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According to Ernst & Young, venture capital (VC) investment in 2022 fell short of 2021's record-setting pace. While it still surpassed $200 billion – the second-highest year for this type of investment – most VCs' advice to entrepreneurs was one of caution. As a general rule, nine of ten startups will fail. This means newly minted CEOs must be on top of the game 24×7. However, they can't do it alone.

The right executive team offers a CEO a range of skills and perspectives. CEOs at tech companies recognize that their marketing, sales, engineering, and ops leaders are critical to the success of their companies. But what about legal teams? In 2021, I wrote about the value of in-house legal teams, stating: "The primary benefit of bringing on an in-house attorney is that they will become an expert in every aspect of your business, which will let them provide more actionable legal advice as well as a (sometimes) unique input on various business decisions."

In 2023, I would double down on that advice.

In a stable, predictable environment, nearly every issue of meaningful business consequence benefits from the legal team's analytical and strategic consideration. But the skills legal teams have developed are increasingly applicable during economic or geopolitical unpredictability. Strong legal teams today provide visibility, help an organization maintain focus, seek to make life easier for stakeholders, and escalate the right issues at the correct times. This all enhances a CEO's ability to scale and drive business growth.

CEOs who neglect legal do so at their peril. To reset expectations, retrench, survive, and put yourself in a position to capitalize when there's a rebound, legal is an ally that shouldn't be overlooked.

Insightful but dispassionate perspective 

In-house legal leadership with a clear understanding of business operations and strategic objectives capably anticipates and resolves business-critical issues.

The best legal leaders embed their teams in critical functions such as operations, product development, sales, finance, and marketing, becoming trusted allies of the extended team. They can advocate and contribute without overly investing in a particular course of action. When legal teams gain vital cross-functional perspectives, they can dispassionately distill varying viewpoints, strategize a course of action, and quickly address issues like internal miscommunications and conflicting directional decisions.

This second-level insight can highlight to the executive team how the objectives of every department's various (sometimes competing) interests are best served by a course of action while offering critical operational context to help guide decision-making.

A CEO can't be in every meeting. Still, by being able to trust their legal leadership, they can facilitate next-level intra-company relationships and introduce critical insight – and even oversight – that they cannot offer.

Keeping the focus where it should be

The best legal leaders recognize the areas where the CEO has a passion or can be the most effective, then help them maintain focus. If you are a CEO with a product and engineering background, you will naturally gravitate towards those areas and strongly believe in the direction of related functions. This is a good thing, provided you can contribute in a non-disruptive way, know when to take control and drive the process, and understand when to delegate decisions to leadership within the function.

But, even the best CEOs can get too far in the weeds and spend time on issues that could be handled by

staff at a level (or two, or five) below. In these cases, the business would be better served by legal's effort to refocus your attention on more strategic or pressing parts of the company.

Legal leaders can create a constructive forum that focuses squarely on mission-critical aspects and can help communicate the desired outcomes and best course of action. They can also highlight areas of the business that need attention – whether it's go-to-market motions, operations, or other parts of the company – and prioritize work that needs to be done.

The key here is enabling legal to help you focus on the big picture as you make critical strategic decisions outside your specialty. This will allow you to appropriately weigh the strategic significance of decisions made to the overall corporate goals. Simply put, the best legal leaders can separate the micro from the macro. They'll be doing you a favor and your employees, investors, and customers.

Amplifying critical issues and defusing minor ones 

As stated, influential legal leaders will strive to support your focus on the big picture. Part of the way to accomplish this is to minimize the number of issues that come to your attention, which begins with better business processes.

A lack of processes can consume much of a CEO and leadership team's time, particularly in earlier-stage startups. The legal team is in a great position to simplify the work that must be done, creating small but manageable processes that can scale over time. This becomes exponentially more valuable as inter-departmental trust and communication increase.

As a part of establishing or strengthening processes, legal teams will invest time learning how you work best with stakeholders and design processes accordingly. For instance, is your preference to learn through conversation and back-and-forth questioning? Then they will set up meetings to brief an issue and work together on the best path to resolution. Suppose you read up on a point to be fully informed, prepare questions, or think about the solution before the meeting. In that case, they will become very good at summarizing issues and streamlining written communications. Legal leaders make a system, make it repeatable and familiar. This minimizes inefficient use of time and sets a process for communicating effectively.

Legal teams will maximize the impact of your time when it comes to legal issues requiring greater CEO engagement. For example, when pushing to close financing, the legal team will summarize the key components of a transaction and put them into context. There's nothing worse than seeing an email from a lawyer asking you to open a document to look at a footnote and give an opinion on its language. In these cases, legal should summarize the issue, covering areas like financial impact, blocking rights, board composition impact, conversion, etc. They should also recommend the best path forward, ask for your desired real-life outcome, and discuss implications.

Rather than simply presenting problems, a good legal team will propose solutions. As the CEO, you should trust that your legal team has gathered all pertinent information regarding an issue, working with other parts of the business to understand and address it. If your legal team only presents you with problems, requiring you to dig deeper and find answers, your time could be better spent on your role. The most essential thing legal can do is to make a CEO's life easier and minimize the time you have to spend addressing a given issue while maximizing your impact on the outcome.

Knowing when to escalate

Sometimes issues call for CEO involvement at earlier stages or more frequently throughout the process. The legal leader should have frequent and candid conversations with you on top-of-mind concerns and particular issues where you want more involvement. They should be thinking about major items that significantly impact the business, like a fundamental shift in the product or target market or higher-level corporate matters involving areas like shareholder and board rights. They'll work with you to understand when to become involved in an issue.

Secondly, legal teams need to know when to escalate and understand when an issue can impact the entire company or at least substantial parts of the organization. When the legal team is ingrained in business decisions, departments, and communications, the team can better understand the gravity of issues and escalate as appropriate. Combine that with a streamlined way to communicate, well-conducted due diligence, and an effective recommendation as to a course of action, and their conversations with the CEO will be clear, concise, direct, and compelling.

Knowing when to escalate comes with time and experience – even seasoned pros miss the mark from time to time. It's wise for legal teams to err on the side of overcommunication, and as the CEO, you will let them know when to escalate and when to execute as time goes on.

Beating the odds

Businesses that beat the odds are not only the ones with excellent products, strong market fits, and go-to-market motions. They emphasize operational excellence and efficiency. This starts with support functions, and an effective legal team can lead the way to creating core, repeatable problem-solving and communication processes throughout the organization.

In short, legal leadership can set an organization on the right course, reducing friction and minimizing operational overhead as the company scales. Regarding startup success, the right leaders doing the right things can clear the way for products to reach and help as many customers as possible. This will maximize the likelihood of a CEO's success – and the right legal team can lead the way.

Tim Parilla is the Chief Legal Officer of LinkSquares.