As a small business owner, budgets are very tight, and the idea of having an attorney regularly engaged to handle the day-to-day legal issues that might come up can seem impossible. Large companies have the budget to employ an in-house attorney while others create an entire in-house legal department with many lawyers. To a small business owner, this is not a possibility. However, what you may not know is that there is a cost-effective way for a small business to have consistent, quality legal services to meet their everyday legal needs. Believe it or not, some lawyers and law firms offer general counsel services at reasonable rates, and in some cases, on a fixed-fee basis.
So, what are the advantages of hiring an outside general counsel?
You can’t predict when a legal issue will present itself, and a lot of times it requires a nearly immediate response. For example, you’ve closed on your biggest sale to date, but the buyer is requiring you to sign a significant legal agreement memorializing the terms of your deal. If you don’t already have a legal advisor skilled in handling business matters, including the ability to review and negotiate these types of agreements, you’ll have to spend a lot of time vetting and interviewing candidates until you find one that you’re comfortable with. If you’ve engaged an outside general counsel, when the legal issue arises, you simply reach out to your general counsel and they take care of making sure the issue is efficiently handled and your time is appropriately allocated to the business. Additionally, in-house counsels are typically limited to their individual expertise which will require you, the business owner, to hire multiple outside attorneys to handle specific matters that your in-house counsel is not experienced enough to handle. Hiring an outside general counsel in a law firm offers your business the opportunity to take advantage of all practice areas of that firm and essentially allows you to make one call to have your legal needs addressed.
2. Cost Effectiveness and Cost Certainty
Hiring an attorney as a full-time employee can require a high salary and sometimes demand some equity or partial ownership in the business. Plus, as an employee, they’re eligible to receive all employee benefits that your company provides. An outside general counsel is not an employee of your company, does not require any ownership share, and certainly isn’t eligible to receive any employee benefits. You will merely pay your outside general counsel for the work she or he performs, and in some cases, lawyers will offer a fixed-fee option so that you can budget and maintain an element of cost certainty with respect to legal fees.
As a business owner, you’re always planning – planning for the next strategic growth move, or planning for succession and your ultimate liquidation. Any planning, whether for growth or an eventual exit, requires your company to be prepared for any transaction that could arise. This includes having all of your corporate documentation in order, having your employees under well-written agreements with the company, making sure your intellectual property is appropriately titled and protected, and a whole host of other items and issues that require continued maintenance and upkeep. Typically, the business owner doesn’t have the time or the expertise to ensure that all of this information is organized, up to date, and complete in the event of a transaction. Your outside general counsel, however, does. This will also prove advantageous for you down the road, especially if you hire an outside general counsel with merger & acquisition experience. Your outside general counsel should not only keep you prepared and your records up to date, but also should regularly perform a pre-transaction “due diligence” analysis of your business so that you’ll be fully prepared when a potential buyer approaches you and requests a whole host of corporate documentation. While this may come at a cost up front, you will more than make up for this cost by (1) maximizing the price you receive from a buyer, and (2) making the purchase and sale process way more efficient and less time-consuming.
There are a variety of benefits to business owners in hiring an outside general counsel. Whether you’re looking to grow or eventually sell, an outside general counsel is there to protect you and your business, while ensuring you maximize your business’s value.
Want more information on outside general counsel?
The attorneys at Cohen Pollock Merlin Turner are happy to help. Contact us for more information.