When a company hires its first in-house attorney, an array of business practices are subjected to legal review for the first time. This can have the short-term (and even long-term) effect of increasing the legal expenses of a business. This is particularly true if the first hire is a general counsel rather than a staff attorney. So if legal expenses may actually climb, how should a company decide to add to its overhead?
Advantages Of Bringing Counsel In-House
A key advantage of having an in-house GC is that he or she is "living with the client" during the initial thinking about projects. In a company where the GC is considered part of senior management, counsel is on hand to steer the company toward safer approaches to potentially risky propositions before significant time and resources have been committed. By virtue of having more direct and continuous contact with managers throughout the company, in-house counsel may identify and focus on issues that management might never have brought to the attention of outside counsel (or only when it was "too late"). In contrast, outside counsel are consulted most often after a matter has attained a "critical mass" and the expense becomes clearly justified.
Not every company can justify hiring a full-time or even part-time lawyer. There are no hard and fast rules but here are some of the indicia:
1. Sales exceed $10 million and/or the headcount of the company goes beyond 250.
2. The company provides a service or sells a product that has potential to cause great physical, emotional or financial harm.
3. The company owns and/or leases several properties.
4. The company deals with a high volume of contracts with vendors and clients.
5. The company is in a regulated industry (or one that will be).
6. The business is heavily involved in the purchase, sale and/or development of valuable intellectual property.
7. The company is contemplating going public.
8. The company is facing a serious legal/PR problem that is likely to linger.