When to hire outside general counsel

As businesses meet the challenge of paying for legal services, many wonder whether they should hire an in-house attorney or an attorney working within a law firm to serve as their general counsel. 

While the decision is largely a financial one, it’s important to make sure that all of the relevant factors are being covered in the equation being evaluated, says Matthew Zifrony, a director of law firm Tripp Scott. Zifrony serves as outside general counsel to several companies and provides strategic counsel for corporate contractual and transactional issues.

South Florida Business & Wealth recently spoke with Zifrony about what factors should be considered in the evaluation.

SFBW: When do companies usually find themselves in the position of having to make this decision?

Zifrony: When the cost of hiring an attorney in-house is less than what their legal bills would be if they continue to work with outside legal counsel. Often, companies find that they have to make trade-offs if they hire a general counsel in-house. Are they able to find an experienced attorney that they have to pay top dollar for or do they pay less money for an attorney who may not have enough experience to deal with the legal issues of the company?

SFBW: If they hire an in-house general counsel, will they likely have to use outside counsel as well?

Zifrony: It is very likely that they will. When companies hire in-house attorneys, they are limited to the knowledge and expertise of that one attorney. Often, legal concerns and issues exceed the specific expertise of that one attorney. When they hire outside general counsel, they have the benefit of working through one attorney who has access to other specific expertise of the firm the attorney is affiliated with.

In addition, a lot of legal issues that companies face require bringing in expertise from other geographic locations.  For instance, if a lawsuit is brought against the company in another state then a litigator from that state would likely have to be retained.  An outside general counsel can use their firm’s connections to get the right people involved. In this instance, the in-house attorney would be hiring that outsourced help anyway.

SFBW: How else does outside general counsel bring value to a company?

Zifrony: Many companies hire attorneys only when they have legal matters. The result is that they work with disparate attorneys who only know about the one matter they are handling. Working with an outside general counsel, the company can leverage the benefit of having someone who has knowledge of all of its legal issues, their history and context. This allows the company to be best served by legal expertise.

SFBW: How does a company find the right outside general counsel?

Zifrony: The attorney should be someone the company is comfortable with – likely someone who has worked with them and knows the company and its issues well. Often, this situation evolves naturally in the course of doing business, as the work that the attorney serving the company does grows over time.

SFBW: Are there certain types of companies that benefit most from having outside general counsel as opposed to an in-house attorney?

Zifrony: Yes. Small to mid-size companies are ideal candidates for having outside general counsel since it allows them to consolidate their legal work in a cost effective manner. Large companies – not so much. Larger companies often elect to have their in-house general counsel serve as more of a manager, officer or figurehead rather than someone that performs the actual legal work. ?

Matthew Zifrony can be reached at 954.525.7500 or mzz@trippscott.com.

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