A good in-house lawyer will protect your company from liabilities that far exceed their salary. They can maintain stability and drive growth, becoming your “right hand” in assessing complex information and determining a risk appropriate strategy or direction. They ensure regulatory compliance in a climate of heightened corporate governance. They can significantly finesse your external relationships with clients, governments and vendors and can positively impact workplace culture and the management/employee relationship.

The key to a successful legal hire is a) knowing when it makes sense financially and b) balancing the lawyer’s level of involvement with the management team against the current and future legal needs of your company.

In companies where the in-house lawyer has full buy-in from management, their role is to steer towards the safest approach for business projects, avoiding committing resources to a strategy which in time may be abandoned as too high risk.

There are many other benefits to adding a lawyer to your team. In-­‐house counsel can identify areas of risk earlier than management, when there is still a mitigating approach or solution available because its not already “too late.” Once an issue has snowballed, two things happen: less solutions are available and the growing legal cost quickly becomes justified. External counsel engaged in “putting out fires” often charge a significantly higher rate than they would for day-­‐to-­‐day company work.

To answer the question of when to hire an in-house lawyer, here are some basic criteria to consider:

  • Your external legal costs exceed $500,000
  • Your sales exceed $8 million and/or you have more than 200 employees
  • You are considering going public
  • You are growing your workforce significantly
  • You are facing an on-going lengthy legal dispute
  • You buy or lease multiple properties,
  • You are in a heavily regulated industry
  • You deal with a high volume of commercial contracts
  • You are buying, selling, developing or licensing Intellectual Property
  • You are considering doing something you know will be advisor-attentive

Generalist or specialist?

Technology companies often add patent counsel first and wait until company revenue has increased enough to allow them to add a more senior lawyer to guide their whole business. Do you prefer a “safe pair of hands” generalist, a senior corporate lawyer on-call who can advise on most areas and will immediately contribute to the company’s risk management and growth strategy? Or do you have a high volume of specialized real estate, employment, IP, tax, technology or commercial contracts work? Could this be handled by a more junior lawyer with five years of focussed experience? Identify the areas where you expect legal costs to escalate and look for someone with experience in those areas. In assessing and distilling your legal needs, weigh your must haves and nice-to-haves against your budget and prioritize accordingly.