You brace yourself as another legal bill lands on your desk. Should you look now? Or wait? You don’t want to ruin your lunch. But you already feel your heart beating faster and sweat beading-up on your brow.
You sneak a peek. Your heart sinks further. Another huge bill. You pay on time, yet they get larger every month. Your law firm always has a good explanation, but you can’t help feeling taken advantage of. Is all this legal work really necessary?
Costs are spiraling out of control, and you’re not sure what to do until a friend suggests you hire a general counsel. It sounds good, but, it’s a big step.
How do you know if you’re ready to bring a full-time or part-time general counsel into your inner circle? Here are five factors to consider:
1. Regulated Industry
If you operate in a highly regulated industry, such as medical devices, pharmaceuticals, banking, etc., you’ll have plenty of ongoing regulatory questions to merit some level of consistent legal involvement, even if your business is a start-up.
2. High Risk Product or Service
If your business sells a product or service with the potential to cause serious property damage or personal injury, your new product development, packaging and marketing plans can benefit from legal review. The same goes for businesses selling a product or service that could cause financial harm. Sometimes these industries are regulated, sometimes they’re not.
3. High Contract Volume
Businesses that enter into a large number of contracts on an annual basis may have a critical mass of legal work. Such contracts could be for the purchase or sale of goods or services, the leasing of equipment or real property, the licensing of intellectual property, the acquisition of services through consulting or distributor agreements, etc. Certain types of contracts lend themselves more easily to being brought in-house. How do you know if you have a “critical mass” of contracts? If your sales exceed $10 million, it’s worth taking a second look at the number of contracts you’re signing, especially if you’re inclined to sign other people’s contracts without really reading them. You could accidentally miss something important, like the new tech company who didn’t know they were giving away valuable patent rights because the contract “looked okay” to them.
4. Valuable Intellectual Property
In our information-driven society, intellectual property (“IP”) continues to be a growing percentage of your business valuation. Most people think of patents when they think of IP. But the IP category is much broader than that. It includes trademarks and copyrights and trade secrets.
You build business wealth when you secure and protect your IP rights. That makes knowing what IP you have, where it is, and making sure it won’t walk out the door when employees jump ship an important management responsibility.
5. Significant Number of Employees
People and their behaviors are ultimately at the heart of all business conflicts, even the ones dressed up as non-employment matters. The more employees you have, the more people issues you have. Additional legal obligations also kick in as your payroll grows and more state and federal laws begin to apply. With employment lawsuits on the rise, it pays to keep flare-ups to a minimum.
If your business fits into one or more of these categories, it’s time to take a closer look at the pros and cons of continued legal outsourcing. After all, having a savvy part-time or full-time general counsel on your team is equivalent to a sports team having a conditioning coach. If you only call them after a player is injured or an important game lost, all they can do is troubleshoot and pick up the pieces.
But, bringing them into the locker room earlier changes the conversation. They can help you strengthen your natural talents and take your game to the next level. It’s a smart way to keep your business in the game and protect your key assets and players before they get hurt or sidelined.