Entrepreneurs who avoiding hiring in-house counsel – I feel your pain

Entrepreneurs who avoid hiring your first in-house counsel – who hurt you?
In recent months I’ve been on multiple interviews with founders for their first full-time or fractional legal counsel who evinced visible scars from past experiences with lawyers. Their negative experiences fall into similar buckets:

1. The self-sufficient entrepreneur — This type is confident reading contracts, has been getting by doing all the legal work himself, and sees little value in lawyers. They will only hire in-house counsel when the volume of legal work has brought them to the breaking point. I met one CRO who for years was spending hours every night reviewing and redlining contracts (recently, with the aid of AI).

2. The contracts swim-lane — Similar to the self-sufficient type, this wants a lawyer to handle only contract redline negotiations and accelerate sales and nothing else. One founder/CEO of a Series B company complained to me of their outside firm’s “slow” turnaround for contract review requests (3-4 days, typically). He also openly told me they had previously hired an in-house counsel for this position but let them go because they did not focus exclusively on sales contracts and customer-facing trust but sought a bigger role and kept devoting attention to other legal issues for the company.

3. “Everything must go through legal” — This type hates dealing with legal matters personally but regards the work of lawyers with mystique and awe. They want a lawyer to be involved in every decision and have been using multiple outside firms and sending them all their contracts and legal questions, but gets annoyed when outside lawyers return “it depends” answers, long memos without a clear course of action, or tells him he needs to make a business risk decision without advising what to do. This type expects in-house counsel to do the same work as outside counsel, only faster and cheaper, but is afraid that hiring an in-house counsel will disappoint them in the same ways their outside firms do.

So let’s set the record straight:

YES — you should hire an in-house counsel and not do legal work yourself.
YES — an in-house counsel can save you time and money compared with an law firm doing the same work.
YES — a good in-house counsel can add tremendous value and lower risk by building internal processes and being part of decision-making in ways that outside counsel can’t be.
NO — in-house counsel is not a replacement for all expert outside counsel.
NO — in-house counsel is not a replacement for executive responsibility. You still need to understand how the law affects your business and make decisions about legal risks.