When's the Right Time to Hire In-House Counsel

Quick Summary
Owners of growing businesses often approach the question of whether or not to create a position for a full-time attorney as an “either/or” decision: Either we have a general counsel on staff or we outsource everything to a law firm. In fact, companies that have their own general counsel still tend to use outside law firms for specialized work.
That’s why you can’t just assume that it’s time to hire a general counsel when your legal bills are approximately the same as a full-time lawyer’s salary. It’s really more a question of what kind of legal issues you face and your philosophy about adding an attorney to your senior management team.

Defining the Duties of In-House Counsel

  • Emerging businesses tend to encounter complex or specialized legal issues, such as employment contracts, complex relationships with large enterprises, stock issuance, and other securities issues.
  • An in-house attorney’s job may include selecting and managing outside vendors, as well as handling issues internally and providing business counsel.

Pros and Cons of In-House Counsel

  • In-house counsel – like any senior manager with power and influence – adds value when doing the job well, but can become an obstacle if his or her management style is ineffective or does not fit the culture.
  • Your company benefits from an in-house attorney who is tightly aligned with business objectives, but there are risks if he or she is too much of a generalist or a specialist.

Compensation and Alternative Approaches

  • Hiring an experienced attorney is costly; salaries vary with geography and industry.
  • Alternative compensation approaches include hiring a junior attorney (with fewer responsibilities) or using equity in addition to a below-market salary for a senior attorney.
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