When business booms, your company may become all too familiar—and frustrated—with the high costs of outside legal counsel. When this happens, your company will inevitably consider whether it’s the right time to hire your first in-house counsel. Let’s look at when to hire your first in-house counsel, what skills and experiences to look for among the candidates, and what role the first in-house counsel should have in the growth of your company and its legal strategy.
When to Hire Your First In-House Counsel
Companies looking to hire their first in-house counsel should know that a newly minted company lawyer will not eliminate all or even most outside legal costs. While your new in-house lawyer will be able to reduce outside legal costs by taking on much of the daily legal work themselves and more effectively managing outside counsel, it is also likely that this person will discover previously unknown legal issues that require attorney attention. So most companies should not hire their first in-house counsel as soon as outside legal costs reach the market salary for in-house lawyers in their area, thinking that this will necessarily save them money.
For some companies, hiring an in-house attorney in anticipation of escalating legal costs make sense not because the hire will reduce the need for outside counsel, but because the attorney will have the expertise to choose and manage outside counsel in the most efficient way. Some common triggers for major legal bills are:
Entering into (or currently being in) a highly regulated industry.
Developing, licensing, or acquiring intellectual property.
Buying or leasing real property.
Significantly growing your workforce.
When evaluating whether it’s time to hire your first in-house counsel, your company should also consider benefits beyond reducing legal costs. For example, in-house attorneys often have specific skills, such as facilitating real estate transactions or reading and summarizing complex non-legal documents, which can be part of their new role. By taking on this additional work, your first in-house counsel can free up other employees to engage in work that better fits their role.
Whom to Hire: Know Your Needs
For most companies, their first legal hire will need to have met a few basic criteria: time spent at a well-regarded law firm, where he or she worked in a practice area requiring expertise that would be helpful to the business, and previous in-house experience. But beyond these minimum requirements, what should your company look for?
You might have received conflicting advice on this. On the one hand, you will hear that you should look for a generalist who has experience in a wide range of legal matters. On the other hand, you might hear that you should seek someone who understands a specific subject area, such as intellectual property or employment law, that is important to your company.
Though it might seem obvious, knowing whether to hire a generalist or specialist depends on the needs of your company. Hiring a lawyer who previously worked in capital markets or securities law for a company that does not plan to go public or receive significant outside financing in the next few years may make little sense if that person lacks other skills or expertise that will benefit your business. Similarly, if you expect to develop or acquire valuable intellectual property as part of your company’s near-term growth strategy, your outside legal costs will probably not shrink significantly if you hire a generalist who lacks experience in intellectual property.
With all this in mind, you need to take a hard look at the next few years of your company’s growth and consider what expertise you will need from your in-house attorney. Companies often look for attorneys with expertise in one or several of these subject areas:
You won't likely be able to find someone who is an expert in all of these legal areas. Instead, determine where you expect legal costs to grow in the next few years, and hire someone with relevant expertise in those areas. For help on subject matter areas that your in-house attorney is not familiar with, Priori Legal can be an extremely cost-effective way to find high-quality help on demand.
Beyond previous experience and expertise, you should hire someone who aligns with the values and culture of your company. While companies sometimes tend to think of in-house counsel as purely there to fit the in-house counsel job description, the fact is that they can significantly impact workplace culture and the relationships a company develops with vendors, clients, and outside advisers.
Determining the Role of In-House Counsel
What exactly is the role of a company’s first in-house counsel? Some companies choose to hire someone who can immediately contribute to the management and growth strategy of the company, in which case they should consider hiring a more senior person in a general counsel or vice president of legal affairs role. Other companies choose to hire someone who will play a more specialized, functional role, reserving the larger and more management-oriented general counsel role for when the company can afford a more experienced candidate or when the company has a better sense of their legal needs and the kind of in-house attorney that will work best with the management team. In deciding what role your first in-house counsel will play, remember that you and your company will decide the extent to which he or she is integrated in the management team, which often depends on your salary constraints and the current and future needs of your company.
Hiring your first in-house counsel can be challenging. Once you decide that it’s time to hire, determine your company’s near and long-term legal needs, and consider the role for your first in-house counsel, you can start looking for the right candidate.