In an age when outsourcing is the trend, and companies are relying on outside contractors more than ever to help grow their business and expand their position in the marketplace, it can be difficult to know how and when to in source specialized professional services. Specially, when should a company invest in developing and hiring in-house legal counsel?
The answer is murky at best, especially when it comes to dealing with legal issues. Knowing when and how to transition from outside legal consulting to hiring a full-time in-house counsel is one of the most crucial and difficult decisions a company must make. Indeed, it is a decision that has only become harder to make as the market changes.
When to Consider In-House Counsel: Company Size and Legal Needs
There are some general guidelines that can prove helpful throughout the process. While every company and industry demand a slightly different strategy, it is generally time to consider hiring in-house legal experts when your operation is between 40-100 people. If you have complex or more extensive legal needs, you might consider hiring in-house counsel sooner.
Many company executives balk at the idea of hiring in-house counsel because it sounds like an expensive investment that might not make long-term financial sense. Integrating an in-house counsel as a core part of your employee base, however, can drastically improve your company savings and prove to be one of the most worthwhile investments an organization can make.
If your C-suite is debating whether to incorporate in-house legal counsel, there is plenty to consider. Analyze your previous legal expenditures and use that as the foundation of your legal strategy. When you find that your legal bill is about two times the entire cost of hiring in-house counsel, you can (and should) think about integrating in-house counsel into your company structure.
Five Industries That Hire In-house Counsel the Most
- Finance: Everything from investment banking to private equity, these businesses are littered with high stakes contracts.
- Tech: Whether software or hardware, tech is littered with legal red tape including patents, litigation, and IPO.
- Entertainment: With the abundance of copyrights, licensing and royalties, in-house counsel is a must.
- Oil: It goes without saying, if you are in the oil or gas business you had better have in-house counsel.
- Real Estate: Commercial real estate is benefited by in-house counsel due to lending, contracts, and building code.
Understanding In-House Counsel: The Pros, Cons, and Pitfalls
As your business grows and your legal needs evolve, there are some pivotal pros and cons to be aware of to maintain company security and success.
Today’s complex and unpredictable economic terrain has made commerce more volatile. It puts far more pressure on companies to approach their short-term and long-term goals with nuance, flexibility, and cleverness. No one can afford to bring on a full-time team member that cannot contribute to further developing and implementing a company-specific strategy.
If your company is beginning the process of hiring in-house counsel, bring outside voices and experts into the candidate search so that you hire legal counsel that brings as many analytical skills and as much creativity and adaptability to the table as any other employee or department. Ensure that you identify and target lawyers and attorneys that are a natural extension of your brand and familiar with your specific industry’s legal happenings, based on carefully developed search criteria.
In-house counsel can also help improve internal operations and strategy. Instead of existing employees seeking issue-specific legal counsel to put out fires, an in-house counsel will proactively develop company protections and contribute to overall company success day-in and day-out through detailed legal plans tailored to your business.
Regardless of your industry, do not underestimate the value of experience. Every candidate should bring 5-10 years of diverse experience to the table. Look for resumes that reflect a deep understanding of intellectual property law, tax law, employment law, contract law, and cooperation and securities law. These are areas that come up in virtually all businesses, and an in-house counsel will prove more valuable when they have a thorough awareness of those legal niches.
Capitalizing on In-House Counsel: Saving Company Cash and Improving Strategy
While your in-house legal counsel should be well-versed and firmly embedded in your company mission and strategy, their expertise will not extend to every legal issue that arises. The range in a company’s legal needs makes it impossible for one lawyer or one general law firm to advise and handle everything, which is a fact that only becomes more apparent as the marketplace expands and accelerates with 21st-century technology. From trademarks and intellectual property protection to employee termination to shareholders’ agreements, the legal field is riddled with both broad and industry-specific pitfalls.
An in-house counsel, such as General Counsel or Chief Counsel, becomes a cost-saving investment when it seeks the right specialty legal advice from trusted and qualified specialists. They can manage outside legal advisors with a keener, more experienced eye, and free up time that would have otherwise come out of other non-legal employee schedules. Even better, in-house counsel dedicates 100% of their time to your company and delivers results and strategy much faster than outsourced legal advice. You will find that an in-house counsel mitigates legal expenditures as much as they increase productivity and efficiency across other departments.
Some other factors that will make hiring in-house counsel a financially viable option include going public in the next 5-10 years, the development of high value intellectual property, being in a federally regulated industry, and spending more than $500,000 in outside legal expenses in a year. If your company takes the right in-house counsel approach for the right reasons and at the right time, you will see your investment pay off in more ways than one.