May 25, 2020

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The pros and cons of hiring outside general counsel

Matthew Zifrony | 4/1/2020

For growing companies, the question of whether to hire an in-house attorney or retain ongoing outside counsel is an important decision affected by finances, experience, and agility in responding to legal needs.

As a company grows and its legal needs become increasing complex and even multi-jurisdictional, below are several advantages and disadvantages regarding in-house versus outside counsel…

  • Finances. Many companies that use outside counsel for all their legal work often first consider hiring an in-house attorney when legal bills exceed the perceived cost of having an attorney on staff. Why pay more in fees when you can pay less in a salary, they wonder? While an outside attorney already providing legal services to a company could be the prime candidate for transitioning into an in-house role, the costs may not add up. A seasoned in-house attorney experienced in the company’s myriad unique and complex issues could command far more than continuing with outside counsel. The company also will find itself paying a robust compensation package for the new attorney, as well as the cost of any administrative support.
  • Geographic diversity. Growing companies many times require legal expertise that transcends state lines or even national borders. Regulatory or legal matters from another state or nation may require an attorney or litigator from that other jurisdiction be retained. That may be the case regardless of whether the company hired an in-house counsel. However, many large firms have offices or of-counsel relationships in markets beyond where the company may be domiciled.
  • Access to broad specialization. In-house counsel often develops deep and intimate knowledge of the company’s various lines of business. If legal concerns and issues exceed the expertise of the in-house attorney, the company may find itself still calling on outside counsel. Working with an attorney affiliated with a law firm brings the expertise of the entire firm, including the institutional knowledge of the client’s lead attorney at the firm.
  • Size matters. Larger companies can find that by hiring an in-house attorney, institutional knowledge of all of the company's inter-related legal issues is developed by that one attorney. They then can retain outside counsel as needed on individual matters. Smaller companies can enjoy similar benefit and cost savings by consolidating its legal work with a single outside attorney who serves as the company's outside general counsel, and makes available the law firm’s scope of services.

Whether you hire an in-house attorney, retain outside counsel affiliated with a law firm, or use a blended model that incorporates the best of both options, growing companies should weigh the pros and cons to determine the right legal solution for their unique needs.

Matthew Zifrony is a director with Tripp Scott and practices in the areas of entrepreneurial business, commercial real estate, and condominium and HOA.

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