Kimberly Lytikainen‘s progression from intellectual property litigation at law firms to senior legal roles at Sun Microsystems, NVIDIA, MindBody, Five9 and Ping Identity taught her a fundamental truth about scaling startups: The legal shortcuts founders take at $10 million in annual recurring revenue (ARR) compound into deal-breaking liabilities by $100 million. Over 15 years building and scaling legal functions, Kimberly has guided multiple companies from $75 million to more than $1 billion in ARR, shepherded several initial public offerings (IPOs), and co-quarterbacked major mergers and acquisitions (M&A) transactions.

The pattern she observes across high-growth companies is consistent. Founders often delay investing in legal infrastructure to focus solely on product and go-to-market (GTM). Clean intellectual property, organized cap tables and robust privacy compliance that takes weeks to establish early on will require years of remediation later; often, they surface at the worst possible moment during due diligence. Kimberly’s framework identifies specific revenue inflection points where legal requirements fundamentally change, and how founders can build legal teams as strategic partners rather than bottlenecks from day one.

3 principles to transform legal from bottleneck to enabler 

During periods of hypergrowth, legal teams face constant pressure to move faster while maintaining quality. Kimberly has refined three core practices that enable legal functions to scale without becoming bottlenecks.

The first centers on what she calls a “one team mindset.” This means the legal department operates in unified alignment with business goals rather than departmental priorities. “The team is always the business,” Kimberly said. “It may be best that we offer some of our budgeted dollars to the engineering group and support another engineer being hired as opposed to a headcount in our department.”

The second practice, “solutions, not problems,” represents one of Kimberly’s core mantras. Rather than simply identifying legal risks, teams should arrive with options that advance business objectives while managing exposure. This requires viewing legal skills as tools for enabling business outcomes. “Think of yourself as a business person first,” Kimberly said. “You happen to have legal skills that you bring as you enter any room or hop on any video call.”

The third practice involves systematic cross-functional partnering. “We can’t be experts in everything,” Kimberly said. “Even within the legal organization, tap into your teammates across the aisle for their expertise and their experiences.” This collaboration extends beyond the legal department to include partnerships across all company functions, creating a network of expertise that supports faster, better-informed decisions.

Founder shortcuts that become deal-breakers later 

Kimberly has participated in M&A transactions from both sides of the table, and certain foundational gaps appear repeatedly during due diligence. Four areas consistently trip up founders who assumed they could address these issues later.

Regulatory compliance and privacy top the list. “Even 10, 12 years ago, we used to talk about privacy by design, but it truly is a way of life today,” Kimberly said. “There is no other way to do it because you don’t want to rebuild the product.” For companies at $35 million or below in revenue, she recommends investing in privacy expertise through a practical law firm with startup experience, rather than hiring an expensive in-house specialist.

Cap table management presents the second critical area. Companies paying contractors or employees with stock in the early days often fail to track these commitments systematically. “It’s surprising when you’re going through a liquidity event how many people come out of the woodwork and make all kinds of claims,” Kimberly said. Investing in a stock administrator, even as a contractor, prevents these costly surprises.

Employment documentation matters equally. Kimberly emphasizes getting proprietary information and invention assignment agreements signed universally. “Really, all employees, but especially anyone who is even smelling the product,” she said. The documents must be kept organized and accessible, which becomes critical during due diligence.

Finally, collaborations with universities and government agencies require careful attention to fine print. “I’ve also seen that trip up startups,” Kimberly said. These partnerships can create encumbrances on intellectual property or grant agencies full usage rights. “It can be a real monkey on your back if you’re not careful.”

What changes at $40M, $100M, $350M and beyond

Legal and operational maturity requirements shift dramatically at specific revenue milestones. Kimberly identifies clear inflection points where both founders and venture capitalists should expect fundamental changes in legal infrastructure.

The first major threshold arrives at $40 million ARR. Companies at this stage should bring in key operational roles, including a real chief financial officer and legal leadership. Kimberly cautions against hiring too senior too soon.

“I think it’s a big mistake to right away recruit a general counsel when you’re at $35-$40 million,” she said. Instead, hire a VP of legal or director of legal focused primarily on GTM with enough expertise to identify when specialized regulatory help is needed. Both founders and VCs expect general and administrative infrastructure at this mark. From there, $100 million ARR requires more sophisticated legal capabilities spanning multiple functions. “I think you can save that title for when you’re bigger, when you’re $100 million and you really need a general counsel.”

The next significant shift occurs between $350 million and $500 million. “There’s another step function of maturity that’s expected of you when you are being diligenced,” Kimberly said. Tax structure, entity organization, and international regulatory compliance all face heightened scrutiny. “When you’re bigger, the main thing from both sides of the table, VC and founder, is there’s less forgiveness because there’s just more risk.”

By $1 billion ARR and beyond, companies must demonstrate they will be accretive to acquirers. Problems that were easily solvable with insurance or workarounds at a smaller scale become deal impediments. “The smaller and younger you are in your company life, the more forgiving and the more solvable because it’s just a smaller problem,” Kimberly said.

Invest in experienced representation and keep your house clean

Kimberly approaches M&A preparation from hard-won experience. Beyond the foundational infrastructure, specific decisions enable smooth due diligence and favorable terms.

Professional representation matters earlier than founders expect. “If I were founding a company myself and I had even $15 million, I think it would be worthwhile to invest in a banker,” Kimberly said. The instinct to handle negotiations personally underestimates the value that experienced bankers and lead legal partners bring. “There is a role and a very valuable role for them to play,” she said. “There are always corners that you don’t see.”

Compliance certifications require genuine processes behind them, not just self-attestations without support. “Depending on the risk profile of the buyer, that could be a showstopper for them as well,” Kimberly said. “Or they’ll just want a huge holdback where the founder and the selling company won’t get their money. They won’t get the benefit of the bargain for years out, and that’s not fun.”

Strategic positioning should happen continuously, even when not actively seeking acquisition. Kimberly recommends building relationships with industry analysts who shape market perceptions and influence how companies are valued. “Love your customers well and often,” she said, noting that word of mouth remains the biggest marketing return on investment.

Finally, founders should talk early with M&A specialists and bankers to understand the landscape. “Explore what the chess board looks like and what a successful outcome could look like, given various paths and moves of the company as you evolve,” Kimberly said. “Getting out ahead of that and then working backwards is really smart.”

Implement tools that meet the company where it is

Kimberly’s framework for scaling legal operations at Five9 across 3,000 employees in the United States, Europe and East Asia relied on strategic technology investment rather than proportional headcount growth.

“It’s a big mistake as a legal leader to think about solving gaps in resources with just headcount,” Kimberly said. “No CFO wants to hear that.” The proliferation of generative AI tools has made this approach even more viable, though implementation requires careful integration planning.

The critical distinction lies in how tools connect with existing company systems. Contract lifecycle management platforms locked in what Kimberly calls a “virtual closet,” accessible only to lawyers, deliver minimal value. “That’s not what I’m talking about,” she said. Effective tools integrate with customer relationship management (CRM software, quote-to-cash systems and whatever workspace the company already uses. At Ping Identity, that means building around Google Workspace and Gemini.

This integration enables self-service capabilities for business teams, allowing sales representatives to generate contracts without legal bottlenecks. Working with IT departments to roll out tools in phases helps prove value at each stage. “You can prove the value in each phase so everybody wants to keep going forward,” Kimberly said.

Assign lawyers to business leaders, not legal projects

Kimberly’s transition from law firm to in-house counsel at Sun Microsystems revealed a radically different operating model that shaped how she builds legal teams today. Rather than treating lawyers as a separate support function, Sun integrated legal professionals directly into business operations.

“Every lawyer was truly thought of as a business person,” Kimberly said. “We sat on the staffs of the business teams.” Even as a junior corporate counsel, she attended staff meetings alongside business leaders, contributing to strategy discussions and priority-setting. “My opinion mattered. I was asked what I thought about various business challenges.”

This structure creates direct accountability between lawyers and business leaders. Each attorney serves as the go-to legal partner for a specific function or leader, whether heading up a marketing sub-function or managing crisis communications. “I think it’s very important to feel accountable for each and every member, frankly, of general and administrative,” Kimberly said. “To feel accountable to another human who has a different role day to day in the business so that you can collaborate and be in step with what’s going on.”

This model contrasts sharply with traditional legal departments that operate in isolation, only engaging after business decisions are made. When lawyers participate in business discussions from the beginning, they can solve for business outcomes while managing risk. “Everybody has skin in the game,” Kimberly said. “We’re here together to drive business and to make the business successful.”