Phoenix Business Journal: What to consider when hiring in-house legal counsel

Phoenix Business Journal

by David R. French

In the American business environment, every company will need a lawyer at one point or another, but just how to find and retain that legal counsel can be source of debate.

We all know that one person, or perhaps you are that person, who started his company from nothing and grew it to a successful enterprise. When an entrepreneur is just starting out and operating on a shoestring budget, it isn’t uncommon for them to reach out to friends or acquaintances to handle specialized areas, including legal.

These fledgling companies often need assistance with basic contract review or understanding compliance procedures, which is easy enough for the average lawyer, no matter their legal specialty. But as the company grows into a profitable corporation, many executives take the next step of retaining outside counsel in the form of a law firm or several, depending on the complexity of legal issues. In some cases, because firms can be expensive, the company may instead pick the in-house counsel route.

For many companies, consideration of in-house counsel is a worthwhile step. Not only may there be potential legal cost savings, but bringing someone onboard the internal team may also help ensure the company’s vision is maintained. In many situations, the CEO could hire their attorney friend who has been handling the company’s legal work from the beginning, or tap the outside general counsel that has already been pitching in for specialized projects. Neither of these are a bad decision, but choosing in-house counsel requires more than simply scrolling through your legal contacts for someone you know and trust.

A company that has begun considering candidates for in-house counsel positions might first outline exactly what the expected legal issues will be. While a good in-house counsel will often be a generalist, able to handle myriad legal problems on a daily basis, it may be more important to find a lawyer with expertise that matches the company’s most pervasive legal needs than a lawyer with a prior relationship with the company. For example, bringing outside counsel inside may be unwise if the attorney being considered has been handling the company’s transactional work, but the company’s chief legal issue is tort litigation. This mismatching of skills and needs will not serve the company or the candidate well.

When searching for in-house counsel, a company will also be wise to select a candidate who actively maintains social connections and ties to local legal counsel and law firms. This is important because, as many companies fail to anticipate, hiring in-house counsel does not necessarily eliminate the need to retain outside counsel for specific projects or actions. Thus, the ideal in-house counsel will be able to access and coordinate with appropriate outside counsel, such as their previous law firm or former colleagues. Conveniently, law firms are often encouraging of their lawyers transitioning to in-house counsel positions, so a company should value more highly a candidate who will be able to maintain ongoing ties with their former firm and access those resources when significant legal issues arise.

A company should ensure the candidate accepts the differences between practicing in a firm and working in house. Rather than being a hired gun brought in to consult on individual problems after the fact, an in-house counsel is, or should be, part of the team before, during and after company projects. The in-house counsel should be able to understand the company’s long-term objectives in order to tailor advice to the best interests of the company. A good in-house counsel working in a proactive manner instead of reactive will help a company anticipate and prevent legal problems before they arise, while maintaining company values.

To foster this, a company may wish to encourage its executives to keep the in-house counsel in the loop by discussing and brainstorming plans and strategies with them regularly. This has the potential to reduce future legal expenses, which most companies will cite as a goal.

Ultimately, a company should seek to find the best person for the job when making the shift to identifying in-house counsel. It is not always enough to select a candidate solely on the basis of established working relationships. Finding the right fit may require a company to move outside the trusted inner circle, which can be hard to do. But moving beyond the comfort zone to find that attorney with the right skills to address the company’s legal needs can be the needed catalyst for a new level of positive growth.