How Outside General Counsel Can Make You More Profitable
- November 23, 2021
Business and law evolved together and have developed such a symbiotic relationship in the process that every business from one-person startups to international corporations have substantive legal needs. These needs vary greatly among industries and even among individual businesses in the same industry. The size of the business plays a substantial role in determining how a company’s legal needs are structured, but size is only one factor among many to determine your business’s legal needs. Large corporations typically have their own legal departments while their small business counterparts often only find it necessary to keep a local attorney on retainer. Startups commonly use a pay-as-you go approach to meet their legal needs.
What all of these business models have in common is that they all have legitimate reasons to hire outside general counsel, even those with their own in-house legal teams. In larger companies, it’s common for in-house teams and outside counsel to work as part of a bigger picture.
Here’s what business owners and managers need to know about outside counsel, including when using it makes sense and what types of areas are most commonly outsourced.
What Is Outside General Counsel?
Outside general counsel refers to lawyers who provide legal services to a company but are not employed by that company as part of an in-house legal team. As mentioned previously, all types and sizes of businesses encounter situations where outside general counsel is their best option. Companies with their own law departments often hire outside counsel for special projects or on an as-needed basis.
Outside counsel may be brought in for certain types of cases requiring specific expertise that in-house staff doesn’t have. They may also be brought in on a temporary basis during unusually busy times when in-house staff can’t handle the workload.
What Is the Difference Between In-House Counsel and Outside Counsel?
The major difference between the two is that in-house legal teams are employees of the company and outside counsel work as independent contractors. Their roles are typically somewhat different as well. For instance, in-house counsel generally plays a managerial role in overseeing work that’s been outsourced. In-house legal teams are focused solely on the companies that employ them, have a front row view of the inner workings of the business, and are highly familiar with company culture. In-house counsel can also keep an eye on costs involved in outsourcing legal work to help ensure that they don’t become greater than necessary.
Outside general counsel are paid an agreed upon hourly fee for services rendered. The use of retainer funds may be involved. However, even fledgling and super-small businesses with sporatic legal needs for an in-house legal team can still greatly benefit from having a small retainer with a legal team such as Global Legal. Such an arrangement enables the merchant the opportunity to get legal advisement through a quick call, have contracts reviewed, and other legal assistance when it arises.
Why Do Companies Use Outside Counsel?
Companies use outside counsel for a variety of reasons. Perhaps their ongoing legal needs are consistent but not enough to maintain an in-house staff of more than one or two attorneys. It may be more cost-effective for them to hire outside counsel when it becomes necessary to fill in the gaps. Hiring outside counsel also saves companies money by eliminating recruiting costs as well as paying for insurance, benefits, and other aspects of paying full-time employees.
One of the main reasons for bringing outside counsel on board is when a litigation matter arises that is out of the scope of the in-house legal team. For instance, the rise in electronic payments has created an increased need for electronic payment litigation, which is a skill set in-house law staff often lacks. Global Legal is prepared to take up the slack as outside counsel when these issues arise.
There are times when using strictly outside counsel is in the best financial interests of the business. Depending on the needs of the company, this doesn’t necessarily have to be a law firm — it can be an attorney in private practice who is willing to work on a private contractor basis for a per-project rate. When going this route, businesses need to be sure not to cross the line between employee and independent contractor. Other companies simply aren’t large enough to justify maintaining a separate law department.
What Are Outside Counsel Guidelines?
Outside counsel guidelines are agreements between the client and the law firm or independent contractor who provides the business with legal services. These agreements can be long and complex, and each is unique to the needs and preferences that comprise the building blocks of the corporate relationship between the two parties. These guidelines should be carefully considered by each of the two participants prior to moving forward with the relationship.
Typically, outside counsel guidelines define those legal areas that are to be dealt with by outside counsel as well as the role of the in-house legal team, if any. Ideally, these documents should outline how conflict between in-house teams and outside counsel is handled, designate a supervising attorney among the in-house staff, and provide a clear budget timeline forecast. Billing protocols are included.
These guidelines should include a signature page at the end for everyone involved to sign, confirming that they have read and understand the document.
Outside counsel guidelines should also be considered living documents. Because they are generally drafted at the beginning of the business relationship, many of their aspects may lose relevance as circumstances evolve. It’s important to review these documents at least once per year to ensure that they’re up-to-date. Agreements should work for both sides rather than simply functioning as a list of demands from the client.
What Should Companies Look for When Hiring Outside General Counsel?
The specific needs of the business should take precedence over other considerations when hiring outside counsel. A small business operating within a specific geographical area, for instance, will have significantly different needs than a international corporation with legal teams of its own in multiple locations.
Specialization has become a substantial trend among outside counsel providers such as Global Legal, which operates in the arena of providing legal advice for payments companies.
Other factors that those seeking outside general counsel services may wish to consider include reputation within the industry, compliance within the applicable regulatory agencies, and a history of complying with state and federal employment laws as well as consumer privacy laws.
What Types of Work Should Companies Outsource?
The type of work that companies typically outsource are specific to each individual business. The most common reasons for outsourcing legal work include contract creation and review, research and analysis, and administration work such as discovery, transcription, and collections. Many business hire outside counsel to act as a legal guide through the process of selling their companies or navigating a merger.
It’s also becoming more common to outsource speciality litigation services. For instance, one of the main focuses of Global Legal is franchise litigation, which occurs when either party involved in the franchise violates the contract, wants to break the franchise relationship, or otherwise has failed to live up to the obligations put forth in the franchise agreement.
Other areas of expertise commonly outsourced include the following:
Electronic Payments Litigation
Electronic payments, Credit cards, PayPal, Venmo, any online payment scenario are increasingly used in financial transactions of all types, creating a need for experienced and skilled litigators in this area. Global Legal can also help those who are setting up an electronic payments system and getting clients removed from MATCH List. MATCH Lists are lists provided to financial institutions of merchants considered to be high-risk. From Reserve Fund disputes, to advising on a new processing arrangement Global can offer the experienced insight and legal expertise to make sure your business is protected and most profitable.
Independent Sales Organization Litigation
This area involves disputes between business owners and ISOs, disputes with commercial vendors and related, often including issues of overcharging and otherwise wrongfully charged fees, data breaches, and fraudulent business schemes. This area also includes contract review designed for those seeking to partner with a third party payment processing provider to ensure that all necessary legal bases are covered.
Complex Business Litigation
Contract disputes are one of the most common issues to come up, and it takes a finely-tuned legal skill set to successfully handle them. Complex business litigation also includes handling employment claims and class action lawsuits.
Companies that develop new products often partner with an independent patent law specialist to ensure that their ideas are safe from being stolen by someone else and portrayed as their own.
Personal Injury Litigation
Businesses usually outsource accidents involving personal injuries to skilled personal injury attorneys even if they’ve already got a substantial in-house law team in place. This is a highly specialized area of law, and these cases really need to be handled by the experts.
Some firms have lawyers on staff who specialize in helping entrepreneurs ensure that their startups have all the necessary boxes checked. Those who fail to obtain these services may be in for unpleasant surprises at some point down the road.
Contact Global Legal for More Information
Please contact Global Legal Law Firm for more information and to schedule a call on how partnering with a skilled outside counsel can provide you with the kind of specialized expertise your business needs to thrive.
Regulatory bodies such as the FTC and CFPB are targeting payments processing now...Read More
Payment processors have recently become increasingly the target of regulatory investigations and actions...Read More
Nonbank financial companies that pose risks to consumers will face more scrutiny from...Read More