Fractional services are becoming increasingly popular in our remote and outsourced digital world. When a business is in need of ongoing services but cannot justify hiring a full-time small business lawyer for the limited number of hours required, fractional general counsel can step in, making a big impact for a lower cost.

Increasingly, 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.

What Is Fractional General Counsel?

“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.

What Is the Difference Between In-House Counsel and Fractional General Counsel?

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.

Do I Really Need an Attorney?

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.

What Services Can Fractional General Counsel Provide for My Business?

There are dozens, if not hundreds, of legal functions that occur within a business every day. Whether you realize it or not, legal oversight (or lack thereof) has a tremendous impact on the efficiency and efficacy of your day-to-day business operations. A fractional general counsel can step in to help you protect and streamline your business operations and interests in a number of categories.

Human Resources

Human resources (HR) and legal departments have a tremendous amount of overlap. This happens because both state and federal laws protect employee rights. These laws range from preventing discriminatory practices and workplace harassment to the regulation of hiring, firing, medical leave, fair pay, and workplace safety.

Many HR managers have advanced degrees and specialized training, but there is no replacement for actual legal training when questions of legality, ethics, and compliance are on the line.

Employment law covers the rights and responsibilities of both employees and employers. The U.S. Department of Labor (DOL) oversees and enforces over 180 federal laws for more than 1 million American employees. Your HR functions must be built on an understanding of which of these laws apply to your industry and your business in particular.

For instance, small businesses have different obligations to fulfill where health benefits, medical leave, and family leave are concerned. Depending on your industry, you may have specialty compliance requirements to meet. Construction companies, for instance, must meet special worker health and safety requirements through OSHA training.

Failing to properly understand or address these issues could result in ethical missteps, fines, or even legal action from either the government or your employees. Remember, when it comes to Human Resources, preventing a problem is always easier than fixing it.

Employment and HR law services often include:

HR professionals negotiate legal agreements every day. They provide offer letters, termination packets, employee mediation, and ADA compliance. Without appropriate legal counsel or training, they could be leaving your business open to liability. Fractional legal counsel can help prevent liabilities by creating and reviewing policies and procedures, drawing up employment contracts, and generally overseeing legal aspects of the Human Resources department.

The EEOC

The EEOC (U.S. Equivalent Employment Opportunity Commission) handles the implementation of government laws that make it unlawful to oppress a singular request for employment or representative because of their race, skin color, religion, sex, etc. They have the power to research charges of any victimization businesses covered by the law. They also apply these laws to a wide range of work circumstances. These can incorporate recruiting, terminating, advancements, provocation, preparing, wages, and advantages. The EEOC supplies authority and direction to bureaucratic offices on all parts of the central government’s equivalent business opportunity program. When there is a definitive choice to record a claim, the EEOC considers many factors such as strength of the proof, the issues for the situation, and the bigger effect the claim could have on the EEOC’s endeavors to battle working environment separation.

Contracts

Contracts are a part of every business’s operations. Employment contracts, client contracts, acquisition contracts, sales agreements, licensing contracts, intellectual property contracts, tax contracts, and many more.

Contract attorneys specialize in the creation, negotiation, and enforcement of contracts. If necessary, they may become involved in litigation if the parties in the contract disagree about interpretation or enforcement.

Brand new startups can sometimes get away with doctoring a basic contract from the internet, but this can leave you open to serious risks and liabilities as a business. A contract attorney can help ensure your contracts protect your business, your employees, and your investments.

Additionally, a contract attorney can help you make sure anything you sign created by another company is on the up and up. Fractional general counsel working with contracts can make sure you are not agreeing to something that will ultimately result in losses or damage to your company.

Contract services performed by fractional general counsel may include:

A contract attorney will look over every aspect of your contracts —such as the essential terms, provisions, and adherence to local laws— to provide you with an in-depth understanding of the agreement, close any potential loopholes, ensure you receive the best possible terms, and protect you from breach of contract.

Employment Agreements

An employment contract attorney specializes in the creation, negotiation, and enforcement of employment contracts. This may include the terms of payment, commission structure, job duties and expectations, and employee code of conduct.

For businesses that need to protect trade secrets, intellectual property, or copyrighted material, employment agreements can help protect the company from human error or malicious intent. Without the contract, there is often no way to recoup your losses if your information is leaked or stolen.

Employment contracts are also a way to mitigate disputes between employees and employers. Should a dispute arise, you can simply consult the contract and review the terms of employment. This is especially important for temporary, part-time, seasonal, or contract employees because it provides stability and job security by setting the time frame of employment.

Fractional general counsel may create employment contracts for small businesses, negotiate the terms with employees, or review the contracts in case of a dispute. They can help you create a legally binding contract that protects your interests and your business. In case of any claims of breach of contract, your attorney will also be able to defend you against the claim and, if necessary, represent you in court.

Business Formation/Entity

If you are thinking of starting a business, one of the first legal tasks you need to complete is to choose a business entity. A business entity is a state-level organization formed by one or more persons. In most states, you are required to file business documents with the office of the Secretary of State or a similar state agency to legally set up your business.

The business entity that you choose is critical to your business operations. It will determine how your taxes are determined and paid, how your employees are paid, and how ownership of the company is set up. It also determines your legal liability in case of legal disputes. The different types of business entities include:

You should consult with an attorney before choosing a business entity because choosing the wrong one can cost you thousands in taxes —and serious fines and repercussions in the case of mislabeling a nonprofit. Fractional general counsel can help you by looking over your planned business operations and long-term goals to determine the best possible entity for your business.

Sole Proprietorship

After you’ve chosen the appropriate entity, you need to complete certain documents and legal procedures to complete your business formation. A sole proprietorship is the simplest business entity and does not require registration with the state. You are unlikely to need an attorney to help you start a sole proprietorship unless you are in a highly regulated industry requiring specific business licenses and/or registration.

Partnerships and LLCs

For partnerships and LLCs, state registration is a requirement. You have to prepare either a partnership agreement or an LLC operating agreement to file with the state. Sometimes, one option is to register with your state agency online, but having an attorney look over, revise, and file these documents for you is best —especially if your business is even mildly complicated.

Your operating agreement outlines your business’s financial and functional operations. This includes regulations, provisions, and rules — essentially all your basic business operations. When all members of the partnership or LLC sign their agreement, it becomes a legally binding contract. Using the services of a fractional general counsel can help ensure everything is laid out to protect all the parties involved and sets up the company the way you envisioned it.

These documents also protect your business’s limited liability status. In other words, they protect the individual members of the company from being personally liable to the company. If, for instance, the company were to be sued, as long as you have an LLC set up correctly you would not have to use your personal finances to meet those legal obligations. Even if the company went bankrupt, you would not necessarily also be bankrupt.

Corporations and S Corporations

Corporations and S corporations must also register with the state. They must file bylaws and other documents because their ownership structure is more complicated. If you are starting a corporation, you should always enlist the help of an attorney to ensure everything is handled and set up correctly. This protects you from making any costly mistakes that could damage your business.

Other legal services you may require during business formation include:

Compliance

While many large companies —especially those in highly monitored and regulated fields— have chief compliance officers, most medium-sized and small businesses do not have the size and funds to keep the position on full-time. Hiring fractional general counsel can help. A freelance attorney can step in to help with the components of a compliance program, including:

The content of these compliance components will depend on your industry regulators and laws. For instance, if you are a private practice doctor, you must make sure you are in compliance with HIPAA, OSHA, the CMS, the CDC, and the FDA. In finance, you must comply with the Banking Security Act (BSA), the Fair and Accurate Credit Transactions Act (FACTA), the General Data Protection Regulation GDPR, and Common Reporting Standard (CRS), among others.

Even general businesses must ensure they are in compliance with state and federal regulations concerning employment policies, health and safety, and general fiduciary responsibility.The government does not care if your non-compliance is an honest mistake; you will face the repercussions either way. The consequences for being found non-compliant can range from fines and citations to major lawsuits and even the enforced closing of your business. So make sure you take the appropriate legal steps to protect yourself, your employees, and your business by having an attorney ensure you are truly in compliance.

Mergers and Acquisitions

When two companies come together, a lot can go wrong. If this is your first major acquisition or it happens only rarely, using outsourced legal counsel can save you a lot of time, money, and frustration in the long run. Services provided by acquisitions and mergers lawyers include:

The exact services you need will depend on the size and type of your transaction. Generally speaking, your attorney will ensure that the two businesses are properly merged into one larger company and that you have achieved your business goals through negotiation.

The legal nuances and ramifications of mergers and acquisitions can be very complex to navigate on your own. You need a trained legal professional who is able to advise and guide you through the process.

Registration and Licensing

Different industries and verticals have different licensing, permit, and registration requirements. You have to make sure you have the correct business licenses to meet your local, county, state, and federal requirements. Without the right licenses and permits, you could face hefty fines or even closure of your business.

Licenses are issued by the government on both the local and federal levels. There are three main categories of licenses:

You may potentially need to apply for dozens of licenses depending on your location, business entity, and industry. Common examples include:

Some licenses must be obtained before starting your business. Others may pop up as you expand, launch new products and services, move to a new location, or open up additional offices. Businesses must stay on top of which licenses and permits are applicable to avoid any unpleasant consequences.

Consider consulting with a freelance attorney who specializes in your industry or type of business (for example, a small business lawyer for Arkansas businesses) before you start your business. This is a great way to accurately determine what licenses and registrations you need to acquire.

You should also consider checking in with your fractional general counsel periodically —either annually or when you reach key milestones in your business. This helps ensure all of your licenses and permits are up to date, and your business is fully protected from liability. Retaining fractional general counsel for these periodic check-ins is an excellent way to save money while still ensuring your business is legally secure.

Litigation and Disputes

Litigation and disputes is generally what most people think of when they imagine hiring legal counsel. Litigation is the preparation and presentation of a court case. Dispute resolution involves legal proceedings and negotiations outside of the courtroom, including mediation and arbitration.

Litigation Lawyers

Litigators, or trial attorneys, focus mainly on courtroom cases. Many attorneys in the field focus on litigation generally. Many others specialize in specific areas of litigation or the law, such as family law or intellectual property. Fractional legal services work the same way. You can use the services of an attorney who generalizes in litigation, or you can try to find a contract attorney who specializes in your particular industry or case subject matter.

You may need to hire a litigation attorney for your business for countless reasons: charges are being filed against your company; someone is threatening to sue; you are considering bringing legal action against an employee in an intellectual property dispute; or you might need one for many other variations of these problems. Regardless of the reason, legal counsel can help guide you through the process for the best possible outcome.

Alternative Dispute Resolution

An attorney specializing in alternative dispute resolution (ADR) provide services to help you settle legal issues outside of court. People seek ADR for many reasons. Maybe you do not have the time, energy, or money for a prolonged legal battle, you want to settle the issue quickly, or you need to protect your business’s reputation. Whatever the reason, alternative dispute resolution methods like mediation and arbitration can help you resolve your issues out of court.

Mediation can often help two disputing parties find an agreement in the middle ground. Examples include employment discrimination accusations, claims of misconduct, or landlord-tenant disagreements. However, you should remember that mediation decisions are not legally binding unless they are put into a contract.

Arbitration, on the other hand, means all final decisions are made by the arbitrators and are legally binding. Think of mediation as a round of negotiations and arbitration as a mini-trial. Labor disputes, commercial construction disagreements, real estate disputes, and disputed insurance claims are all regularly handled by experienced arbitrators.

Get the experienced legal advice you need to navigate these tricky situations successfully by consulting fractional general counsel.

Collections

As a business, one of the most unpleasant tasks you have to complete is collecting on overdue invoices. It is uncomfortable for everyone —especially if they are a long-term or recurring client. Obviously, however, you cannot give your services away for free, or you will not be able to pay your own employees or turn a profit.

Collection agencies are an option, but they are often too expensive for small businesses, especially if only a few invoices need collecting. You can also retain a full-time debt collection attorney, but the monthly expense may outweigh the funds they recover for your business. A fractional debt collection service can be a great compromise.

When you work with a freelance attorney on a regular but as-needed basis, you get all the benefits of both worlds. The attorney gains a deeper understanding of your business every time you work together, and you only have to pay for the hours they actively work on your specific collection cases.

You are also likely to get better results working with an attorney than you would on your own. For many businesses, a letter from an attorney on official letterhead is enough to spur clients into paying overdue invoices. For the more complicated collection issues, having an attorney in your back pocket is an invaluable means of increasing the appearance of your authority.

Recovering delinquent accounts and past-due funds requires a lot of customer contact and documentation. Requisite time and effort aside, you have to make sure you understand and follow the most recent rules and regulations surrounding debt collection for your industry. If a case is handled indelicately, your business could actually face major fines and legal repercussions should the client choose to sue or file a complaint.

Avoid losing even more money on overdue accounts by ensuring you are strictly in compliance with all debt collection laws, rules, and regulations. Consult with an attorney to set up training, policies, and procedures for your staff, or retain fractional legal counsel to deal with overdue accounts as they arise. Either way, finding and making use of quality legal advice can help ensure your company remains in compliance while recovering past-due accounts.

The Pros and Cons of Inside vs Outside Legal Counsel

There are both benefits and downsides to consider when you are debating whether to hire an in-house attorney or to contract with fractional general counsel.

Pros of In-House Counsel

When you hire an in-house attorney, you get consistent and in-depth legal oversight and advice customized to your business and yours alone. You do not have to worry about lengthy projects hiking up the price because (generally) you pay the attorney a set salary. Even if they are a general counsel attorney when they start the job, eventually they will be immersed sufficiently in your business to become legal experts on your specific company. That kind of in-depth knowledge can be invaluable.

The pros of hiring in-house counsel include:

Cons of In-House Counsel

In-house counsel is not the best choice for every business. The first and most obvious con of keeping an attorney on full time all the time is the expense of bringing on a full-time employee. In addition to their salary, you pay employment taxes, vacation time, employment insurance, life insurance, health insurance, and retirement funds.

Furthermore, their salary is required all the time, not just when you actually need their legal services. It all adds up fast! Do the math and make sure you would actually save money by bringing your legal counsel in-house. If your legal needs are seasonal, hiring fractional counsel may be a better choice.

Hiring an in-house attorney will not solve all of your legal troubles. Every attorney has their own specialty, but no one person can have an in-depth understanding of every legal issue that may arise in any business. For example, if you hire a tax attorney, they may not be up to date on IP or employment law. If those things became problematic, you might need to hire additional counsel. Make sure you will not have to hire additional assistance, potentially more than doubling your expenses.

The cons of hiring in-house counsel rather than as-needed legal services include:

Fractional General Counsel Pros

Fractional general counsel is the happy medium between hiring a new attorney every time you need something and bringing on a full-time employee. With the right fractional counsel, you gain the benefits of both worlds by working with an attorney who has a deep understanding of your business without the expense of a full-time employee. Fractional general counsel makes seasoned legal advice available to small and medium-sized businesses without breaking the bank.

Fractional legal services should be set on a regular schedule, so your attorney will have regular updates on your business operations and growth plans. They should be able to help you proactively work on compliance issues and point out areas where you may need some special legal action. From reviewing contracts to facilitating mergers and acquisitions to handling employee disputes, fractional general counsel can help you keep your business running smoothly for a fraction of the cost of a full-time employee or firm.

Fractional general counsel can benefit businesses through:

Fractional General Counsel Cons

If you find you regularly spend more on legal services than you would on a full-time employee, fractional services are probably not for you. Do you need full-time access to legal counsel? Do you find putting meetings off for a day or two because your attorney has a full schedule of other clients is extremely problematic? Hiring an in-house attorney may be a better option. Furthermore, if you run a complex business in a highly regulated industry, you may need to consider hiring a specialty firm, providing access to multiple attorneys with many specialties.

While using fractional legal services certainly has a lot of benefits, you should also consider that:

Arkansas Small Business Lawyers

If you need a small business lawyer, Arkansas-based Martino Law Firm can help. We offer fractional general counsel for small- and medium-sized businesses all over Arkansas. We can help streamline your business’s operations, ensure you are in compliance, and protect your business from legal action and losses.

Protect your business, your employees, and all your hard work with the Martino Law Firm and our general practice attorneys who represent real businesses right here in Little Rock. Contact us today to schedule a free consultation today!

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