Building Your Startup Legal Team: A Strategic Approach from Expert GCs

Building and scaling a legal team is both an art and a science. Not only do you have to be an adept storyteller to convince leadership of the need for additional support, but you need to tell that story with data. You have to understand the business inside and out and view your team's growth in the context of larger organizational goals. And of course, you need to be able to attract and retain top-tier talent in a competitive market.

Having managed small to large teams globally, I've seen firsthand how delicate this process can be: balancing business needs with budget constraints while fostering a culture of innovation to boot.

Recently, I had the pleasure of moderating a panel discussion with three fellow members of The L Suite about this very topic: Dina Segal, Chief Legal Officer at Gusto; Peter Wei, Head of Legal at Octaura; and Eric Treichel, General Counsel at Riskified.

Read on to hear key insights from our conversation.

Key Takeaways:

• Pull all the "scaling levers" you can, like outsourcing and technology, to maximize efficiency before adding headcount.

• Understand how to make a compelling business case for expanding your team; this may involve honing your storytelling and data analysis skills.

• Create a cohesive culture across your team and the broader organization by leaning into playbooks and establishing guiding principles.

• Prepare for the impact of AI and automation, but keep in mind that people are still the beating heart of a successful legal function.

Understand When to Grow Your Team

The first step to building and scaling your legal team involves introspection: Do you really need more headcount, or are there other ways you can maximize efficiency without increasing your budget?

At Gusto, where Segal oversees a team of over 50 people, Segal and the company's CFO require the legal and compliance department (and others throughout the company) to show which "scaling levers" they've pulled before considering additional headcount. Some of those levers might include:

• Process improvements, e.g. iterating on thresholds for legal review or empowering other teams to handle certain negotiations more independently with direction/playbooks.

• Rethinking workload distribution, e.g. ensuring effective prioritization and that the team is focused on work most core to their expertise and impact.

• Leveraging technology, e.g. exploring automation or other tech solutions to help with repetitive, routine tasks.

• Strategic outsourcing, e.g. leveraging on outside counsel, temporary/part-time hires, or offshore support.

Personally, I’ve found success outsourcing low-complexity, high-volume work to providers who operate within our established playbooks. For instance, I often leverage Lawtrades to plan for seasonal capacity strains, like at the end of Q4 when we need additional hands on deck for an influx of deal work. This is also where AI tools come into play. Similarly, specialized expertise or targeted projects (e.g. FLSA classification review, regional policy updates, regulatory compliance in global markets) will require the need for strategic outside counsel support.

When it comes to offshoring, our panelists had mixed reviews. The primary takeaway was that while offshore support can be useful for operational or rote tasks, it's less appropriate for work that requires true legal creativity or deep knowledge of the company's inner workings. “The closer the work is to building and knowing our products, the harder it is to outsource," said Segal.

Make the Business Case

Once you've identified a need for additional headcount, the next step is making a compelling case to the powers that be.

Benchmark Industry Norms

Having official benchmarks can be incredibly helpful, but only when those benchmarks are tailored to your organization's specifics like size, industry, region, and funding amount. The L Suite's annual legal team budgeting/benchmarking survey provides valuable insights into how high-growth technology companies are thinking about these metrics. (And resources like this are a great reason to apply for membership.)

Many companies use a percentage of annual revenue as their benchmark for legal department spend. But not every company has a percentage-based approach to hiring. Gusto, for instance, incorporates dependency planning, including headcount and technology needs, into its planning cycles across the company. .

"I'm in that room, learning and observing and taking it all in, and thinking about what the legal team needs to meet Gusto's goals — because that's what we're ultimately here to do: build a sustainable and durable business for the long term," Segal said.

Use Data to Showcase How Headcount Supports Business Goals

In my experience, packaging a new hire as key support for an initiative directly tied to larger organizational goals — like expanding into a new global market — is more persuasive than simply citing an overwhelming workload. For example, I work with Financial Planning and Analysis (FP&A) teams to assess where we see potential for future revenue growth. These insights make it easy to convince leadership to approve new hires within a particular region.

Wei shares the sentiment that data can help tell a compelling story: "A lot of business-side people are aspirers and dreamers; if I can supply them with added perspective about the company's next goal, and what kind of support I need to get there, that approach works most of the time," he said.

Segal added it's important to cultivate a "superpower of looking around corners" and noted that this involves consistent monitoring and analysis. For instance, during regular meetings with her staff, she cascades key company updates and goes over teambudget. "I really empower my individual leaders to get down to a granular level and be accountable for their budgets."

Navigate 'No' or 'Not Now'

Of course, even with a strong business case, budget constraints can sometimes prevent immediate hiring — particularly in a shaky economy. When you get a negative response to a request to add a team member, remember there are different flavors of no. Segal outlined a few versions she's heard: "There's just, 'No, we're not investing there for a while.' Usually, it's more like, 'Not now, come back in a different part of the cycle or a few months.' And sometimes it's a partial yes — you ask for four, and you get one now and three later.'"

As that last point implies, sometimes there's room for negotiation. This, however, involves having a strong, foundational relationship with HR decision-makers and the C-Suite. You want to be known as someone who is thoughtful and analytical when making requests, so when you do ask for resources, everyone knows you've done your due diligence.

"Relationships are the backdrop of this entire conversation," said Segal. "The closer and deeper and more trust-based relationships you have with your business partners, the better your requests for headcount will go — they know that when you're asking for something, you really need it to enable business needs. And if you still get a 'no,' everyone mutually understands why."

Create Clear Swim Lanes, but Keep Pace With Company Culture

As your team grows, it becomes increasingly important to establish clear roles and responsibilities. Treichel suggested mapping out all the tasks that fall to the legal function and determining which attorney or team member will handle each one. This includes thinking about those edge cases that don't fit neatly into any one category — like insurance decisions or dealing with the rare IP litigation or cease-and-desist letter.

Wei, coming from a smaller team perspective, emphasized the importance of understanding what motivates each team member. "The easiest and best way [to delegate] depends on who's interested," he said, noting that he tries to align tasks with individual interests and career goals whenever possible. "If I don't know what makes someone tick, I'm going to have trouble incentivizing them to bring their best foot forward."

Segal also emphasized the importance of fostering a culture of smart risk-taking within the legal team. At Gusto, the legal team is continuously addressing this topic, including conversations at legal all-hands. "This is how we gain credibility and are actually able to drive great outcomes for the business," she explained.

Utilize Playbooks and Guiding Principles

Playbooks can align teams across departments and encourage employees to level up their skills. At every company I’m at, I develop an exhaustive playbook for the commercial side of the business — I call it the GTM Bible. It's an incredibly useful tool for training our sales team every quarter.

Wei also leans on playbooks to empower sales at Octaura. "The sales team is welcome and encouraged to handle any first-level negotiations using the playbook; I can manage risk even if they stray off mark, as long as all the contracts route back to me so I can overrule them," he says. "That happens sometimes, but having the playbook in place still saves us considerable time."

Beyond playbooks, Treichel shared his approach of establishing guiding principles for the legal team. These principles, documented in an onboarding guide, help new team members understand the department's mindset and approach to problem-solving. For instance, one principle is to "attack problems from the perspective of maximizing long-term, sustainable revenue" rather than simply identifying and flagging risks.

Keep Tabs on How AI Will Change the Conversation

In my view, AI's primary value lies in amplifying — not replacing — the capabilities of existing team members. Our panel conversation highlighted a general consensus that AI and automation tools will allow legal professionals to focus more on high-value, strategic work.

A few ways I see AI making an impact in the near future involve low-hanging fruit like:

• NDA assignments

• Customer name changes

• Basic contract amendments

• Redlining and red flag detection based on established playbooks

Treichel noted his legal team — like many I've spoken with — is taking a wait-and-see approach before investing heavily in AI solutions, though he does anticipate some benefits. "In five years, I expect there will be more efficiency on the commercial side," he said. "If you have five lawyers doing something now, maybe you only need four in the future, because each one of them will be able to handle a little bit more on the margins thanks to AI efficiency."

For now, humans remain the beating heart of a successful legal team — and finding the right people to come on board, grow with your company, and thrive as strategic business partners is an ongoing process. But by leveraging scaling solutions, being strategic about headcount, and cultivating strong internal relationships, you can build a legal function that not only meets the company's current needs but is well-positioned to support its future growth.

For GCs looking to connect with peers facing growth challenges, The L Suite can offer valuable resources — apply to join today.

About The L Suite

Called “the gold standard for legal peer groups” and “one of the best professional growth investments an in-house attorney can make,” The L Suite is an invitation-only community for in-house legal executives. Over 4,000 members have access to 300+ world-class events per year, a robust online platform where leaders ask and answer pressing questions and share exclusive resources, and industry- and location-based salary survey data.

For more information, visit lsuite.co.