Attorneys are expensive! Bringing corporate counsel in-house is a great opportunity save cash and improve the quality/color of legal advice you’re receiving.
Saving cash
If your company has a regular flow of contract work, do the math early and calculate your annual costs of using your preferred outside law firm and compare that with the cost of hiring an in-house attorney. Despite this sounding like a relatively straightforward point, we’re flagging this because we find that for many CEOs, our biases lead us to delay the hire even when the cold-hard math tells us otherwise. As an example at my last company, I (Will) was aware that we had lots of contract work coming down the pipeline that was likely to cost hundreds of thousands of dollars. However, in order to get a lawyer with enough experience (that we could trust on these contracts), we’d be paying a salary of approximately $200K plus benefits. At the time, that would have made the lawyer one of the highest paid employees at the company which didn’t feel right emotionally to me. The idea of the highest-paid person at the company being someone who wasn’t directly responsibly for company building was too much for me. In the end, it did actually end up costing us ~$350K in legal bills before we finally made the hire.
Overall productivity boost
You’ll also get a productivity bonus once you do hire an in-house attorney because they’ll flex into various other roles the same way you and everyone else does. For example, even if you hire a lawyer that specializes in commercial contracts, their legal training positions them well to improve processes and reduce company liability across hiring, firing, board matters (e.g. granting options), fundraises, partnership discussions and more.
Quality advice
With the right in-house lawyer, the quality of your advice can improve. A common mistake is to think of your attorney as translation service. Let’s use a contract negotiation as an example. You, the CEO, may start by asking your attorney to:
“Put this business deal into a binding legal contract”
or
“Tell me what that document says in plain English”
This can actually be quite difficult and good attorneys (in-house or external) will be able to tease out the nuances of how slight variations in contract language can significantly impact your business goals.
It’s actually a difficult dance to properly weigh business goals and legal goals as you work through a contract negotiation, and external counsel will almost always prioritize legal goals over business goals. Its a simple matter of incentives as they manage their own and their firm’s reputational risk instead of necessarily what’s best for your business goals. An in-house lawyer is in a better position to balance both legal goals and business goals.
Note: If you make a bad hire for in-house counsel, they have the potential to do a lot of damage before anyone notices. When using outside counsel, there are normally several different sets of eyes on the work they produce from associates up to partners. Furthermore, there is the added pressure that if they ship bad work product, they jeopardize the reputation of their entire law firm. By contrast, an unskilled and unmotivated in-house lawyer will not have that the same redundant quality controls built into their workflows.
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