Utilizing Outsourced GC for Different Business Life Cycles: Part 3 – Signs You’re Ready for In-House Counsel

NOV 26, 2019 | PRACTUS LLP

Utilizing Outsourced GC for Different Business Life Cycles: Part 3 – Signs You’re Ready for In-House Counsel

Legal Services & Business Lifecycles: Part 3 – Ready for In-House General Counsel

In this series, we’re exploring the legal needs of different business life cycles, including what kind of legal professional is best-suited for each. In this third and final piece, we’re going to discuss how to recognize when you’re ready for in-house counsel within your business lifecycle.

As a business leader, I’ll set a pretty high wager that your organization’s legal needs aren’t at the top of your favorite tasks to deal with. I don’t blame you, as you have plenty of your own, more pressing matters to tend to on a continuous basis. You have your own business regimen, and as the company evolves and priorities undoubtedly shift, part of that evolution will most certainly include increased legal needs and, subsequently, higher legal bills. 

A large part of being an effective leader is understanding when and how to delegate. Bearing this in mind, here are some of the key signs to recognizing when your business is ready for in-house counsel, and how Auxana can help make sure you’re working with the best fit for your company.

In-House Counsel Doesn’t Necessarily Mean a Full-Time Hire

When reviewing scaling business’ legal needs in the previous article in this series, we discussed that as the business grows, legal requirements tend to shift from one-time projects into recurring needs. This also a major sign that your business could be ready for dedicated in-house counsel. However, just because your organization is ready for more consistent legal help, doesn’t mean that it’s time to budget for a full-time hire.

Part of why the Outsourced GC model is so effective is that it allows companies to have an in-house legal counsel at a much earlier stage in their business life cycle. The point is, most growth stage companies don’t need a full-time in-house attorney. The majority of the time, there just isn’t enough work to support the salary. In fact, hiring a full-time GC can easily cost your business over $200,000 each year! But when you do recognize the need for in-house legal services, you can greatly benefit from a “shared services” type concept in which an attorney with expertise in a distinct vertical or industry can work successfully to support multiple companies, including yours. 

Spare Your Executives the Legal Headaches

Accelerated growth can lead to disorganized and inefficient business practices as your small, scrappy team evolves into more structured, siloed departments. It’s easy to fall into the trap of thinking that your teams’ superstars – no matter how excited and eager – can realistically keep up with an ever-growing litany of new tasks and responsibilities. This is how gaps in the foundation can lead to a full-blown collapse. When your colleagues are spread too thin, things tend to fall through the cracks, and employee morale suffers along with business operations.

This leads us to another major sign that your business could benefit from in-house legal counsel: when your C-suite starts taking on much of the actual legal work themselves to avoid outside legal costs. If your CFO is reviewing contracts and advising HR processes, your COO is managing outside legal counsel, or your CEO is negotiating business development deals, it’s definitely time to hand those tasks off to a separate legal professional. In order for your business to continue to scale in the right direction, your executives need the ‘in the weeds” legal tasks off of their plate, ASAP. Not only will this make for a more well-run organization, but it’s also a huge step in the right direction for better work-life balance, which has a tendency to get thrown off as a company grows and each team member takes on more and more responsibility. It’s simply not worth the risk of letting your business do without legitimate legal counsel while your teammates crumble under the weight of projects that they shouldn’t be handling.

Outsourced GC vs. Full-Time In-House Counsel: What’s the Difference?

There isn’t a huge separation of responsibilities when it comes to hiring an outsourced GC vs. full-time corporate counsel. Businesses of almost all shapes and sizes can benefit both legally and financially from an outsourced GC who can fill the need for a business attorney, but on a fractional basis. The biggest difference really comes down to administrative tasks. For example, while your full-time in house counsel would be expected to contribute to and attend board meetings, you might not place that obligation on your outsourced GC (although we know a few who are up to the task). 

I expect that many scaling companies will eventually get to a point where they do require a full-time in-house attorney. For those businesses, including those which are quickly growing with an increasing number of new hires, those that have a significant amount of regulatory issues (e.g. the cannabis industry) or even those within industries that contain many legal nuances, such as real estate – it makes sense  to fill a full-time legal role. But the key point is that is not the only option. Some companies can get to a successful exit (e.g. purchase by a private equity firm) with an outsourced fractional GC, and not ever need to make that full-time hire. 

Utilize Practus & Auxana to Hire With Trust and Transparency

I would advise any business that’s ready for more regular legal counsel to consider an outsourced GC first. You can find and source a Practus GC or an Auxana GC as an “associate GC” or “AGC”,  on an ongoing basis or for a one-time project. Even if your company already has an in-house attorney, Auxana can help.

Perhaps your in-house attorney needs more support or wants to focus more of their time on long-term vision/strategy, but doesn’t want to eat up the legal budget by making another hire. In this situation, they can contract with an Auxana outsourced GC — someone who’s already been vetted, and they can feel confident about working with. Auxana attorneys can also come on part-time for help with a specific project or business transaction, like buying or selling a company; many of our attorneys have specific skill sets that include this type of work.

Business leadership can utilize Auxana to not only locate outsourced GCs who specialize in the type of business counsel they require, but who also make a great fit for their company’s culture, objectives, and vision. Beyond simply hiring legal counsel, your company has the opportunity to enlist a culturally-compatible legal partner, and this compatibility has the potential to evolve into a long-term, favorable partnership for everyone involved. That’s taking your business to the next level.

Practus, LLP provides this information as a service to clients and others for educational purposes only. It should not be construed or relied on as legal advice or to create an attorney-client relationship. Readers should not act upon this information without seeking advice from professional advisers.

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