Sound legal advice and services are essential for the success of any business, whether bare-bones startups, small or medium-sized businesses, or more established enterprises. While some may view legal fees as just another expenditure going out the door, investing in legal counsel helps company leadership avoid risk and make significantly smarter business decisions.
Many companies don’t receive the legal counsel they need because they either don’t have the resources to hire in-house general counsel, or the variable, seemingly excessive cost of legal fees makes them hesitant to hire outside general counsel. But, in today’s highly regulated, legally complex business environment, not being proactive about seeking legal counsel could have catastrophic results for the future of your business.
Thankfully, a new trend toward legal services called “fractional general counsel” combines the best aspects of in-house and outside general counsel, while helping to reduce costs and enhance the attorney-client relationship. If you think your company can’t afford the legal help it requires, or perhaps you just need to reign in legal costs, it might be the solution you need to ensure the security and future success of your business. Here are three ways utilizing fractional general counsel could benefit your organization:
1. Avoid the drawbacks of in-house counsel
Even for larger corporations that can afford in-house counsel, sometimes an independent attorney whose counsel cannot be dictated by an employer is important to provide objective legal guidance. Since in-house attorneys are employees, their jobs often depend on pleasing company executives, which can potentially lead them to engage in ethically or legally unsound behavior — whether unconsciously or not. I personally witnessed this when suing in-house attorneys at financial institutions on behalf of the federal government in the aftermath of the Savings and Loan Crisis. And how might the Enron scandal have turned out differently if they had utilized reliable outside counsel?
Another drawback to in-house legal counsel is the cooling effect it may have on employees who might otherwise seek legal advice from the company attorney. They’re more likely to feel comfortable speaking with an outside attorney — someone who works for the good of the organization while remaining objective, with no political agenda — than a colleague or a superior. In this way, giving employees access to outside counsel can potentially help prevent harmful legal predicaments for businesses.
Employing in-house counsel can also complicate matters for companies who may be unhappy with their legal representation or need to mitigate legal fees. With outside counsel, it’s possible to rapidly adjust legal costs or representation without going through the process of reducing an employee’s salary or eliminating their position, allowing organizations to maintain agility.
2. Access expert legal advice when you need it, on your budget
Business leaders can be hesitant to involve outside general counsel over concern their involvement will make things more expensive and complicated. Traditionally, attorneys either charge clients a contingent fee (a percentage of a jury award or settlement) or an hourly fee. As an experienced attorney myself, I have actually found the hourly fee can create an inherent conflict between attorneys and clients. Excellence in any endeavor is usually the result of hard work and substantial effort, so the hourly billing system can cause attorneys to deliver substandard work if they feel pressured to avoid extra legal fees for their client.
A huge benefit of utilizing fractional general counsel is the ability for businesses to more easily budget for quality legal support. Fractional general counsel attorneys often provide their services for a set monthly fee tailored to each client’s individual needs. For an agreed-upon amount, companies gain access to a highly trained legal team, without the guesswork of planning for an undetermined amount of hourly legal fees or the high cost of employing in-house counsel.
The monthly-fee structure not only enables business leaders to more easily integrate legal fees into their budget and proactively seek legal counsel when they need it, it also allows attorneys to invest the necessary time on tasks they believe is in the best interest of the client without worrying about racking up extra client fees.
3. Gain a deeper, high-trust attorney-client relationship
Fractional general counsel is ultimately a way for businesses and their attorneys to become more aligned. A fractional general counsel attorney understands that legal is only one part of the larger formula for business success, and works as a trusted advisor for companies to help achieve their goals, align their interests and create win-win outcomes for all involved.
Instead of discouraging business leaders from seeking legal counsel, the fixed-fee structure encourages greater interaction and legal planning, creating deeper, high-trust relationships between companies and their legal representation. As fractional general counsel attorneys get to know the companies they serve inside and out, their clients ultimately feel they have access to a veteran in-house attorney right down the hall, but without all the strings attached, on an as-needed basis and for a fraction of the cost.
For companies that may have been hesitant to seek legal advice in the past, fractional general counsel makes ongoing legal counsel more accessible and effective, allowing leaders to proactively approach risk management and partner with an experienced, trusted attorney to achieve positive business outcomes.
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