Why Companies Hire In-House Legal Counsel

If you’re wondering what the differences are between in-house legal counsel and a traditional lawyer, then it’s likely that you’ve got some current legal issues you need some help with, and expect to have more in the near future.

So before you decide either way whether to hire in-house counsel or a regular business attorney, let’s understand the differences.

In House Attorneys Provide Excellent Legal Advice

In-house attorneys are well versed in corporate legal matters because that’s all they do. The average in-house attorney will not be drafting wills or handling divorce or personal injury cases.

Further, the in-house attorney usually handles legal issues from start to finish, as opposed to a partner assigning different associates the pieces of a larger case. Since legal issues are often context specific, in-house counsel are better positioned to give relevant advice because they see the entire legal and business issue.

Another advantage to in-house counsel is their business knowledge.

Quality legal advice is fact-specific, so the more an attorney knows about the company’s business, the better the legal advice. Because in-house attorneys are treated more like employees or executive management, they become more intimately familiar with the business’s operations, allowing them to provide customized legal advice specific to that business’s needs.

In House Attorneys Provide Excellent Business Advice

Not only are in-house attorneys trusted legal advisors, but they are called upon to assist with important business decisions and strategic business planning. The combination of legal knowledge and business experience makes for a more well-rounded advisor, helping the business avoid unnecessary liability while increasing revenue and profits.

But let’s set aside the quality of the work for just a moment. Let’s talk about what is likely your most important question about in-house attorneys versus traditional attorneys.

In House Attorneys Actually Cost Less

An in-house attorney can save a company thousands of dollars over traditional hourly-rate attorneys while providing superior service combined with relevant business advice.

Here’s why:

Hourly-rate attorneys earn money based on time (not results), often tracking their activities in six-minute or 15-minute intervals. At an hourly rate of $500, a simple two-minute phone call could cost as much as $125. Even a first-year associate billing in six-minute increments at $300 per hour will charge $30 for that two-minute phone call.

Traditional attorneys are trained and incentivized to bill as many hours as possible, either to generate more income or to meet their firm’s hourly rate requirements. For example, if you ask an hourly-rate attorney for advice on an employment issue, the attorney will likely charge for legal research and writing—even though she researched the same issue just last week for another client.

These hourly billing practices are not necessarily unethical or unfair (at least, not to the traditional attorney!), but they directly affect the cost of legal services.

Compare those examples to how an in-house attorney works for you.

In-house attorneys are usually employed by their company on a salary basis, so they don’t track billable time and don’t bill their company by the hour. Instead, in-house attorneys are treated like part of the business because they ARE part of the business, making themselves available to answer even the simplest questions.

So it’s the motivations of in-house attorneys that cause them not only to actually cost less, but to also work more quickly and efficiently because they’re not being paid by the hour. They are actually incentivized to get you the information you need as fast and inexpensively as humanly possible, while being relevant and accurate in order to keep their job!

With an in-house attorney, the client never has to wonder whether the question is worth asking, since a quick phone calls or in-depth legal discussion doesn’t come with an invoice.

There’s a reason why all mid-sized and larger corporations hire in-house counsel for their businesses. Sometimes several.

But the big question for you is whether an in-house counsel is right for your small company.

Click here to find out “How can a small company like mine afford an in-house attorney”.