At what size do companies tend to add a legal operations team?
Hello! Thanks for your question about the size at which companies tend to add a legal operations team. The short version is that companies tend to have legal departments of at least 5-50 employees before they add legal ops roles, and many startups use a benchmark of 100 employees as the point at which they bring on an in-house general counsel (GC). However, there are a variety of other factors that are strong drivers for companies to onboard legal departments. Below you will find a deep dive of my findings.
My approach was simply to find the latest credible information online about trends in companies' legal departments and determine the point in their growth (in terms of revenue and/or number of employees) they tend to bring on legal ops teams. I also explored other factors that influence whether companies brought on legal departments. With that said, let's jump right in!
LEGAL OPS & SIZE
The general goal of a legal ops team is to maximize a company's in-house legal department's ability to protect the company with a focus on growing the business. Legal ops is often separate from in-house counsel and already exists within the majority of Fortune 500 companies. The Corporate Legal Operations Consortium's (CLOC) membership criteria at one time required members to have legal departments of at least 50 people, though this has since reduced. SimpleLegal, a company that provides legal ops software, has seen legal ops roles in companies with legal departments as small as five people.
Regarding growing companies and in-house GCs, many startups use a common benchmark of 100 employees as the point at which they hire a GC (some even as early as 10 employees). HubSpot hired its first in-house GC when it had about 300 employees and $30 million annual revenue, though they worked with a part-time outside GC on various issues prior to that point.
It may be that company size is not so significant a driver in the decision to hire a legal ops team or an in-house GC, but rather a variety of influencing factors. For some companies, the expectation of significant legal bills related to an IPO, financing, real or intellectual property, or growing the workforce are all good reasons to bring on legal ops that will cover legal issues while staying focused on the firm's financial health. Another advantage over outside counsel is that a legal ops team or in-house GC always has the company's best interest at heart.
To wrap it up, many companies bring on an in-house GC when they reach around 100 employees and generally add legal ops roles when their legal department has at least 5-50 employees. There are also many influencing factors rather than size that may drive a company to add legal roles.
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