Does Your Company Need a Legal Team (In-House Counsel)?
If you are considering engaging a legal team for your company, this article provides a comprehensive overview of:
What is a Legal Team?
A legal team is a permanent entity in your company that provides legal services to the business. It consists of a group of lawyers who may be specialising in different fields, such as employment and commercial, and may also include paralegals.
The primary role of the legal team is to act in the best interests of the company as a whole, as opposed to that of individual directors or shareholders.
The legal team will work hand-in-hand with the other divisions in your company to optimise operations. These other divisions can include the human resource department (e.g. dealing with employment matters) and senior management of the company (e.g. advising them on the legal aspects of corporate deals).
Duties and Responsibilities of a Legal Team
The areas in which a legal team can provide help can include:
- Helping the company to understand the impact of any legislative or regulatory changes on its business model or operations
- Ensuring that the company’s operations comply with the relevant regulatory frameworks and laws
- Mitigating any legal risks associated with the business
- Providing support in corporate transactions, such as drafting and editing contracts
- Assisting the company in any litigation involving the company
- Liaising with and supervising any external counsel
For example, if there is a litigation suit against the business, the legal team will likely be involved in all stages of the litigation process. This will include gathering all the necessary evidence to defend the company against the suit, drafting requisite court documents, liaising with external counsel (if any) and preparing for trial.
For a company with a recognised brand, legal work may include enforcing any intellectual property owned by the company (e.g. trademarks, patents) against any infringers and advising the company on how to best approach potential claims.
Why You May Need a Legal Team
Pros of hiring a legal team
There are many benefits of having an in-house legal team:
- Comprehensive advice – As part of the company, the legal team is the most familiar with the nuances of your business operations. Thus, it is able to provide comprehensive legal advice which is attuned to the specific legal and business considerations of the company, rather than advice that is limited to the particular transaction or project.
- Proactive advice – The legal team will be able to proactively identify any legal issues with any matter proposed or implemented by the company. This will assist the company in seeking out any legal issues early, which will avoid any future, and possibly unnecessary, escalation of issues. This will be time- and cost-efficient for the company.
- Similar objectives – The legal team operates as a strategic part of the business. Thus, its objectives are aligned with that of the business, and it is in its best interests to enable the company to effectively execute its plans.
- Facilitating interactions – Your company may need to engage external counsel for advice in certain specialised matters. In such situations, the legal team can facilitate seamless interactions between the company and any external counsel, because of its unique position stemming from its understanding of the company’s business objectives and its possession of legal knowledge.
Limitations of hiring a legal team
Nonetheless, there are also limitations where an in-house legal team is concerned.
- May have less specialised expertise – Although a legal team likely has sufficient general legal expertise to handle most matters that arise within a company, it may not have sufficient specialised legal expertise in certain areas. This is because most lawyers transition from a specialist to a generalist when working as an in-house counsel to take up different matters of the company. As a result, their specialist skills may have deteriorated overtime. Thus, areas that require highly specialised knowledge may necessitate the engagement of external counsel.
- May be costly – A legal team is a permanent fixture in your company, which is expensive to maintain. Thus, whether having a legal team is cost-effective will depend on the amount of legal work that your company requires to be done. If the amount of legal work is not substantial, it will likely be more cost-effective to hire external counsel when necessary. On the other hand, if there is substantial legal work to be completed over the course of the business, you may wish to consider engaging a legal team as part of your company.
Alternatives to Hiring a Legal Team
As mentioned earlier, an alternative to having an in-house legal team is engaging external counsel when necessary (for example, for a specific transaction). This may be more cost-effective if the amount of legal work required for your business is not significant.
Another option is hiring a single in-house lawyer, as opposed to having an entire legal team. While this may be cost and space effective, you may also wish to consider whether the legal expertise of that individual is sufficient to meet the needs of your company.
Other Considerations to Make When Hiring a In-House Legal Team
Of course, there are other considerations you should take into account in determining whether your company should hire a legal team.
First, the size of your company. If your company is small in terms of size or revenue, it may be more cost and space effective to engage external counsel when needed, or have a single in-house lawyer.
Second, the amount of legal work within the business. If there is little legal work required for the business, then it may not justify having an in-house legal team. Rather, the company should rely on external counsel.
Third, the type of legal expertise required. Depending on the nature of your business, the legal expertise that you may require in your legal team will vary. This may include expertise in:
- Intellectual property law
- Corporate transactional work, including negotiating and drafting contracts
- Securities law
- Competition law
- Tax law
- Employment law
In this case, you may wish to engage a legal team made up of individuals trained in each of those areas of law. For example, your team could consist of lawyer A who specialises in competition law and lawyer B who specialises in tax law and so on.
However, if your business does not require legal expertise that spans over the course of your business, such as a one-time legal matter or situation requiring legal advice, it may not be cost-efficient to hire a whole legal team (as mentioned above).. Instead, it may be cheaper to engage an external counsel.
Making the decision of whether to hire a legal team is definitely not an easy task, as it requires a careful consideration of the needs of your business.
Should you choose not to hire an in-house team, you may wish to consider engaging one of our corporate lawyers to act as your external counsel. They will be able to provide legal expertise as and when they are engaged, for example, on a particular transaction or series of transactions.
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