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When Should I Hire an In-House Counsel?

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Your business has progressed to the point that it faces legal issues or needs the routine assistance from outside legal counsel. If this is the case, it may be time to consider hiring an attorney to serve as your in-house counsel or general counsel. An in-house counsel can be an invaluable addition to your business. Here are the things that you should consider when making the determination of whether to hire in-house counsel.

Let’s begin by reviewing the role of an in-house counsel. First, she is your legal advisor for any legal matter that may arise in your business. Second, she is your professional representative in all legal matters facing the company. Lastly, she can perform many of the legal functions or services that the business requires. Let’s address each of these benefits individually.

Legal Advisor to the Business

An in-house counsel serves as the legal advisor to your business. She will educate herself on the laws applicable to your business operations. She will then advise on any instance of business operations that must comply with these laws or could potentially subject the business to liability. Let’s review some common examples of routine business operations that must comply with specific laws.

Regulations – If your business is subject to federal or state regulation, your in-house counsel will advise you in how to comply with those laws. While some businesses and industries will have special regulatory requirements, all businesses are subject to state business regulations.

Tax Pitfalls – All business (or business owners) are subject to applicable tax laws. Your in-house counsel will be able to advise on transactions (such as the purchase or sale of property) that could subject the business to legal liability. She may also be able to work with your accountants to strategically plan for tax avoidance.

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, worker’s compensation claims, and unemployment claims.

Collections – Your in-house counsel may advise your claims representative on collecting delinquent accounts so as not to run afoul of fair debt collection laws. In some instances, your in-house counsel may take part in the collection effort.

These are simply common examples of how in-house counsel advises her employer. Your counsel will advise on any matters specific to your business.

Legal Representative of the Business

A primary role of in-house counsel is that of professional client. That is, your in-house counsel will be the primary point of contact for dealing with outside attorneys when your business faces a legal issue that requires outside representation. Businesses routinely require outside representation in operational transactions, funding transactions, and legal actions. For example, if your company is in the unfortunate position of being subject to a major lawsuit. The ability to defend such a civil action is likely beyond the ability of your in-house counsel for reasons of time, resources, or expertise. As such, your in-house counsel will find outside counsel to represent your business. She will remain in contact to monitor the progression of the case. Finally, she will update the executives or the board of directors on the status of the action at any time. This is just one example of when your in-house counsel will serve as a professional client representative. Your business may face any number of legal situations where she will serve in this role.

Legal Services For the Business

An in-house counsel should have subject-matter knowledge of the legal areas relevant to your business. As such, she can assist in many of the legal functions that your business requires. Some examples of routine legal services that your in-house counsel might provide include:

Regulatory Compliance – As previously discussed, most businesses are required to comply with state and federal corporate governance requirements. Your in-house counsel will take the lead on all regulatory filings and disclosures of your business.

Contract Review and Drafting – Many businesses routinely enter into purchase agreement or other contracts. Your in-house counsel will review any such contracts for legal issues. Further, she will be able to draft (or edit) the contract in such a way that it protects your business interests.

Collections – Your in-house counsel can serve as a power asset when seeking the collection of delinquent accounts for customers or clients. Sometimes, simply writing a collection letter on legal letterhead is sufficient to encourage payment. Other times, your in-house counsel may bring a legal action to collect the debt in small claims court. This is a fairly routine type of civil proceeding that does not require the expenditure of time and resources that a major lawsuit requires.

What Your In-House Counsel is Not

One thing to remember about your in-house counsel – she is NOT your attorney. In many instances, it would be a conflict of interest if your in-house counsel represented you personally in a legal matter. She is an employee of and represents the company. The business is her client. Her primary duty is to serve the interests of the business with care in loyalty. If your business has multiple owners, representing you in a personal legal matter can easily arise to a conflict of interest. Remember, if you have a later dispute with the other company owners, the in-house counsel represents the business. If she previously represented you in a legal matter, it would rain questions as to where her loyalty lies. It is far less of a concern when you are the sole owner of the business.

These are just a few examples of how an in-house counsel can help any business. There undoubtedly numerous legal undertaking relevant to the operation of your business.
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