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February 5, 2024

Wiggin and Dana launches general counsel outsourcing services for cash-strapped startups

PHOTO | CONTRIBUTED Jack H. Sousa is a partner at law firm Wiggin and Dana, and co-founder of goldilo(x), which provides outsourced general counsel services to startup companies.
By Andrew Larson
Wiggin and Dana’s CT offices
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You’re the CEO of a fledgling tech or life sciences company. You’re short on cash, and even shorter on time.

Your business is starting to grow, but your finances are tight. Maybe you only have enough cash on hand to survive a few months because you’re funneling most of your resources into developing a product or drug.

You have legal needs, but you can’t afford the $200,000 to $300,000 salary for an in-house general counsel.

What can you do?

Law firm Wiggin and Dana recently launched a new service aimed at helping early-stage companies navigate the hot and cold extremes of starting a new business.

The new offering, goldilo(x), provides outsourced general counsel services tailored to each client’s legal needs and budgetary constraints. It’s part of Wiggin and Dana’s emerging company practice, and their wiggin(x) division.

While most clients still pay hourly rates, goldilo(x) clients have the opportunity, in some circumstances, to work out monthly fees.

“A lot of times, clients just can’t predict what they’ll have in the hopper, in terms of what’s going to be coming in for the next six to 12 months,” said Jack H. Sousa, co-founder of goldilo(x) and a partner with Wiggin and Dana.

Sousa, who is based at the firm’s Stamford office, said he saw an opportunity with goldilo(x) to serve emerging businesses that weren’t yet ready to hire a full-time legal team.

“We have a lot of companies that are not quite ready to afford that price tag (of a general counsel), but also want more than just one attorney’s worth of knowledge,” Sousa said. “So, it turns into a really good thing for us, that we can offer a full suite of what we call ‘general counsel-type services.’ To a company, you get maybe less cost, but also more people.”

Professional service firms have increasingly looked to offer outsourced services as a way to generate new clients and revenues. Typically, they cater to smaller or startup companies that don’t have the deep pockets of larger, more established businesses.

Some Connecticut accounting firms, for example, offer outsourcing services for certain business functions like payroll.

Broad brush

Wiggin and Dana has 170 attorneys, spread among offices in Stamford, Hartford, New Haven, Westport, Madison and Greenwich, along with New York City, Washington, D.C.; Palm Beach, Florida; and Philadelphia.

Its focus areas include employment law, compliance, intellectual property, commercial real estate, among many others. Rather than having to find a full-time general counsel with broad experience, goldilo(x) clients can lean on Wiggin and Dana’s range, Sousa said.

“You get a full team dedicated to the client through the goldilo(x) platform,” he said. “It’s not just one person. You get a broad brush.”

Contributed
Wiggin and Dana's Stamford office.

Typically, clients are matched with an experienced attorney, their de facto “general counsel,” along with a more junior lawyer, their “deputy general counsel,” and a paralegal.

The attorneys provide services from corporate housekeeping to reporting requirements for public companies, based on a pre-negotiated fee structure.

Tier one, which includes basic services for startups such as corporate governance and equity plan administration, typically costs a few thousand dollars a month.

Tier two includes full outsourced general counsel services, typically involving employment work, real estate and intellectual property. Costs can range from $8,000 a month to $40,000 a month.

Tier three includes a variety of services and is geared toward publicly traded companies with reporting requirements that typically cost at least $8,000 to $10,000 per month.

In addition, clients can purchase a-la-carte services outside the scope of the tiered packages, such as litigation support. The firm also provides counsel for mergers and acquisitions.

Fee structure

Goldilo(x) was developed with cost-sensitive small businesses in mind, offering outsourced general counsel services custom-tailored to clients’ needs and budget, Wiggin and Dana said. In some cases, this is done through a fixed-fee agreement, but not always.

In cases where fees are fixed, clients can ask their attorneys questions without the fear of racking up expenses.

“We’re sort of getting rid of the stigma that the meter is running,” Sousa said. “We want clients to be calling us, we want to be counseling them in real time.”

During price negotiations, the firm takes into account what an early-stage company can actually afford.

“If a client says, ‘Hey, we can only afford x per month,’ then we thoughtfully try to reverse engineer and say, ‘OK, we can allocate these people and this much time,’” Sousa said. “We have an algorithm that we’ve created internally that we use to set meaningful pricing that works for the client.”

Wiggin and Dana does not take equity stakes for legal services in lieu of cash payment.

“I think it’s important for your legal counsel to have an independent analysis that is not tied to any shareholder or membership stake,” Sousa said.

According to Thomson Reuters, law firms on the West Coast have been investing in clients for years, which raises questions about the ethical issues and business risks involved.

Goldilo(x) attorneys typically immerse themselves in the company culture and attend board meetings — while maintaining an arm’s length, knowing they are not actual employees.

They help with stock plans, regulatory filings, employment agreements and commercial contract work.

Wiggin and Dana also represents larger companies that use goldilo(x) services to secure an interim general counsel during a transition from one in-house lawyer to another.

Tech companies

Sousa, who co-founded goldilo(x) in September 2023, ran a boutique firm in Fairfield County before joining Wiggin and Dana with his team two years ago.

He said a big part of what goldilo(x) brings to small companies, which often face a great deal of risk, is stability.

The service is particularly attractive to bioscience and technology upstarts.

Wiggin and Dana has helped several early-stage companies in Connecticut go public, including Branford-based IsoPlexis and New Haven-based RallyBio, which are both in the life sciences industry.

Jodie Gillon

Jodie Gillon, president and CEO of BioCT, an organization that represents the state’s bioscience industry, said startups, at first, will usually outsource their legal needs.

“You have so many facets of legal that need to be covered from compliance, to IP, to safety, to investors, employment law, to deals, that it’s virtually impossible to find one attorney who is an expert in the strategy of it all,” Gillon said.

However, when a company reaches a point where it has more than one product or trial, it may be ready to hire a general counsel, who then directs additional work to outside counsel.

“You want to progress a bit and have enough funding,” Gillon said. “Sometimes you may even need several different firms with different expertise to have the best in each area. Fortunately, in CT we have a multitude of strong firms to choose from.”

Wiggin and Dana’s growth

Sousa said Wiggin and Dana’s emerging company practice has experienced significant growth for more than four years.

“It’s one of our biggest revenue-drivers in the firm,” he said. “We’re doing, I think, 20% growth year-over-year in each of the last few years.”

Sousa said he attributes that growth to an increasing number of early-stage companies in the region — many of which have become so successful that their legal needs expand, too. He said the amount of work the firm is doing for key clients has also increased.

“The firm is growing up and down the East Coast, so it’s a pretty exciting time,” Sousa said.

Wiggin and Dana’s CT offices

New Haven: 265 Church St.

Stamford: 281 Tresser Blvd.

Hartford: 20 Church St.

Greenwich: 30 Milbank Ave.

Westport: 60 Church Lane

Madison: 23 Woodland Road

 

 

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