In-House vs. Outside Counsel: A Guide to Choosing the Right Option

Choosing Between In-House and Outside Counsel

As businesses grow and evolve, they will encounter a wide range of legal issues that can have a significant impact on their success. Choosing between in-house and outside counsel to address these issues often involves weighing a variety of factors, from areas of specialized knowledge to budget and bandwidth.

In this article, we’ll highlight some common instances when a company should consult with in-house counsel, and when they should hire outside counsel.

What is In-House Counsel?

In-house counsel are attorneys who work directly for a company. They are employed full-time or part-time and have an intimate understanding of the company’s operations, goals, and legal needs. They are typically responsible for providing legal advice and guidance to the company’s executives, managers, and employees on a wide range of legal matters.

When to Consult with In-House Counsel

In-house counsel can be a valuable resource for companies in many different situations due to their in-depth knowledge of the organization and its values and priorities. Here are some of the key examples of when a company should consider consulting with their in-house counsel:

Regulatory Compliance

Compliance with laws and regulations is a critical issue for most businesses—and an issue that will need to continually be contended with for as long as a company is around. In-house counsel can provide advice on how to comply with complex legal requirements in a cost-effective and efficient manner. They can also help companies navigate the often-changing landscape of regulations and work with external regulators on behalf of the company.

Contract Drafting and Negotiation

Contracts are a fundamental aspect of many business relationships. In-house counsel can review and draft contracts to ensure that they align with the company’s goals and needs while also providing adequate protection and risk management. In-house counsel can also negotiate contracts with third parties and help resolve any disputes that may arise during the negotiation process.

Employee Relations

Employees are a critical asset for any company, but they can also present legal challenges. In-house counsel can provide guidance on hiring, termination, compensation, benefits, and workplace safety issues. They can also help companies navigate sensitive situations like discrimination claims, harassment allegations, or disputes with labor unions.

Intellectual Property

Intellectual property is a critical aspect for many companies, and protecting it is essential to their success. A strong sense of familiarity with the organization’s patents, copyrights, trademarks, and other IP assets is vital to effectively defending them, making this an area that is ideal for an in-house team to work on.

In-house counsel can help companies manage their intellectual property portfolio. They can also advise on infringement issues and help companies enforce their intellectual property rights in court.

Litigation and Dispute Resolution

Litigation and dispute resolution can be costly and time-consuming, but they are sometimes necessary to protect a company’s interests. In-house counsel can provide advice on dispute resolution strategies, including negotiation, mediation, and arbitration. They can also represent the company in court if necessary, working closely with outside counsel if the case requires specialized expertise.

When to Hire Outside Counsel

While in-house counsel can handle many legal issues, there are times when it makes sense to bring in outside counsel. Here are some of the key situations when a company should consider hiring outside counsel:

Complex Legal Matters

One of the most common reasons for a company to hire outside counsel is for complex legal matters.

In-house counsel typically have a broad range of legal expertise, but there are times when specialized knowledge and experience are required. For example, if a company is facing a complex antitrust investigation, they may need to hire outside counsel with expertise in antitrust law. Similarly, if a company is considering a merger or acquisition, they may need to hire outside counsel with experience in corporate law and deal-making.

Hiring outside counsel with the necessary expertise can help ensure that the company receives the best possible legal advice and representation.

Cost-Effective Legal Services

While in-house counsel can provide legal services, it may not always be the most cost-effective option. For example, if a company has a small legal team, they may not have the capacity to handle a sudden influx of legal matters.

In these cases, hiring outside counsel on an as-needed basis can be a more cost-effective solution. Hiring outside counsel allows companies to pay only for the legal services they need, rather than hiring additional in-house counsel for the long-term.

Litigation and Dispute Resolution

Litigation and dispute resolution can be costly and time-consuming, but they are sometimes necessary to protect a company’s interests. In-house counsel can provide advice on dispute resolution strategies, including negotiation, mediation, and arbitration. However, in some cases, litigation may be necessary. When this happens, it may be necessary to hire outside counsel with litigation experience.

Outside counsel can provide a fresh perspective on the matter and offer strategies and tactics that in-house counsel may not have considered. Additionally, outside counsel can help reduce the burden on in-house counsel, allowing them to focus on other legal matters.

International Legal Matters

Companies that conduct business internationally may face legal issues that require the expertise of outside counsel. International legal matters can be complex and require an understanding of local laws and regulations.

Hiring outside counsel with international experience can help ensure that the company complies with local laws and regulations. Additionally, outside counsel can help companies navigate cross-border legal issues, including contract disputes, intellectual property issues, and compliance matters.

Legal Matters That Exceed the In-House Team’s Bandwidth

Similar to the strategy of optimizing costs by hiring outside counsel in the short-term instead of adding additional full-time employees to handle increases in the number of matters, outside counsel also allow you to free up time for your in-house team which can pay dividends in terms of their overall productivity.

If in-house lawyers are feeling overwhelmed, opting to delegate work to outside counsel for a period of time can give them the space they need to properly focus on their work and deliver better results.

Making the Decision

These are just a few common instances that can influence an organization’s decision when they are choosing between in-house and outside counsel for a particular legal matter. Though the decision isn’t always so cut-and-dry, knowing the strengths of each can go a long ways towards making a decision that ultimately benefits your organization—legally, strategically, and financially.