple point-specific solutions which do not talk to each other unless they are helped by yet another layer of tools such as robotic process automation plus another tool to make the targeted tools communicate. For example, if a company already has a contract database containing hundreds of signed documents, in order to be able to derive any intelligence from specific clauses in all those documents - maybe the company wants to know how many non-standard termination clauses it has or if there are any penalty clauses or weird indemnities - it is not able to that without setting up an RPA tool together with a natural language processing tool or starting the herculean task of verifying those documents manually.
This (and the other issues briefly mentioned here) can be avoided by proactively setting up a legal infrastructure platform capable of supporting all legal verticals (corporate, employment, privacy, contracting, compliance, etc.) instead of point-specific solutions which are flooding the market and only solve parts of the problem.
With the right comprehensive tool (in the contracts scenario), all company contracts can be digitally processed from the moment they are created until they are signed, while legacy contracts (those contracts created in the past before the tools were implemented) can be easily uploaded and the relevant intelligence structured and accessed (without other additional third-party dependencies).
There are many point-specific solutions dealing with similar issues in the piecemeal manner mentioned above (assembling a handful of different tools and vendors to achieve legal compliance) but the main thing which it is still missing and which Goodlegal will strive to solve is exactly the need to have everything consolidated under one overarching platform which can provide
(i) an out-of-the-box legal department (meaning a configured framework of technology, content, intelligence, and legal partners) for the above issues by also leveraging whatever internal non-legal related tools a company might have already implemented or
(ii) by allowing any company to design its own legal department by configuring Goodlegal to match its specific legal and business-related needs, procedural and technological context.
Needless to say that as mentioned in our first posts, the Goodlegal community version will allow any company to freely set up its own legal department framework to execute essential processes for its business and ensure day-one legal compliance. Our public release will follow in the coming weeks.
In the meantime, feel free to register for our beta to get a sneak peek of the platform (and its 🪲
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Stay cool and compliant :)
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