For many growing companies, there comes a point when the legal needs and associated costs reach a tipping point where it makes more financial sense to bring legal expertise in-house. However, hiring an in-house lawyer isn't just about cost savings.
An internal lawyer will develop a deep knowledge of your company's operations, contracts, policies, and risks which can be incredibly valuable. This enables them to critically analyse and tighten up legal practices that may have been lacking or overlooked previously and ensure that you can be proactive in dealing with any potential issues rather than reactive.
Two key signs it's time to hire your first lawyer:
If either of these rings true, adding an in-house counsel is likely the right move for your company's growth.
There are several good reasons for companies to have an in-house lawyer instead of relying solely on outside law firms. One key benefit is proactive risk management. An in-house counsel deeply understands the company's business and can identify potential legal issues before they become costly problems. They ensure regulatory compliance by staying up-to-date on changing laws and implementing proper guidance.
From an efficiency standpoint, having a dedicated in-house legal resource streamlines processes, promotes consistency, and allows quick resolutions of routine legal matters leveraging their solid legal knowledge leaving only niche specialties requiring the use of outside counsel during the early stages of growing a legal team.
Crucially, an in-house lawyer serves as a trusted legal advisor integrated into high-level decision-making. They assess the legal implications of growth strategies and major initiatives. Their involvement demonstrates to stakeholders that the company prioritizes corporate governance, regulatory compliance, and risk mitigation as pillars of sustainable growth.
While outside counsel provides supplementary expertise, an experienced in-house general counsel elevates the entire legal function. As a strategic partner, they enable comprehensive risk management, efficient processes, and legally-vetted strategic planning to propel the business forward.
The role and responsibilities of a company's in-house lawyer can vary depending on the specific needs and growth stage of the business. Some key considerations include:
Core Responsibilities
Typical responsibilities for an in-house counsel include risk assessment, drafting/negotiating commercial agreements, managing corporate transactions, managing and disputes including areas such as debt recovery, dealing with employment issues, regulatory liaison, and oversight of all legal matters. Above all, they leverage deep organizational knowledge to drive a business-aligned legal strategy.
The specific role will depend on company size, growth trajectory, industry, and the skillset/experience level of the attorney hired. The key is finding the right fit - an in-house lawyer properly empowered and embedded as a trusted business partner, not just legal support staff.
Strategic Involvement
Many seasoned lawyers won't take an in-house role unless the legal department is a respected function within the company. Top legal talent often wants a seat at the strategic decision-making table alongside the CEO, CFO, and other executives. An in-house lawyer with deep business immersion can provide invaluable guidance that impacts high-level planning.
Management Duties
Companies have different approaches regarding management responsibilities. Some hire a senior General Counsel or Head of Legal to oversee and integrate legal affairs holistically from day one. Others start with a more specialized functional role, reserving broader managerial duties for when the team expands.
Reporting Structure
The ideal reporting structure is commonly for the in-house lawyer to report directly to the CEO or founders, at the same organizational level as C-suite executives like the CFO and COO. This avoids conflicts by having legal reports into another function.
When hiring your first in-house lawyer, the ideal background and skillset will depend heavily on the specific needs and future growth plans of your company. For companies operating in heavily regulated industries, prioritizing a lawyer with direct experience navigating those particular compliance frameworks is crucial, as this regulatory expertise allows them to hit the ground running. If your company has an active M&A strategy or significant corporate transactions on the horizon, a lawyer with a strong corporate/transactional background makes sense to properly oversee those complex deal processes.
For early-stage companies, a more generalist corporate skillset covering governance, financing, IP, employment, real estate, and other core areas may be preferable initially. As the company scales, you can then layer in lawyers with more specialized expertise aligned with the strategic roadmap. Looking 3-5 years out, if certain areas like data privacy, international expansion, IP development, or other focus areas are critical priorities, weighing those concentrations in your hiring criteria can provide immense long-term value.
There are pros and cons to hiring a specialist versus a generalist as your first lawyer. Specialists bring deep mastery but may lack breadth, while generalists are more versatile across areas but are likely to still need to utilise external counsel in various areas. You will also want to consider whether you want to hire someone directly from a law firm or someone who has already gained in-house experience in a sector similar to your own.
An interim or contract lawyer can offer flexibility while you further define the ideal long-term profile needed.
