Mid to large-sized corporations often have a dedicated team of attorneys working in-house to meet all the legal needs of the company. For small businesses, it can be a considerable expense to hire an in-house attorney – an expense that is simply not feasible for many businesses. Is it absolutely essential to have in-house legal counsel in order to be successful as a small business? Or is there another option?
The legal needs of a small business
From its very formation, a small business has important legal considerations. Depending upon its business structure (such as LLC, LLP, corporation, etc.) the company will need various formation documents.
Articles of Incorporation, company bylaws, partnership agreements and the like are extremely important to draft correctly, because they set the rules by which you and the other officers of the company will be able to conduct business – as well as the terms by which one of you can leave the company and receive the compensation for your ownership interest that you are entitled to.
Every business also needs employment contracts, registration with the IRS and other state and federal agencies, adequate human resources policies and so forth. All of these documents add up to a substantial investment that can make a difference in the company’s viability and ability to grow healthily. In addition to all of that, there is always the possibility of having to defend against a lawsuit from a disgruntled ex-employee, a customer or someone else.
Retaining outside counsel
If your company simply doesn’t have the funds to hire an in-house attorney to handle all of the above legal affairs, there is always the option of retaining outside counsel. This is a great alternative to in-house counsel because you can have all of your legal needs met without having to employ and pay the salary of an attorney.
The best part of retaining outside counsel is the flexibility you can have with payment arrangements. For example, you can sign a contract with a firm to take care of all of your legal needs for a fixed fee, or you can come to an agreement to use them for your legal needs on an as needed-basis.
Hiring a law firm as outside counsel also comes with the added advantage of being able to access a wide variety of skillsets, since the firm typically will employ many more attorneys than you could feasibly hire for your own company. They can take care of a variety of legal needs, such as ensuring regulatory compliance, reviewing and drafting contracts, handling human resources issues, advising in corporate governance issues and so forth.
Running a business comes with its fair share of headaches and challenges. Knowing that you have the option of retaining outside counsel instead of an in-house legal department can open new opportunities for you and can help to alleviate some of your stress.