Businesses enjoy several common benefits from working with in-house counsel. These include cost benefits, familiarity with business concerns and professional relationships, among others. As businesses have come to realize these benefits, the use of in-house counsel has risen dramatically.
Several years back, The Practice published an article that tracked how general counsel had changed over the past half century. The roles that general counsel play have become more common, prestigious and diverse. Yet, there are still times when businesses—even those with large general counsel offices—turn to outside counsel. Why is that?
Some concerns fall outside their areas of expertise
As the name implies, general counsel are often generalists. Businesses frequently want their general counsel to handle a wide array of daily concerns. These may include everything from contracts and IP protection to mergers, compliance and risk-assessment.
On the other hand, some businesses may realize they run into the same legal concerns time and again. They may hire general counsel who are more experienced with those particular concerns.
In either case, it’s common for businesses to encounter problems that fall outside their general counsel’s realms of expertise. This is common with high-risk concerns like litigation. Especially if the litigation falls within a specific niche or threatens to derail the general counsel’s other efforts, businesses may find it valuable to look for outside support.
Some concerns are overwhelming
General counsel already have a lot on their plates. Especially during times of financial uncertainty or stress, businesses ask a lot of their general counsel. The result is that many feel overwhelmed and start to burn out.
Asking overwhelmed general counsel to tackle additional projects or litigation may be a step too far. There’s only so much that one person or one team can accomplish. In these situations, outside counsel can ease the burden, relieve a bit of the pressure and help businesses find better results.
Some matters can lead to conflicts of interest
General counsel are often important members of the business leadership. In fact, there’s a growing trend toward acknowledging their roles with the title of Chief Legal Officer (CLO). This often means general counsel may receive shares of the company like other executives, and they may then find themselves with conflicts of interest as they address certain concerns.
Attorneys need to be clear and upfront about their ethical responsibilities. Accordingly, general counsel asked to resolve issues in which they have financial stakes may wish to bring in help from outside. These situations offer another common reason businesses work with outside counsel.
Good outside counsel adds advantage to advantage
Businesses choose to hire general counsel because they recognize certain advantages in doing so. Typically, these involve economic benefits. However, businesses may find the same economic concerns that drive them to work with in-house counsel for most of their legal needs may drive them to work with outside counsel for high-stakes litigation and other, specialized concerns.
Legal concerns are more than a matter of billable hours. They often address areas of risk. These risks often justify the extra investment in experienced counsel. After all, no business can afford to lose lawsuits it should have won, fail to comply with certain standards or hire a new legal team as its old team members burn out on a regular basis. In the right situations, hiring outside counsel is every bit as shrewd a move as hiring general counsel was in the first place.