How to Build the Best In-House Legal Department Structure

Your in-house legal department structure can make or break how the company’s legal matters get handled. Get it right, and you ensure effective service delivery and a legal function that acts as a strategic partner to the broader business. But there’s no “one size fits all” solution.

Every business is different, and the ideal structure for your team is determined by the unique characteristics of your industry and your internal workflows.

Fortunately, there are still solid principles you can apply to create an optimal in-house legal structure. In this blog, we run through everything you need to consider to build a robust and strategic legal function.

In-House Legal Department Structures: Centralized, Embedded or Hybrid?

First, let’s review the options that exist for your legal department’s organizational structure. The ideal solution varies from business to business, but generally falls within one of the following three categories:

Centralized

Centralizing the legal function means that your team forms a distinct business unit or department within the organization, overseen by the General Counsel. This structure makes it easy for legal team members to discuss matters, share advice, and collaborate. And it gives legal leadership direct oversight of what’s happening within the function, making it easier to coordinate efforts and maximize value delivery to other parts of the business.

Embedded

In an embedded structure, individual lawyers work within specific business units (instead of a separate in-house legal department). The obvious advantage to this structure is that these lawyers gain a deeper understanding of how their business unit operates, as well as its unique legal needs and challenges. It also promotes “cross-pollination” of legal and business knowledge, allowing lawyers and their non-legal colleagues to learn about each other’s workflows and priorities.

In this model, the General Counsel usually shares oversight with commercial managers, freeing the GC to focus more on the business’s overall strategic direction.

Hybrid

Finally, a hybrid or matrix model combines a centralized legal department structure with an embedded one. The legal department is still operates at the direction of the General Counsel, but it includes lawyers embedded into specific business units as well. This approach allows the business to develop a combination of general and specialized legal professionals for a more flexible overall legal function.

Hybrid structures usually work best with larger, multinational corporations with the resources to support multiple satellite teams.

Factors That Determine the Ideal In-House Legal Department Structure

There are a myriad of factors to consider when trying to determine which legal department structure is right for your organization. Common considerations include:

How Legal Supports Business Priorities

One of the most important factors is how your legal department’s structure supports the company’s overall business objectives and strategic initiatives—both now and in the future. An ideal legal function is agile and responsive to changing needs, adapting to market conditions and changing industry regulations quickly and efficiently.

That kind of agility often comes from having an embedded team structure. But if your legal function isn’t large enough to accommodate an embedded approach, you can also bake this into a more centralized structure by staying in close communication with other business stakeholders and holding regular feedback sessions to stay apprised of what’s top-of-mind for leaders throughout the broader business.

The Scale of the Legal Function

The larger your organization is, the more likely your legal department will need to be segmented to address regional concerns. For example, the legal team may require a separate Deputy General Counsel to oversee EMEA, APAC, North America, etc.

While smaller legal teams won’t require nearly as much segmentation and complexity, they also probably won’t have the headcount to accommodate specialized roles. That can mean an increased reliance on outside counsel or alternative legal service providers for niche work areas. Or hiring in-house lawyers with a broad skillset.

The Legal Department Budget

Your financial constraints will go a long way toward determining the structure of your team, especially in terms of your balance of in-house work to outside legal counsel. If you have the budget to outsource work, it might make sense to keep your team small, but it’s not typically the most cost-effective approach.

For example, recent Association of Corporate Counsel data shows that insourcing legal work can result in substantial cost savings — especially when organizations are making data-driven decisions about when and how to outsource.

Whether or not you have the budget to add headcount or outsource work, using legal spend management tools can also help to optimize your budget. For example, using legal spend software, you can track legal costs in real time to ensure outside counsel delivers quality legal services at cost-effective rates.

Your Team’s Skillset

Evaluating your team’s current expertise is part of understanding the best legal department structure. Perform a skill gap analysis to understand your team’s existing knowledge and experience. Then, look at historical data to see which business divisions use your legal team the most and the type of matters they generate.

For example, you might discover the engineering department has ramped up research and design projects, but you don’t have that type of expertise on staff. As a result, you are outsourcing a lot of IP work to expensive outside counsel. Your options here could be to identify better outsourcing opportunities or to hire and embed a lawyer with expertise in the engineering function.

Your skills gap analysis should ultimately inform your decision-making when dividing work between in-house and outside counsel. If you choose to keep work in-house, you may have to train your team in new areas of the law or hire new attorneys with that expertise.

Example of Legal Team Structure and a Legal Department Organizational Chart

As we’ve established, a variety of factors determine the ideal structure for your legal team. Naturally, that means that few legal department org charts look identical.

That said, to provide a framework for understanding how a typical legal department might be organized—and where the various roles usually fit into the hierarchy—here’s an example of how a moderately-sized corporate legal department structure might look:

As this legal department org chart shows, there are often different reporting pathways that ultimately lead back to the GC. The legal operations function usually works in parallel to, but supporting, the primary legal function. And some support functions, like paralegals or legal secretaries, coordinate admin and basic legal tasks for several more senior roles.

For global organizations, there may also be additional segmentation based on the areas where the business operates (for example, there may be multiple Regional General Counsels, each responsible for overseeing a specific geographic location).

Conversely, a small start-up organization may only have a General Counsel and some support staff that report directly to the GC. And the General Counsel may oversee many tasks that generally fall under the purview of legal operations in a larger organization.

In-House Legal Department Roles and Responsibilities

Now that we have a clearer sense of how to determine the ideal legal department structure for your organization, let’s take a closer look at the responsibilities of the common roles that comprise an in-house legal team.

General Counsel (GC) / Chief Legal Officer (CLO)

The GC (or CLO) is the senior legal executive within an organization. This is typically the first role filled for your in-house legal department.

This role is responsible for overseeing all legal aspects of the business. They provide strategic guidance to senior management, ensure regulatory compliance, oversee high-risk litigation and legal disputes, and direct the organization’s legal strategy.

Associate/Assistant General Counsel

The Assistant General Counsel typically provides nuanced legal advice and support across departments and ensures the company complies with laws and regulations. As such, the role requires deep expertise in law and your organization’s industry.

The AGC reports directly to GC and helps shape the company’s legal frameworks, manages risk, and deals with external parties in legal matters. The position comes with the responsibility of a leadership role — including involvement in managing the legal team and participating in high-level, strategic decision-making. In some cases, AGCs are senior subject matter experts on specific domains of law.

Deputy General Counsel

Deputy General Counsel usually refers to the GC’s direct second-in-command. The DGC operates at a similar level to an Assistant or Associate GC. Still, this senior role requires an even more in-depth understanding of legal matters across various disciplines. That might include general corporate law, litigation, IP, etc.

The DGC typically needs more than ten years of in-depth corporate legal experience, including extensive experience with high-stakes matters like M&A, complex litigation and corporate governance.

It’s worth noting that there can be some overlap between this role and the AGC in terms of seniority and responsibility, with the exact role varying from business to business.

In-House Counsel

In-house counsel is a general term that typically applies to the attorneys within the legal department (though it can also be used when referring to those in leadership roles). In-house counsel provide legal advice, handle contract negotiations, and deal with regulatory compliance and other matters.

On a small team, your in-house counsel is likely a generalist that works on a variety of matters. However, in larger legal departments, in-house counsel sometimes specialize in particular practice areas.

Typical tasks associated with the role include contract negotiation, managing regulatory compliance, cross-departmental legal work and handling legal interactions with customers and vendors.

Senior Corporate Counsel / Senior Attorney

Senior Corporate Counsel refers to in-house counsel with a higher level of experience. They also typically shoulder more responsibility in the in-house legal department and have greater autonomy to resolve legal matters than more junior counsel.

Tasks associated with the role include drafting and negotiating contracts, liaising with external counsel, advising on corporate governance and representing the company in legal matters.

Legal Operations Manager

The legal operations manager is typically responsible for ensuring the department runs as efficiently and effectively as possible. They review processes, look for ways to improve departmental workflows, and refine how legal matters are managed and resolved.

Their responsibilities include managing the department’s internal processes, technology, budget, and operations according to best practices. That includes finding opportunities to free in-house counsel and other legal professionals from tedious admin tasks — allowing them to focus on more meaningful legal issues instead.

Typically, this role will report directly to GC, but their place in the organizational hierarchy may vary depending on your team’s size and structure.

Paralegals

Once your legal department scales beyond a handful of attorneys, paralegals become essential to the success of your ongoing operations. They provide legal support across tasks, including helping with research, preparing legal documents, and reviewing case files.

Effective use of paralegals within your team’s workflow helps control your department’s legal costs since paralegals command lower hourly rates than most attorneys.

Legal Assistants / Legal Secretaries

Legal assistants and legal secretaries typically handle more administrative and support-focused tasks. That often includes managing schedules and correspondence and handling general office tasks.

Experience in legal e-discovery and legal document management is helpful for the role — and many departments will prioritize hiring assistants with at least some prior experience providing this kind of legal support.

How to Optimize Your In-House Legal Department Structure and Headcount

Whatever its size and structure, an essential part of optimizing your legal team is making the most of your available resources. Structuring the team efficiently is a great place to start. But the savviest legal teams are also using new legal tech, including legal AI, to maximize the efficiency of legal operations.

For example, tools like Brightflag’s e-billing and matter management platform make a great addition to the legal team’s tech stack — providing rapid-fire insights into legal work and budgets and saving your team time and money. It can also automate many steps in time-consuming tasks, like invoice review, allowing legal staff to focus on higher-impact work.

To learn more about how Brightflag’s AI-powered enterprise legal management platform can unlock greater visibility and efficiency for your legal department, book a demo today.