Certain types of businesses routinely face the need for the services of a legal professional. This is true if the business is subject to extensive regulations, has a complex legal structure, is regularly involved in transactions, or is subject to major litigation. At some point the business may desire to hire an in-house legal professional to handle or manage the legal issues. At that point, who, when, and how to hire becomes relevant to the company. A primary consideration is whether the business needs the services of an attorney or a paralegal?
To answer this question, we’ll begin by reviewing the primary training and skill sets characteristic of an in-house counsel and a paralegal. Once you have an understanding of each professional’s skill set, you should work to identify the specific needs of the company. At that point, you are in the best position to determine whether you need the services of an attorney or a paralegal.
What an In-House Counsel and Paralegal have to Offer
In-house counsel generally provides three major services to the employer — advisor, professional client, and service provider. She will research and advise the employer on any legal matters affecting the business. She is the legal face of the company the dealing with outsiders on legal matters. This includes responding to legal inquiries, handling legal complaints, and hiring and overseeing outside counsel when necessary. Finally, she will also perform many professional services to the business, such as contract review and drafting, corporate governance, regulatory compliance, etc. In summary, her contributions revolve primarily around her substantive knowledge, or her ability to conduct research and become familiar with an area of law. This allows for the ability to effectively render and advice and to spot issues of relevance to the company.
Paralegal skills generally focus on the procedural, rather than substantive, aspects of law. That is, a paralegal is trained to work in support of an attorney who focuses on the applicable substantive law. She is not highly trained in all of the substantive areas of law affecting a corporation. Unlike an attorney, she lacks the in-depth understanding of a myriad legal issues. Further, she has less training in legal research and writing. She would have less ability than an attorney to research and become proficient in a new area of law. As such, she would be less proficient in providing legal advice on novel areas of law or spotting potential legal pitfalls. In some cases, a paralegal may also have a general understanding of the substantive laws, but she lacks a legal license and is limited in her ability to represent the firm in legal matters.
If you need more information on the role of paralegals and attorneys within a company, visit the LawTrades blog.
Identifying the Company Needs
The next step in the determination of whether to hire a paralegal or an in-house counsel is to identify the needs of the company. The type or nature of legal issues affecting a company will vary depending on the operations of the company, the industry, the size or structure, and many other fiscal and operational aspects. Some of the most common legal areas of interest relevant to the company include:
Regulations – A business may be subject to federal or state regulations. Depending on the regulation, operating legally may require a great deal of planning and strategy. Also, regulations are notoriously full of administrative filing requirements and red tape. If the regulations regime of the company requires analysis, issue-spotting, and strategic development, a company would be better served by a licensed attorney with knowledge in this substantive area of law. If the company is subject to heavy administrative filing requirements, a paralegal may be able to handle the responsibilities more effectively than an attorney.
Corporate Governance – Corporate governance is largely procedural in nature. A well-versed paralegal would be able to manage many of the routine governance processes, such as voting, meeting, and record retention requirements. More complex corporate governance issues, such as business transactions or altering the governance documents, should be handled by an experienced attorney.
Litigation – Paralegals generally work in support of an attorney in matters of litigation. The attorney will be more familiar with the substantive law issues.
Employment Issues – If your business hires or fires employees, your in-house counsel may advise you or your managers on actions that might run afoul of applicable employment discrimination laws. She may also be able to advise on compliance with employment laws, such as EEOC regulations, workers compensation claims, and unemployment claims.
Tax Pitfalls – Taxation is generally within the expertise of accountants and tax attorneys. Accountants manage the accounting process, and attorney strategize tax deferment or avoidance. Paralegal skills would generally not be appropriate for these issues, as the procedural aspects of taxation are generally handled by an accountant or bookkeeper.
Collections – Collection is generally a procedural in nature. The company will have a course of action to follow for delinquent customer or client accounts. An attorney may be a useful part of that process, such as sending demand letters or initiating litigation.
In all of the above areas of law, an attorney will generally be more adept than a paralegal at advising company executives. The attorney, however, will require a far greater salary than the most experienced paralegal. As such, the company should weigh the costs and benefits of the legal professional when making a decision.
Working with LawTrades
When determining whether to hire a paralegal or in-house counsel, you should consider working with a professional to make the right decision for your company. LawTrades can provide you all the information you may need in this process.