An external general counsel is a trusted adviser who knows your business and has a full grasp of a wide range of potential legal matters.
Managing the growth of a small or medium-sized business may be one of the most complex challenges an owner will ever face. Cash flow, marketing, finance, employee recruiting and retention, and day-to-day business operations all require a high level of attention and skill in order for the business to succeed. Add to the mix potential legal issues that weave their way through each of these challenges, and success is far from certain.
Staying ahead of legal issues is a difficult aspect of growing a business, and many companies operate without adequate legal advice.
A question business leaders often face is whether to hire a full-time general counsel or rely on situational guidance from an outside attorney. While the à la carte approach to legal services may save money in the short term, it can be a nearsighted strategy that misses the very real business needs of a growing organization.
A viable, cost-effective alternative for small to medium businesses: Hire an external general counsel (EGC). To get a better understanding of the benefits of an EGC, let’s answer some common questions.
What is an EGC?
Think of an EGC as a part-time member of your team who, although external to your business, is available for as little or as much work as needed. An EGC is a trusted adviser who knows your business and has a full grasp of a wide range of potential legal matters affecting your business. An EGC is employed by a firm but works for you at a pre-determined rate or on a retainer. Your EGC can work on-site or be as close as a phone call away.
Why should we hire an EGC?
Dedicated counsel proactively protects a growing business and is essential to avoid costly interruptions or lawsuits. An experienced EGC will bring to the table a broad range of experiences and exposure, helping you meet existing and avoid future legal challenges. Additionally, you can think of an EGC as having the backing of a multi-disciplined corporate law firm that works for you. Most importantly, preemptive counsel now saves substantial headaches later and typically is less expensive than hiring a full-time employee.
What are the key considerations in hiring an EGC?
The two most important criteria for choosing an EGC – besides proper legal credentials and experience – are integrity and cultural fit. Remember, you’re bringing in an outsider who will have access to your company’s accounting data, operational plans, business strategy and employee information. It is important to find counsel who will listen to your needs, understand your culture and appreciate how you like to work.
Other key considerations include the attorney’s business acumen, ability to think strategically, collaborative nature, leadership attributes and creativity in solving business challenges. Finally, companies should seek out an EGC with deep business experience rather than seeking advice from an attorney who may not comprehend how legal decisions affect the business, its operations and the bottom line.
What are some common examples of how an EGC can help?
An EGC handles issues that are crucial to the function of your business. Many of those are time and situation sensitive and need the advice of someone familiar with your daily operations. Look for experience in the following areas:
- Contracts. Your firm will contract with other businesses, freelance employees, landlords and service providers for as long as it exists. Having strong contractual oversight is essential for the proper execution of those contracts and is necessary to avoid lawsuits.
- Human resources. Employee issues and labor laws can present tough obstacles for companies. An EGC can assist and guide your HR team in developing sound policies and making smart decisions, regardless of where you do business.
- Real estate. As a growing business, chances are negotiating leases and buying property will be a important part of your operations. An EGC with commercial real estate experience can help smooth over and expedite those transactions.
- Compliance and regulatory issues. Perhaps the area most fraught with potential roadblocks, compliance and regulatory issues can quickly become time- and money-consuming efforts. An experienced EGC can help your teams map out potential pitfalls and operate within current rules and regulations.
- Mergers and acquisitions. As you and your team grow your business, opportunities may arise to merge with another company or acquire its assets, or offer yours for sale. Skilled external general counsel can help you realize the full value and meet the legal requirements of those transactions.
What if my business doesn’t have as many legal needs as anticipated?
Clear communication on the financial aspects of your relationship with your EGC is as important as business and legal matters. Address quantity of work concerns as you structure your agreement. Allow for a periodic review of the payment rate, and seek out an EGC who is flexible and open to your business’s unique processes and revenue model.
An EGC is a cost-effective way to protect your business.
Hiring an EGC is a practical, flexible way for growing businesses to address the many legal issues that may arise. An EGC with the resources of a reputable, talented firm can provide advice on matters involving complex business transactions and contract negotiations, financing, partnership agreements, corporate governance, compliance and regulatory matters, and employment and labor issues. Most importantly, though, an EGC can help protect your business assets and prevent expensive litigation as your business matures.
From startups to buyouts, external general counsel services help businesses thrive with comprehensive, cost-effective, proactive legal advice designed to fit the specific needs of your company.