Introduction
In today’s complex business world, where innovation, competition and following the rules all come together, companies need more than just legal advice; they need a legal partner who thinks strategically. The role of a General Counsel (GC) has evolved beyond the traditional legal department.
In this new era of business, they play an essential role in guiding a company towards success while protecting it from potential problems. They possess unique legal knowledge, business savvy, and a solid commitment to your company’s values. They’re responsible for keeping your company’s reputation intact, designing solid legal plans, and preventing risks.
Choosing the right GC is a decision that can shape your company’s path, influence its culture, and even decide its success. Whether you’re a startup or an established business, adapting to change doesn’t matter – it’s an important decision. Therefore, hiring a general counsel at the right time can prepare your company for a more secure legal future.
Why Hire A General Counsel Over Outsourcing Legal Work?
Outsourcing legal work can offer several advantages, such as cost savings and access to specialized expertise, but it also comes with drawbacks. Here are some common drawbacks associated with outsourcing legal work:
- Quality and Confidentiality Concerns: When legal work is outsourced to a third party, there may be concerns about the quality of the work produced. Differences in legal standards, language barriers, and varying levels of expertise among outsourced providers can lead to errors or subpar work.
- Confidentiality Risks: Legal matters often involve sensitive and confidential information. Outsourcing can raise concerns about data security and breaches of confidentiality, particularly if the outsourcing provider is located in a jurisdiction with weaker data protection laws.
- Communication Challenges: Working with offshore outsourcing providers can create challenges related to time zone differences and language barriers, impeding effective communication and collaboration between the client and the outsourced team. Cultural nuances can affect understanding of legal issues and expectations, potentially leading to misunderstandings or misinterpretations.
- Loss of Control: When legal work is outsourced, clients may have limited control and direct oversight over the work process. This can make it challenging to ensure that work is performed consistently with the client’s expectations and standards. In some cases, holding outsourced providers accountable for errors or missed deadlines may be challenging, mainly if they are in a different jurisdiction.
- Risk of Conflict of Interest: If an outsourcing provider works for multiple clients with potentially conflicting interests, it can lead to conflicts of interest that may compromise the client’s legal strategy or confidentiality.
- Hidden Costs: While outsourcing can lead to cost savings in some cases, managing and overseeing the outsourcing relationship may incur hidden costs. These costs can include legal fees for contract negotiation, monitoring, and additional resources needed to address any issues.
- Limited Strategic Input: Clients may find themselves less involved in the strategic aspects of their legal matters when work is outsourced, as the outsourced provider may focus primarily on task-based work.
It’s essential for organizations considering outsourcing legal work to weigh these drawbacks against the potential benefits carefully and to conduct due diligence when selecting outsourcing providers to mitigate some of these risks.
Outsourcing legal work might make sense for a business initially, but as a company grows, it can become more cost-effective and efficient to bring in a strategic legal advisor, like a General Counsel.
Whether you are searching for a general counsel for your small business or outsourcing legal work, LegaMart is the place to go. Over 2,500 verified lawyers from 128 countries make us a jam-packed place to find legal assistance from experienced lawyers.
Bringing a General Counsel (GC) can save your company money and enhance its effectiveness and strategy in various ways, including; –
- Supports business growth: General counsel provides quick and detailed advice to assist small and large businesses achieve their growth and development goals. They do more than respond to legal issues; they identify potential problems early, helping you avoid trouble. When hiring, look for someone who can collaborate well with your team and has experience in various legal areas, ensuring they can provide guidance and spot issues across the board.
- Specialized legal advice: When your in-house counsel seeks guidance from trusted specialists for specific legal matters, it’s a cost-effective investment. They can oversee external legal advisors more effectively and save time for non-legal employees. The full commitment of your general counsel to your company means quicker results and better strategies than outsourced legal advice. This approach reduces legal expenses and improves efficiency in other departments.
- Comprehensive legal needs: While your in-house counsel should align with your company’s mission and strategy, they may not have expertise in every legal issue that arises. The legal landscape covers everything from trademarks and intellectual property to employee matters and shareholder agreements. It’s unrealistic to expect one lawyer or law firm to manage everything, especially in today’s fast-paced, technology-driven marketplace.
- Financial viability: Hiring in-house general counsel makes financial sense in various scenarios, such as planning to go public in the next 5-10 years, developing valuable intellectual property, operating in a federally regulated industry, or spending over $500,000 on external legal expenses annually. When you bring in-house counsel for the right reasons and at the right time, it becomes a valuable investment that yields multiple benefits. Legamart houses a variety of legal professionals, including general and in-house counsel, as well as the leading service providers for outsourcing legal work.
The role of a general counsel has evolved significantly in today’s business landscape. While their primary responsibility used to be safeguarding the company against legal and ethical issues, it now encompasses much more.
The changing corporate landscape has expanded the responsibilities of in-house counsel. Executive teams seek general counsel who can handle legal aspects while contributing to company goals.
Business leaders increasingly recognize that general counsel can offer better legal advice when they thoroughly understand the company and industry. GCs often engage in critical contract negotiations and make important company decisions.
When to Hire General Counsel?
Determining the optimal time to hire a General Counsel is pivotal in a company’s evolution. Making the right choice at the right time can substantially influence the fluidity and effectiveness of your company’s legal strategy and operations.
Several indicators can point towards the need for internal legal counsel. Let’s delve into some of these signs:
- Board governance support: In the intricate realm of today’s business, boards of directors frequently need internal legal guidance. This is essential for corporate governance, understanding corporate bylaws, managing the delicate relationship between the board and senior management, and foreseeing potential legal challenges within the industry’s regulatory framework. By acting as an insightful advisor, a general counsel can provide legal and ethical direction to the organization.
- High-growth phase: Rapidly expanding companies often grapple with a myriad of legal challenges, from navigating the labyrinth of employment and labour laws to addressing structural modifications. In such scenarios, a general counsel can effectively and efficiently manage these concerns, often at a cost savings compared to recurring external legal fees.
- Preparing for an IPO: Venturing into the public market involves much legal preparation before and during the IPO process. A seasoned general counsel can streamline this journey, ensuring all legal requirements are met and facilitating a seamless transition to the public arena.
- Operating in a highly regulated landscape: Industries like healthcare, biotech, and finance, which operate under stringent regulatory oversight, immensely benefit from an internal legal expert. A general counsel in such sectors not only deciphers the intricate legal guidelines but also longevity.
A commonly overlooked but crucial factor is the time and energy senior management spends on legal issues. In the early days of a startup or a small business, it’s common for founders or senior leaders to juggle multiple roles, including handling legal matters. However, as the business matures, this approach can divert focus from core business objectives and hinder strategic growth.
Furthermore, having an in-house General Counsel can foster a proactive legal approach rather than a reactive one. Instead of addressing legal problems as they arise, a General Counsel can anticipate potential challenges and strategize accordingly, embedding legal foresight into the company’s broader strategic vision.
Key Attributes and Skills of a Successful General Counsel
With time, the role of a general counsel is becoming more interdisciplinary, with an evolving role and scope. Today, several key factors come together to make a successful general counsel:
- Growth mindset – One of the main roles of a general counsel is to balance risks with growth. A lack of efficiency in creating such a balance results in the business slowing down. Hence, choose someone who is adaptable to changes and is ready to face new challenges for the working and scaling of the company.
- Experience – Hiring a general counsel with a good track record of success always benefits the company. This includes someone with relevant experience as a lawyer in a well-known firm who can adapt to the challenges of working as an in-house counsel at a venture capital startup. The two roles differ considerably from each other, and hence, it becomes essential to seek someone who possesses the relevant experience as a general counsel.
- Collaborative nature – A strategic advisor is essential for a company with a goal of growth and expansion. This requires an individual with a collaborative nature who can handle requests from all departments. Counsels cannot work in isolation and must be open to work and manage a diverse environment.
- Value-fit – Each company has its values and culture that it expects its members to follow. Therefore, while hiring the general counsel, ensure that you have clarity on whether this is someone who aligns with your company values and culture and if they have the potential to act as a representative of your company.
- Being a leader – The primary responsibility of a general counsel is balancing their legal duties and prioritizing the overall business operations. This means they need to act within a senior leadership role, which requires them to act with a broader skill set and outlook. Therefore, they should not only know the technical know-how of their jobs but also contribute to the overall direction and strategy of the company.
- Risk management – A general counsel must be able to identify and manage risks. As Deloitte mentioned, “GCs and risk specialists will need to collaborate to develop an effective framework that captures the multitude of legal risks that exist in organizations and design controls to mitigate the most critical.”
- Effective time management – To complete their tasks efficiently, general counsels are required to manage time and tasks effectively. Some common tools that come in handy are Contract Lifecycle Management, Entity Management, and Litigation Management, which can facilitate operational processes, save time, and reduce risks. This further allows the general counsel to control their time usage and focus on other tasks.
- Be a business person instead of a lawyer- This means that the general counsel should be able to communicate complex business points and should be able to address potential legal issues without dragging the business leaders. Therefore, they should be able to handle complexities as businessmen and not just as a lawyer.
- Ethics and integrity – The general counsel should be the ultimate demonstrator of ethics and integrity. They would be required to face situations where right and wrong are not clear, and this means that the company shall be looking at the general counsel to be on the right side of law and ethics. Therefore, the general counsel shall play a key role in preserving the company’s ethics and reputation, meaning they should be individuals with high ethics and integrity.
- Leader in digital transformation – With the increasing use of technology within all business spheres, general counsels should ensure a smooth transition for their team. Therefore, it becomes the job of the general counsel to close the digitalization gap for the company, which can be done by guiding their legal departments through the digital transition.
Conclusion
Hiring a general counsel becomes necessary for all businesses to seek assistance on their legal issues and disputes, which evolve during the operation of your business. Further, a general counsel is required to undertake serious tasks related to the business. Hence, the company should ensure that they hire the right fit for the job, who has the potential to manage their tasks effectively.
If you are someone who wishes to start their general counsel journey, or if you are a small business owner who wants to find the right general counsel for your business, LegaMart can be the right destination to seek guidance. Consider consulting with our diverse team of legal professionals, including general and in-house counsels, who shall assist you in all your legal pursuits.
