Abstract

This essay presents the first empirical study of how rapid-growth start-up companies obtain their legal services, with particular attention to the choice between in-house and outside counsel. Drawing on responses to online surveys of venture-capital-backed start-ups formed between 2006 and 2008, the study tests several hypotheses rooted in economic and entrepreneurship literature. The results show that most start-ups do not employ in-house counsel, with cost considerations and broader coverage offered by outside firms emerging as the primary reasons. In contrast, start-ups that do hire in-house counsel cite their attorneys’ superior understanding of the business, responsiveness, and ability to monitor internal operations as key advantages. The essay also explores related issues, including attorney-client privilege, the role of in-house counsel on boards of directors, and the emergence of hybrid “rent-a-general counsel” firms. By introducing original data and analysis, this study contributes to scholarship on law and entrepreneurship, information asymmetries, and the evolving role of in-house counsel.

Document Type

Article

Publication Date

3-2012

Publication Information

2012 Wisconsin Law Review 333-358 (2012)

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