The Role of In-House Counsel
The role of In-house counsel today is not just that of a company lawyer, but one of a business partner. In-house lawyers are expected to offer legal counsel, but they should also be providing sound commercial/business advice, risk management and direction around many other complex issues. Some of these may include advice on global privacy laws; accounting and tax concerns; corporate governance and compliance and monitoring company pension and insurance schemes.

They may also be tasked with undertaking company secretarial duties as well as handling a variety of commercial contracts, property matters and advising on employment issues.

The key questions that generally arise when considering making such an appointment are:

  • When is the best time to make such an appointment?; and
  • What circumstances would generally lead to this decision?
  • We hope that this article helps provide some answers.

    Timing
    When should you appoint a first in-house counsel? This decision rests on a variety of factors and will vary from company to company. These are the most common and generally pre-empt such a decision:

  • Increasing revenue and general business growth;
  • Pre merger or acqusition phrase;
  • Increasing number of employees;
  • Planned IPO;
  • The company deals with a high volume of complex, high value, multi-jurisdictional contracts with vendors and clients;
  • The company is (or will be) in a heavily regulated industry;
  • The company is focused on the purchase, sale and/or development of valuable intellectual property;
  • The company may be, or already is involved in protracted and expensive litigation.
  • Benefits
    There are many advantages to having a dedicated in-house counsel, both from a cost and business perspective. We have featured those most likely to have a significant impact on your business:

  • Potential reduction in external legal spend. The hourly rate of in-house counsel is usually 30 percent cheaper than that of outside counsel. Bringing work in-house does not necessarily remove the need for external advisers, however it does mean that external legal spend and quality is better managed;
  • Risk management. One of the biggest benefits of in-house counsel, given their intrinsic company knowledge, is that risks can be better managed and future legal expenditure can be minimised;
  • Corporate governance and compliance. This is an area of increasing importance and where in-house counsel can add great value. This is especially true since the impact of Sarbanes Oxley, Enron and Worldcom;
  • Strategic and commercial value. A key advantage of in-house counsel is their proximity to and understanding of the business and the ability to provide spontaneous input.
  • Making the Right Choice
    Getting this right is not always easy and much depends on the business and its particular needs.

    In the majority of scenarios, companies tend to appoint experienced and therefore senior lawyers as their first in house counsel. This is due to the fact they will be typically dealing with all levels of the business, from junior level employees up to senior management and Board members. This generally requires a degree of gravitas and the ability to successfully gather ‘buy-in’ from colleagues who are unfamiliar with working with in house counsel.

    Previous management experience is often an important consideration, particularly if there is remit to build a team. Even as sole counsel, the majority of in house counsel will be expected to successfully manage relationships with external lawyers and to manage/co-ordinate projects.

    Whilst the first in-house counsel may have relevant sector experience, they will often be something of a ‘generalist’ in terms of their technical knowledge and skills. This is frequently because of the wide nature of work covered.

    Almost certainly, a first in house counsel will have previous industry experience. This would illustrate some familiarity with working practices in-house and an understanding of the importance of building successful working relationships with colleagues at all levels, particularly, senior key decision makers.

    Problem solver. An in-house counsel should be able to offer viable and often creative commercial solutions given challenging scenarios.

    Overall, the successful in-house counsel should excel in terms of supporting, protecting and promoting the best interests of your business

    Courtesy of Laurence Simons

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