France can be proud of its 26 unicorns. Our country is 3 years ahead of the initial schedule and fundraising has broken records in 2021. We can congratulate ourselves on the ecosystem set up around French Tech. However, France is still behind the UK and Germany, and far behind the US. Tech companies must continue to structure themselves to maintain the market’s dynamism.
French Tech must strengthen its legal arsenal to continue its momentum and foster the emergence of decacorns capable of competing with GAFAM. The founder of the startup BIM has learned from her brutal fall that it was necessary to “armor ourselves on the legal dimension”. Indeed, Deliveroo has just been severely condemned on the status of delivery workers by the criminal court of Paris to 375,000 euros in fines and 12 months of suspended prison for its former managers. This decision is likely to set a precedent. The responsibility of platforms such as Abritel and others is being questioned. As for Deezer, the company is currently confronted with questions of regulation of the status of publishers vs. hosts.
To the credit of the tech founders, legal issues are not taught in business or engineering schools. However, it is a subject that should be considered, just like financial, marketing and HR issues. The legal culture is therefore initially quite weak in startups. Yet it is a key issue. You have to support and manage disruption by taking risks, while measuring them and limiting them so as not to put yourself in danger.
An essential awareness of the legal issues
To become profitable, French Tech companies face many challenges, including financial and technological sovereignty, cybersecurity, deep tech, CSR, and anticipating regulatory and competitive issues. Legislative inflation is having a major impact on company directors, who are faced with numerous criminal risks inherent to their position, particularly in terms of labor law, the RGPD, environmental law and consumer law. The latest example being the Law of March 21, 2022, which strengthens the protection of whistleblowers, enshrined in the so-called “Sapin 2” law of 2016. Indeed, several cases have demonstrated the difficult struggle of whistleblowers in Tech.
Essential legal issues
1/ Mapping risks, establishing an action plan to reduce them, taking out insurance coverage and anticipating the activation of a crisis unit when the risk occurs;
2/ Establish and manage a global compliance program that goes beyond RGPD issues;
3/ Define and implement a public affairs strategy to anticipate the regulatory and competitive challenges that will have to be faced as the company moves from startup to unicorn, from challenger to leader.
A strategic place for lawyers
Legal issues are not the primary concern of startups, which hire a lawyer, rather junior because these are cheap profiles on which they believe they do not have to invest too much. This lawyer will have to build his or her own team and take on managerial responsibilities for which he or she has not been prepared. The legal function is seen as a cost center, while startups have a growing need for support to structure themselves. The most successful startups are those that have quickly become aware of these needs.
A general counsel with experience, good reflexes, agility, an appetite for risk management, managerial skills, and a good sense of humor is needed.A general counsel with experience, good reflexes, agility, an appetite for risk management, managerial skills and a good network, is the right resource to meet these needs, within a management committee to support the executives and shareholders.
Let’s not neglect the strategic role of this value-creating function, which is bound to gain in importance and is a real force for proposal.