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Authors: Michael Kuzma and Andy Page

Explosive growth is every business owner’s dream – more revenue, more recognition, a bigger team, and bigger opportunities. But with that growth comes increased complexity and more scrutiny from investors, vendors and other stakeholders.

Many businesses reach a point where legal needs become too complex for DIY solutions, but not substantial enough to justify a full-time in-house attorney. This gap in legal coverage often appears during periods of company transformation — raising capital, entering new markets, or preparing for a material transaction. At these stages of business growth, a clear legal strategy is essential, even if permanent legal support on staff is not.

This article walks through common gaps seen in high-growth companies, and how to close them before they derail a key transaction, slow business momentum, or become costly to fix.

1. Outgrowing DIY Contracts and Handshake Deals

In the early stages of a business, formalizing vendor or supplier contracts is rarely a priority. The focus is rightly on validating the business model and generating revenue growth. As a result, key commercial relationships are often based on handshake deals or one-sided agreements that omit critical legal protections and contractual provisions. These arrangements can leave the business exposed — for example, by allowing a supplier to terminate at will or restrict contract assignment in the event of a sale.

As a company matures, investors, lenders, and other stakeholders expect a more disciplined and sophisticated approach to contracts, management, and corporate governance. They look for signs that the business conducts due diligence on counterparties and uses written agreements with terms that reflect operational and legal maturity — such as clear enforcement and termination provisions, assignability clauses, and favorable indemnification or liability limitations.

A scaling business should ensure that its contract relationships reflect its current posture on risk management, revenue recognition, and market reputation—not the levels in place at its initial formation.

2. Cap Table and Company Docs Outdated or Inaccurate

As a business grows, it accumulates a range of foundational documents — vendor contracts, cap tables, equity issuances, operating agreements, articles of incorporation, bylaws, etc. These documents are often overlooked once operations take precedence, but they remain critical for protecting the company’s current ownership structure and the foundation for future growth.

Incomplete or outdated corporate records can cause significant problems during due diligence and can delay or derail financing, M&A, and even negotiations with customers or suppliers. At a minimum, any business approaching a growth event should have a clear and accurate record of who owns what, and what happens if a shareholder, partner, or officer exits the company.

Cleaning up corporate records and formalizing equity arrangements should not be left until an investor or acquirer is already at the table, or when a key counterparty demands documentation.

3. Unclear IP Ownership and Information Risk

High-growth businesses — particularly startups and early-stage companies — often develop valuable proprietary information long before they have formal systems in place to protect it. Critical intellectual property, trade secrets, and confidential information are regularly shared with early employees, contractors, or advisors, sometimes without any binding agreements in place.

Without signed confidentiality, non-competition, and IP-assignment agreements, the business might not legally own the assets on which it relies. This can present serious issues in M&A or transactional due diligence, especially where a contractor contributed to product development or branding. Buyers and investors routinely ask: Does the company own what it claims to sell?

The rapid rise of the use of open-source software and AI-based tools adds another layer of complexity to this question of ownership. Improper licensing, unvetted third-party code, or employees inputting sensitive data into AI tools can result in loss of control over proprietary assets. Businesses should adopt clear internal policies on IP use and AI interaction, and also ensure that all relevant contributors—whether employees or contractors—have executed enforceable agreements assigning their work to the company.

Identifying and addressing these issues early reduces the risk of disputes and protects the company’s assets and value—helping to avoid last-minute scrambling during due diligence.

4. Employment Risks Multiply with Headcount

As businesses grow, so does their exposure to employment-related risk. Rising headcount often brings increased regulatory oversight, a higher likelihood of employee disputes, and greater complexity in managing compliance across hiring, compensation, classification, and termination practices. These risks are especially acute for businesses operating across state lines or managing remote teams.

Common issues include informal or inconsistent onboarding and termination processes, unclear at-will employment terms, and unenforceable or poorly drafted restrictive covenants. In many cases, companies also misclassify workers—treating employees as independent contractors or failing to pay interns appropriately—which can lead to enforcement actions or backpay liability.

While these matters are often overlooked during the early stages of growth, they quickly become high-risk issues under the scrutiny of buyers, investors, and regulators. Proactively addressing employment practices is far less costly than responding to an investigation or enforcement action from state and federal regulators.

5. Legal Does Not Scale Linearly with Growth.

There is rarely a clear one-to-one relationship between operational growth and legal workload. In many businesses, the operations may be proceeding smoothly while legal faces acute demands — such as preparing for a funding round, responding to a regulatory inquiry, or negotiating a major deal. Alternatively, the business might be scaling rapidly while legal focuses on proactively strengthening contracts, compliance systems, or IP protections.

This mismatch is why full-time legal departments are typically found only in large businesses or those high-risk or heavily regulated industries. For companies without daily legal exposure, a more efficient model is to contract legal support as needed — keeping overhead low while still benefiting from strategic guidance. As Jeff Bezos put it, a beer company should focus on making the beer taste better — not building a legal department.

However, waiting until a crisis emerges — whether it’s a lawsuit, data breach, or regulatory investigation —- is a costly and often avoidable mistake. The most effective approach is to engage experienced outside counsel during inflection points: launching new products, expanding into new markets, seeking investment, or preparing for a sale. These moments are early opportunities to get ahead of potential risks. Having experienced legal counsel involved early keeps the business on track and out of trouble.

6. Legal as a Value Driver, Not a Cost Center

Legal is often treated as a cost center—something to minimize, delay, or avoid until absolutely necessary. But as Hilgers CEO Sterling Miller has pointed out in his book on this very topic, legal should seek to be a value creator. Done right, it’s not just about reducing risk — it’s about increasing valuation.

Well-drafted contracts, clear ownership records, enforceable IP rights, and scalable internal structures all lead to smoother transactions, fewer surprises, and better outcomes in diligence. Proactive legal strategy can prevent costly missteps, support strategic goals, and make a business more attractive to buyers and investors.

Ultimately, legal maturity in a business signals operational and financial maturity. Investors and acquirers reward companies that look like they’ve done this before — and the right legal foundation is one of the clearest signs that a business is built to last.

7. Let’s chat!

As your company’s momentum builds, don’t let legal be the department that lags behind. At Hilgers PLLC, we help high-growth companies become diligence ready and transaction proof without the overhead cost of a full-time legal team. Whether you’re raising capital, expanding into new markets, or preparing for a sale, our on-demand counsel delivers GC-level expertise right when you need it. We partner with scaling businesses across the country — from our home base in Nebraska to major hubs in Texas, Illinois, and Florida — to put a legal strategy in place that protects value and supports growth.

If your company is facing legal questions you haven’t had to answer before, let’s talk about a custom legal plan that keeps you growing with confidence.

About the Authors

Michael Kuzma, Partner & Chair of Corporate Practice Group

Drawing upon years of investigation and antitrust experience from early in his career, Michael advises companies and organizations in the US and Japan on complex commercial real estate and corporate transaction. Follow him on LinkedIn here.

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Andy Page, Associate

Andy Page advises clients on a wide range of corporate and transactional matters, with experience spanning commercial contracts, M&A, entity formation, and international operations.