Box GC Practices In-House Law in the Cloud

Julia Love

The Recorder

12-03-2012

Online storage startup Box Inc. has grown quickly by thinking about how people work today and designing its services accordingly.

Founded in 2005, the Los Altos-based company gives users — who now number more than 14 million — five gigabytes of free storage, with additional space and features available for a fee. Some 140,000 businesses pay for premium services, including more than 90 percent of the Fortune 500.

As its list of prominent clientele grows, so does chatter about whether Box will go public. Peter McGoff, who came on board as general counsel and corporate secretary in April, says he is sure the company will take that step at some point, but it is in no hurry. The company has a total of $284 million in funding, $125 million of which was raised in a round completed in July.

"One of the reasons that the company raised that recent round was to ensure that we have luxury to pick the timing" of going public, McGoff said.

Legal team and outside counsel

McGoff came to Box from Informatica Corp., where he was senior vice president and general counsel. Having joined that data integration company shortly after its IPO, McGoff said he can envision the path that Box will take to go public.

Coming on board as the company's second attorney, McGoff is building Box's legal department from the ground up — a challenge he enjoys. Informatica's legal department grew from two to eight lawyers during his 12 years at the company.

"Toward the end, I missed doing the deals and getting dirty," he said. "I wanted to go to a smaller private company where I have the ability to be a bit more impactful."

McGoff has brought on two new attorneys so far, both of whom are working on agreements with customers and partners as well as licensing, and he expects to add several more with those specialties in the coming months. That side of the business has been the focus as Box relies on enterprise customers to drive its growth.

As the company matures, in-house lawyers specializing in employment and IP will likely be added, McGoff said. He also expects the company to hire a lawyer in Europe, the focus of Box's geographic expansion. All told, McGoff predicts that the legal department will double over the next year. With greater manpower, McGoff plans to bring much more of Box's legal work in house.

"We'll see some significant changes in that area, much to our outside counsel's chagrin," he said.

Box still relies heavily on outside counsel for litigation, IP and the bulk of its corporate securities work, McGoff said. The company often turns to Perkins Coie, where corporate partner Mark Albert handles much of their work. The firm is representing Box in a suit filed by Titanide Ventures, a Texas-based company which claims its cloud storage patents were violated by Box, Google Inc., Yahoo Inc. and Hewlett-Packard Co. European firm Taylor Wessing has advised Box on its growth overseas.

McGoff wants to expand Box's roster of firms for outside counsel. He said he is looking for lawyers who command their specialties while taking a practical approach.

"You want attorneys that understand what you're dealing with as an in-house lawyer trying to sell something to a CFO or CEO," he said.

Daily duties

In his early work at Box, McGoff has tried to establish a legal foundation to underpin the company's fast growth. Many startups, he noted, expand first and think about legal issues later.

Guarding Box's IP is one of his primary concerns. The company now has two patents issued with more than 50 being processed, a handful of which are international. McGoff is also exploring other protections such as copyright.

Data protection is central to the company's mission and also the most significant regulatory issue that it faces, McGoff said. His top task has been building Box's compliance program around data security and privacy, which is complicated by the fact that Box operates in numerous states — many of which have their own privacy laws. Box must also comply with Europe's strict privacy regime to court clients on that continent. And McGoff knows that companies will only turn to Box if they trust that their files will be secure in the cloud.

"The No. 1 discussion we have with enterprise is around the safety of their data," he said. "It's very important that we continue to have a strong focus in that area."

To that end, McGoff recently spearheaded a data inventory to take stock of the various ways in which Box interacts with consumer's information and make sure that its privacy and compliance programs measure up. That analysis has given the company a road map for when it seeks to broaden its compliance programs, McGoff noted.

As he settles into his new role, McGoff is getting acquainted with the larger company — and making sure that it is aware of his department. For most of Box's history, employees who had questions about legal issues either turned to outside counsel or didn't ask, he said. McGoff feels the legal department is already becoming better integrated, with a culture that mirrors the company's.

"It's very much a high-energy culture focused on getting stuff done and continuing to build the company at this rate," he said. "In the legal department, we're thinking about how we can get a deal and do it at a fast rate so we can move on to the next one."

Route to the top

McGoff fell in love with the law as a banker. As a manager of a branch of HomeFed Bank in the late 1980s, he got involved in a litigation matter and became intrigued. In 1992, he enrolled in Pacific McGeorge School of Law. After completing a master's in IP law at London School of Economics, he headed to Silicon Valley in 1997 to satisfy his curiosity about technology.

His first post was at Palo Alto boutique Wise & Shepard, and he stayed for several years after the firm merged with Manatt, Phelps & Phillips. He went in house in 1999 as the first attorney of Omnicell Inc., a medication and supply management firm. Soon after, a former Omnicell colleague convinced him to join him at Informatica, where he stayed until taking the top legal job at Box.

EXTRACURRICULAR

McGoff commutes to Silicon Valley from Walnut Creek, where he lives with his wife and two children. The family has traveled to Hawaii several times and toured Paris last summer. His oldest son, who is 17, spent the first year of his life in London while McGoff was earning his master's. McGoff hopes to take the boy and his 11-year-old younger brother back to London next summer so they can see the old flat.

This article originally appeared in The Recorder.