Legal Optimisation: Mindset

Mindset for in-house lawyers: tweaking your perception for success in fast-growth tech companies.

The great majority of new businesses fail. KPMG found that up to 75% of new ventures fail in the first three years, while reporting by Fortune magazine found 90% of startups do not make it past the first two years.

The ones that succeed share a number of characteristics, according to Forbes.com. These include fast growth (emphasis on FAST), not ignoring the “boring stuff” (ie business processes, orderly management) and the ability to work and learn as part of a team.

You’re a good lawyer, you’ll immediately see how a lawyer can add value here. But what you may not realise is how much you’re going to need to change, personally, to succeed in — and for — a young, high growth company.

That’s because these companies are the very antithesis of private practice law firms, and a million miles away from the major corporates and financial institutions which form the backbone of the business world and where most in-house lawyers cut their teeth.

These are places where being a standard lawyer is not going to cut it. They are places where entrepreneurs are used to thinking of lawyers as “deal killers”. It will be up to you to change their minds.

Think about failure

Can you imagine walking into the office of a major law firm, bank or corporate and seeing a poster on the wall which says: FAIL FAST, FAIL QUICK, FAIL CHEAP.

This very poster hangs on the wall of one of our clients.

Now, it’s fair to say that this phrase — which also sometimes appears as ‘Fail Forward’ or ‘Fail Better’ — is open to misinterpretation, indeed has been the topic of some controversy.

It’s not a licence to fail as an enterprise, or to produce crappy merchandise or substandard services.

Rather, it speaks directly to the mindset of innovators, inventors, experimenters. These companies have to aim high and learn quickly. They can’t afford to waste huge amounts of cash in blind alleys. They don’t have the financial cushion or brand reputations of the majors and when they start out, most of the time they don’t know who exactly their clients will be.

These companies want to get their products out quickly to a user group which is going to tell them where they are going wrong so they can fix it, and on through iterative cycles of improvement. It is a cycle of experiment-validate-modify.

How are you as a lawyer going to service that need?

We’re not going to blame you if that sends a shiver down a spine. It’s a good premise for a lawyer horror movie: “The writs are coming from inside the house!!”

Legal needs to align quickly and effectively. Your responses need to be swift, your message often truncated or simplified, and a highly commercial view taken on the topic of risk. Your contracts need to be smart and easy to use, your negotiations rapid and effective. We’ve talked about this in previous blogs on Strategy and Legal Design, and we’re going to expand on our thinking as the series continues.

But let’s start with some home truths.

It’s not your fault

Many lawyers who have trained, qualified and worked in private practice law firms struggle with commercial thinking. In fact, being “uncommercial” is one of the main complaints of clients in regard to their law firms.

This is unsurprising. There is no entity in the corporate world which has existed for the last 200 years in continuous operation with a self-replicating human resource component and virtually zero variation in product offering — you do what the law says and advise within the parameters of precedent.

That is the law firm, in essence. Everyone in the commercial legal market sells the same thing, more or less. It is a known quantity and literally any law firm can buy their way into providing any kind of service almost overnight if they can hire the right people. There is very, very little innovation, except in some aspects of service delivery which tends to lag other industries in terms of execution and use of technology, to name but two aspects.

If you have grown up in this environment, been coached in precision drafting, been told your goal is to provide the right answer, always, for fear of creating opportunities for your clients to be sued into extinction, it’s reasonable to expect that you will have developed a particular mindset. It is one that is risk-averse, sometimes to the extreme, careful, deliberative and one which values being right over being quick.

Good for you. You’re a good lawyer. It’s not your fault you weren’t trained to think like a high growth company, why would you be? It’s not your fault if you hit this stuff like a brick wall. Most do.

It is your fault if you fail to adapt to your new circumstances. It is your fault if you don’t do your homework and learn how entrepreneurs think. It is your fault if you persist in sticking rigidly to standard lawyer behaviours to the detriment of the company you are now working for. It is your fault if you become known as “The No Box”, as one of our clients put it so colourfully.

You’re going to have to be brave. And the first step on that road is via some honest self-reflection.

Mirror mirror

Be honest with yourself. Has our description of the ‘standard lawyer’ irked you, or made you feel uncomfortable? That’s understandable. Just indulge us in this one small exercise and then consider your own responses.

Take a long, hard look in the mirror and ask yourself to what degree all we have described applies to you, personally.

At this point, the standard lawyer response is to frame this as a broad generalisation and think of all the ways this does not apply to you. You know in your heart of hearts that you’re an exception. This is exactly what you’re trained to do with contracts or litigation — look for the escape route.

Sorry to throw a bucket of cold water over you but the reason you’re not exceptional is that nobody in a law firm or big corporate is.

If you’re actually any good, you will have conformed to your business environment. You will have been deliberate, careful, you’ll have developed a great eye for detail and a highly specialised imagination. You’ll be able to know what the other side might do in any given situation and write your contracts accordingly. You’ll outstrategise them, know how to hide your intentions where necessary. You’ll know how to use delay, how to play the litigation game to exact every single second from it, to use to your advantage. You’ll be an expert at outplaying, outfoxing and confounding the opposition.

If you had thought like an in-house lawyer at a high growth company during your law firm training, you’d have been told to pull your horns in. You might have been described as cavalier or, heaven forfend, sloppy. You’d have been accused of being terse in your communications, of ignoring things or indulging in undue summary to the detriment of exactitude. You may not have lasted long…

So, forgive yourself for being standard. You’ve been a good lawyer.

Now you need to be a different kind of good lawyer.

The book you should read

There’s a book you need to read: ‘The Lean Startup’ by Eric Ries. It’ll take you around five hours to read and will give you powerful insights into how your bosses think. It’s been described as a “foundational must-read for founders”.

You’ll learn about the ‘Build-Measure-Learn’ loop, about validated learning, about innovation accounting and start to view entrepreneurship as a management philosophy. You need to read this — or something like it — and understand it, absorb it and observe it in your colleagues’ behaviour.

Adapting it to how you act as a lawyer is the tricky bit. This is where your intellect, your imagination and your faith in your good judgement will pay off. This is where you begin to put all the great things you’ve been taught in a law firm or the in-house department at a big company really begin to pay off for you.

First off, start with the assumption that everyone in this room has read this book, or something like it, or indeed several books on this topic (there are loads of books on this topic…).

They’ll be conceiving wild and wonderful products and figuring out how they can test them on eager and highly critical users and how they’ll use the feedback. They’ll be talking to other developers, rivals, about technical issues, get-arounds, solutions to any and every problem. They’ll be creating eye-catching new marketing techniques to connect with potential customers and understand who they are.

Now the tough bit. You have to be the buffer between this font of invention and the hard-edged and unforgiving corporate world. You have to teach them just how far they can go before they get into serious trouble, the kind of trouble which could land them in jail.

You’ll soon realise it’s up to you to create a workable Operating Model from nothing, and this is the point where most lawyers go wrong. They’ll attempt to install standard lawyering into the situation, and imagine that their colleagues are going to learn and change because the law, and you, its avatar, says so.

That is, to borrow a metaphor, expecting the dog to move when you wag its tail.

Wag the dog

The way to wag the dog is to let your vastly superior knowledge of the law and your vastly superior training in extreme risk avoidance do the work.

By hiring you in the first place they’ve given you the power to frame the decisions for them. But what they don’t want to hear is “no” all the time. They want to hear “how”. They don’t want two, three, five or twenty page responses — yes, we’ve seen them all — to their enquiries.

The answer to “can we do this?” is either “yes” or “no, but you could do this…” and nothing else. Remember “not ‘no’, but how…”. If you see a red flag it’s your job to figure the workaround, not to bounce it back to them.

You’ll know what you can take a lean approach with, and where you can’t. You’ll know what behaviours are going to land them in serious trouble, and areas which are grey and where your clever shortcuts and lean processes are going to produce quick, user-friendly solutions.

In an earlier piece we spoke about designing a strategy for Legal. In military strategy, there is a useful concept: doctrine. Doctrine sits between strategy (the plan for what to do) and tactics (what happens on a daily basis on the front line in pursuit of the strategy).

Doctrine is how you’re going to fight. Your mindset is your doctrine. It will outline how you get your strategy from A to B and build up a suite of tactics for the purpose. Learn from the Lean Startup principles. Experiment with your tactics. If something isn’t working, learn why and adapt or abandon. Let your learning become your habits, focus on what works rather than banging your head against a brick wall. Don’t be afraid to think differently, put it into action and see what happens.

And lean into it. Remember, you left private practice or your big company for a reason. You didn’t really fit in, or you hated the straitjackets, the slow pace, the bureaucracy, the wheels upon wheels producing “perhaps this or perhaps this or perhaps that” answers.

So for heaven’s sake don’t replicate standard lawyering. It will be tempting. It feels like safety, this orderly retreat into what you have been trained to do. But it’s a box canyon. There’s no way out, if you trap yourself in there. You’ll be on the defensive continually, and you won’t realise your potential as an in-house lawyer or help your company become one of the 10% of startups which do make it.

Know your worth

One final thought. Another aspect of your early experience as a lawyer might have passed you by, and that is resource allocation. Law firms, in particular, work on a scarcity model. Associates work incredibly hard in the top firms and often find themselves at over 100% utilisation. When that becomes normal, you’re in “more for less” thinking.

Careful that you don’t apply that to your new role in a high growth company. Yes, the company won’t have a lot of cash to splash, necessarily, but that doesn’t mean you have to take on the mantle of the martyr, silently getting along with less than you need simply because you’re conditioned to think like that.

Any other group head — HR, CTO etc — will shout if they need budget to buy the tools and external expertise so they can be effective in their roles. And so should you.

The last step in changing your mindset is understanding that Legal is not a cost item. It’s an investment. An investment in risk mitigation, in creative lawyering to assist product development, in reducing negotiation time, in streamlining bureaucracy.

So, don’t be a cost, be a benefit. The power is in your hands.