Outsourcing: Hiring With the Right Structure in Mind
In episode 3 of the Persevere Podcast, we welcome Matt Smyth of Headland Law. Matt is Checkable Medical’s patent attorney and general counsel. As an electrical engineer, Smyth designed hardware for telecom companies. He later decided to go to law school because of his interest in patent law. He then worked for a large intellectual property (IP) firm, Fish and Richardson, for many years before spending a decade at Honeywell’s legal department managing their global patent portfolios. Matt decided to repackage his law experience and engineering skillset to help medical startups set their foundations in IP. With this goal, he founded Headland Law & Strategy (headlandlaw.com).
Patty and Matt start the conversation by discussing why a statement of work is important when working with contractors. The bottom line, it’s clarity. Clarity around what the startup wants and what the service provider will deliver, on what timeline, and for how much. Patty shares her experience about how difficult it has been to work with contractors to define a scope of work for something that has never been done before or isn’t completely defined. Matt suggests having a solid team of advisors to help a founder define the different phases of a project and all milestones that can be reached. Breaking projects into small pieces allows for each party to clearly understand each phase of the project and a smoother working relationship with the contractor.
Matt weighs the pros and cons of hiring on a fee structure versus hourly structure. He believes a hybrid model (combining hourly work and fixed fees) is the best way for the founder and contractor to equitably share any risks.
Matt also explains what working on retainer means. He details the two ways retainer engagements usually work and how problems can occur when there are not clearly defined milestones in the work engagement.
Matt and Patty both agree that spending the time and money to establish a legal foundation for the startup early in a company’s journey is a great idea and prevents many future problems.
In the final segment of the episode, Smyth explains what a swimlane diagram is, how it can help designers of software/processes, and how it can help define a working relationship with a contractor.