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When Should I Hire In-House Counsel?

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By Christopher Coble, Esq. on June 23, 2015 3:58 PM

All small businesses have different expansion patterns. Most grow in fits and starts rather than following one smooth upward curve of success. As a result, figuring out specific benchmarks for your small business can be difficult.

One key benchmark is the moment you hire your own in-house counsel. How big does your company need to be before it makes sense to have full-time legal counsel? While there is no perfect formula to figure this out, here are a few considerations:

GC or Not GC?

Deciding who will be your first in-house attorney is just as important as deciding when to make the hire. While some companies choose to bring in a lower level legal specialist (perhaps someone to review contracts, regulatory compliance, or intellectual property issues), others go straight for general counsel.

General counsel normally has expertise in a wide range of business, real estate, tax, employment, and litigation issues, and will normally act as part of your company's senior management team. While this means consulting with counsel before making certain business decisions, it also means your in-house lawyer might save you from making some costly mistakes.

Indicia of Success

Not sure the time is right for a general counsel? If any of the following apply to your business, you may be ready:

  • Over $10 million in sales
  • A high volume of clients or vendors
  • A steady flow of complex contracts
  • The prospect of going public

These are all great problems for a formerly small business to have. By hiring in-house counsel, you can be more confident that your company will continue to thrive as it expands further.

The latest SEC public offering regulations, patent troll techniques, and employment legislation are all matters an in-house counsel attorney or team can keep an eye on and keep your business out of trouble. When these issues handled for you, you can focus on your core business and keep your company on that upward trajectory.

The New Guy or Gal

Ultimately, you'll have to decide when your company is ready and who is best for your company. Keep in mind that many companies have one in-house counsel, so you shouldn't feel obligated to hire a team of lawyers right off the bat.

Also keep in mind: while hiring your CFO's son straight out of law school may seem like a good idea, you're probably going to want someone with at least a few years of experience at a big firm, if not prior in-house counsel experience. Remember, you're hiring in-house counsel to protect your company from liabilities, not to become one.

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