As he advanced in his career as an in-house lawyer at companies such as Opendoor and Blend, Brian Scherer developed a desire to one day become a general counsel.
Knowing that other in-house lawyers shared that professional goal, Scherer decided he was going to launch a business focused on providing the training and technology to help in-house attorneys develop the skills needed to obtain GC roles.
But while participating in the ODX accelerator in San Francisco earlier this year to get his idea off the ground, Scherer heard many complaints from fellow founders about their experiences with lawyers.
Their pain points included struggling to find attorneys, the high cost of legal services and the transactional nature of the startup founders’ relationships with the lawyers they hired.
Scherer said this commentary made him realize he was perhaps building “the wrong version of the thing that I need to build,” so he decided to shift course.
In May, Scherer launched a platform called HeyCounsel that connects start-ups with experienced in-house counsel who are eager to hone new skills outside of their day jobs.
“I wanted to create an experience where startups could have a more advisor-like relationship with their legal counsel and make it mutually beneficial for each side, so that's how I came up with this idea of matching startups with in-house lawyers who have a little bit of excess capacity,” Scherer told Legal Dive.
Paying with equity
The lawyers on HeyCounsel already have in-house counsel day jobs, but they agree to commit roughly one to five hours a week assisting the startups they are matched with through the platform.
Rather than billing by the hour, lawyers are granted anywhere from .1-1% in equity that vests over two years. When an engagement ends, the equity stops vesting.
Scherer noted it’s common for startups to pay other trusted advisors with small amounts of equity, so the approach is one that is in their comfort zone and he is hopeful will catch on with their attorney engagements. Plus, the equity model saves companies from having to pay high hourly rates to lawyers or racking up deferred fees.
HeyCounsel makes money by charging a placement fee to customers when the platform places an attorney at their company.
The companies Scherer said his platform is best designed to serve are in closely regulated industries and are either pre-seed or have raised a seed round of financing but have yet to establish their own legal teams.
“It doesn't make sense for a pre-seed or a seed company to have a general counsel most of the time,” Scherer said. “It does make sense for them to have ongoing legal support that is affordable.”
Variety of legal work
The HeyCounsel attorney a company is matched with can help with initial legal tasks that include incorporation and registration, IP assignment, equity distribution and hiring. As companies grow, their lawyers could also assist with data privacy, sales agreement and fundraising work, among other tasks.
“These lawyers are interested in expanding their expertise and building skills that they don't otherwise have because they're siloed in specific roles at their larger companies,” Scherer said. “This gives them an opportunity to kind of get that mini general counsel feel.”
He said most participating lawyers will have at least five years of in-house experience, and HeyCounsel will try to match companies with attorneys who are familiar with their industries.
For example, the platform matched a company in the Web3 space with a lawyer who has in-house experience at a cryptocurrency trading and investing platform.
“Because the attorney has some experience in the regulatory sphere of Web3 and crypto, they're able to be a good support structure for that startup,” Scherer said. “All the while that attorney is now engaging in some things that are outside of their wheelhouse, meaning they're working on incorporation, cap table management and securities issuances.”
Scherer highlighted that HeyCounsel provides attorneys in its network with legal research tools, template libraries and ongoing training and mentorship to help them develop new areas of expertise.
As more lawyers join the platform, they will be able to provide support to one another and step in to help another attorney’s client if needed. Along those lines, a Slack network is expected to facilitate the chance for HeyCounsel lawyers and other legal thought leaders to share best practices and resources about advising startups.
Additionally, attorneys matched with startups through HeyCounsel will be covered under the platform’s professional liability insurance policy for the purposes of their engagement.
”It's kind of like you're bolting on to all the resources that you would normally find at a law firm, but obviously without being part of a law firm,” Scherer said.
The platform also provides guidance to attorneys about getting sign-off from their day jobs to handle work through HeyCounsel and reviewing their employment agreements to ensure such work is allowed. The platform’s attorneys will be considered independent contractors and are expected to ensure no conflicts arise in their work.
Scherer said he hopes to see companies and the attorneys they are matched with develop long-term working relationships.
In an ideal world, these engagements would in some cases lead the companies bringing on their HeyCounsel attorneys as general counsel.
The potential for that to happen, as well as the role HeyCounsel can play in helping in-house lawyers gain new skills, has left Scherer feeling the business he founded has a better chance to fulfill his goal of producing new GCs than his original idea.
“I think a lot of lawyers will end up finding either their path to general counsel or their actual general counsel role through HeyCounsel,” Scherer said.