How much does a company benefit if hours or years of work time could be saved by its top management, and channeled into business growth?
Especially for young entrepreneurs, who need to focus more on developing the business, opting for outside legal counsel could be an effective option as it will save the time and effort of the top resources and simultaneously provide a legal cover for your business.
Outside general counsel services could also be cost-effective, usually so much so that you may receive entire legal services in a handout of a couple of attorneys.
A business, whether it is a start-up or an established organization, will always need two resources; an accountant and a lawyer. The reasons for hiring an accountant are clear because every organization would need someone to handle their books of accounts.
However, hiring a legal attorney or a law firm may not be quite discernible, at the initial stages. Nonetheless, a good lawyer will be able to lay down a robust defense system from the very beginning so that the organization moving forward is secure, at least along the legal side.
A law firm could be further beneficial as it may be able to legally protect multiple aspects of the business from regular compliances, copyrights, and trademarks to complex lawsuits and liabilities.
Before we dive deep into the benefits of hiring a commercial lawyer, let’s first clear some general terms:
What is corporate law?
As commonly known as business law, corporate law deals with all rules, regulations, and laws which govern the incorporation and operations of any business/corporation.
The practice of corporate law involves, but is not limited to, company incorporation, day-to-day general corporate matters, director’s and shareholder’s rights, articles of association, board meetings, public listing and delisting, and secretarial matters.
What is the role of a corporate law firm?
Most individual corporate lawyers prefer to work with law firms. The reason is that the legal requirements of any corporation are of appreciable size and are especially important.
A company may need legal assistance with a diverse set of issues that would require the expertise of different lawyers. A law firm typically has these resources and attorneys with various skill sets to undertake any legal needs of the company.
What are in-house and outside counsel or general counsels?
Any business as it grows induces further legal complexity. The organizations choose to meet their legal requirements by employing lawyers. If the company directly employs a lawyer on its payroll, they are addressed as in-house counsels. These counsels can advise a company on general day-to-day matters relating to corporate law and business activities.
However, not all organizations could afford to keep regular in-house counsels for such practices and choose to outsource their legal work to outside general counsels or law firms who can provide customized advice on an array of legal issues for the business in a very cost-effective manner.
Reasons for Hiring Outside General Counsel for corporates
There are variegated reasons for hiring outside counsels, with just a few including:
Outside counsels are cheaper than in-house counsels
Outside counsels are an uncontested cheaper option than employing lawyers. While getting legal advice from a team of lawyers in a handout of an individual attorney, you also save on the business cost of recruiting, paying a full-time salary, and providing company benefits to the employed in-house counsel.
Outside general counsels help you with setting up of business and maintaining it
A law firm serving as an outside counsel can assist you from the very basics of incorporation when you would not have an idea of what kind of formation or government regulations would help your business best.
When you have an established business and know your costs, it is easier to incur an added expense of a counsel but when you are in the formation stages and don’t know about the future costs, this legal counsel.
At the same time, it may not be an employee, can still help in maintaining the business, and keep up with regular secretarial compliance – making them a valuable investment.
An outside perspective from an array of lawyers
No single lawyer can assist in various areas of legal practice. With a law firm serving as your outside general counsel, you can have an external view of your business not from one but various lawyers who are experts in their fields. They can offer you objective, knowledgeable advice that is not affected or manipulated by the internal functioning of the business. Having an outside perspective can be beneficial as it is not influenced by any emotions about the organization, thus helping to make reliable business decisions.
It is baseless to assume that if the council is sitting outside the and is not an employee, they may not be able to understand the business and its functionality well.
On the contrary, top law firms, acting as outside counsels will take the time to know your business well so that they can guide you to make the best business decisions because their engagement is greatly affected by your business growth.
This enables the business to reap the benefits of in-house counsel without carrying the burden of a full-time employed lawyer.
Opting for a law firm to act as an outside counsel may seem like an expensive option in the beginning as many law firms tend to charge high hourly prices. Still, there are many law firms, who have come up with specialized packages, where they charge a base fee to companies in exchange for the assurance of continued work each month. This way, the companies also, do not feel the excessive burden of the high fees for expert legal advice.
Conclusion
To conclude, it is best to be thoughtful of your business expenses, especially with young organizations, and to put more focus on business growth.
Whether opting for an in-house lawyer or a law firm, acting as an outside counsel, one thing is sure that a business cannot overlook the importance of legal advice.
Right from business formation to dealing with employee matters daily, a business can save on many costs in the long run by having an expert array of legal advisors, advising of such issues regularly.
Johnny Thompson is a senior reporter for Generator Research in Los Angeles, reporting on technology, business, finances, and more. He previously worked as a reporter for the Wall Street Journal and got his start at newspapers in New York, Connecticut, and Massachusetts.
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