Your Company’s Lawyer is NOT Your Lawyer

A few weeks ago, another CEO reached out and asked for a referral to an attorney. My first question was for the company or for yourself?  I didn’t always realize that there was a difference.

What can make this tricky is that, as CEO of a company, we speak for the company. We are the ones to hire a trusted attorney as corporate counsel.  When we, as entrepreneurs, are building companies from scratch, one of our first partners in that effort is our corporate attorney. They are with us at the genesis. They advise us on many issues, especially those associated with fundraising, stock option plans, employment contracts, and partnership agreements.

As the years unfold, we develop close relationships with these trusted partners. As we work together to solve problems, it is easy to begin to think of them as “my attorney.” But they are not “my attorney.” They are “our attorney.”

When, as CEO, we hire that corporate attorney, we establish a business relationship between our company and our lawyer. It says so right in the legal engagement letter. The lawyer is obligated to represent their client, and, while, as the CEO, we are the executive voice of the company, the lawyer’s formal relationship is with the company.

The vast majority of the time this subtle distinction is unimportant. However, it becomes critically important any time the CEO’s interests potentially diverge from the company’s. That is when you need to have a personal attorney on hand to advise and represent your interests. The most common scenarios when this occurs are when the topic at hand are the employment-related legal matters involving the CEO.

When that situation happens, the company’s attorney will appropriately pivot to representing the company, and likely be reporting to the Board of Directors. At that point, the CEO needs to have an unconflicted attorney who can represent the CEO to provide advice. Any legal firm that currently or has previously represented the company will be unavailable due to a conflict of interest. The first time this happened to me, it was a surprise, and I had to scramble to establish a relationship with an attorney on short notice.

Since then, I have had several CEO-to-CEO conversations about this scenario, and I have discovered that my experience is not uncommon. Now, when I am coaching another CEO, I try to remember to mention the need to establish a relationship with an attorney with employment law expertise that is independent of their company before it arises as an urgent need.

The way I have personally solved this is by getting recommendations for a specialist attorney in another state with exactly the expertise I occasionally need. Then I established a relationship with a lawyer there. I made sure that this firm is not ever likely to be representing one of my investors, nor will I ever hire them to represent one of my companies. That way I always have someone I can call when I need someone to be my lawyer.