Fractional general counsel services are becoming a popular outsourcing trend. This is especially true for small businesses. They need legal advice and oversight to ensure their business is compliant and protected, but they do not have the funds to hire full-time, in-house counsel.
While fractional business services are not the solution to every human capital problem, this is a much more efficient and effective solution than hiring an interim or part-time employee for high-level work.
“Fractional general counsel” is essentially outsourced, legal counsel. Fractional attorneys are independent contractors rather than full-time employees. Calling a fractional professional something like a “freelance attorney” might seem to make more sense, but fractional counsel is more than just an outsourced service.
Retaining fractional general counsel is more like hiring a consultant or a part-time employee than it is like outsourcing to another company. A contract attorney provides legal services for a set number of hours every week or month in accordance with their contract agreement or retainer. This setup gives the hiring business all the benefits of an employee without the in-house cost of a full-time salary, benefits, or employment taxes.
Fractional attorneys usually divide their time between multiple companies. They may work with their clients on a project basis or serve as interim counsel while a company searches for a full-time hire. Alternatively, they may work with their clients for years, filling gaps and offering legal services as needed.
Most companies consult with an attorney when they first set up their business and as the need arises from then on. For instance, legal counsel may be needed if a large merger or acquisition is taking place or an employment issue arises. For these kinds of legal “spot checks,” business owners tend to consult with specialized business attorneys for specific questions or business situations.
However, many business owners eventually discover they speak to an attorney several times a year —perhaps even on a monthly basis. When they do the math, they realize the hourly fees are starting to represent a significant expense that is sometimes enough to hire their own full-time employee.
This is the main difference between fractional general counsel and in-house counsel. In-house counsel is a full-time employee of the company who takes on no other clients. They work solely for your business and handle all legal issues and questions. Depending on your industry and the size and complexity of your business, you may still need to consult with specialized, outside counsel as the need arises.
For example, if your in-house counsel is a general counsel attorney who specializes in real estate acquisitions and compliance, you may need extra legal oversight if you buy another company and need to perform a large merger. Your in-house counsel would still work with any outsourced counsel or other firms to resolve these matters.
Many businesses come to a point when they have to decide if they need a lawyer or if they can handle a given legal issue on their own. Legal counsel can be expensive, especially for small businesses and start-ups. Taking a DIY approach to legal matters can end up costing you much more than hiring a lawyer in the first place.
While filling out a standard IRS form or signing a one-page contract can seem simple enough, making a mistake could expose your business to unnecessary liability or risk. One box checked incorrectly on an IRS form could cost you thousands in taxes. One misinterpreted or unread line in a contract could commit you to an unexpectedly expensive or one-sided venture.
If you do not have legal training, certain subtleties are difficult to catch. Most business owners do not have the time to teach themselves how to act as their own legal counsel. Having an attorney handle these legal matters for you is much safer and less time-consuming. Hiring law firms on an ad hoc basis can quickly become cost-prohibitive.
That is where fractional general counsel services step in. When hiring law firms on an hourly basis is too expensive, but you cannot hire an in-house attorney, outsourced legal counsel can fill the gap without breaking the bank.
Do you have a legal question? Don’t try to figure it out yourself. Contact our team today and we can discuss if our services meet your needs, or at the very least, point you in the right direction.
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