I own and operate a small software company and have been in business for two years. The product I have developed and sell has a great niche market. Although I am making enough sales to pay the bills, I want to take my company to the next level.

I've been investigating VC as an option to raise money to hire employees, etc. But, I've been told by more than one person that VC is a last resort and that I could lose my company…literally kicked out.

Is this true? What kind of attorney should I secure if I were to go down the VC path?

Getting assistance from a Venture Capital can be risky, and not just the possibility of getting kicked out. The plus side is that your dealings with them would be negotiated, meaning you could ascertain from them, using your own legal counsel, up front if losing your company to them is possible.
The bigger danger is losing creative control and direction in your company. VCs can and do assign directors/managers, etc to "help" oversee the business. It may not take too long before they are running the show, even though you still 'own' the company.
Using a VC group doesn't have to be bad, but you should look at other options: business loans from the bank, grants from government or private sources, private investors (including so-called 'angel funding'). Angel funding will also contain some kind of part-ownership deal, but again, this is all negotiable.

If these other options don't pan out, you can still investigate the VC route. As far as an attorney goes, business law is a common field. As you grow, you may wish to hire a business lawyer onto the payroll. You can also use any firm that specializes in business law. Just ensure that you check them out thoroughly, as you would any potential employee.