Employing In-House Lawyers and Engaging External Lawyers: Not Paying Twice for the Same Function

In his recent article on how to litigation-proof your business, David A. Asiedu posed an intriguing challenge: Is having both an in-house counsel and an external solicitor paying twice for the same function? While I have not personally encountered this argument before, I won't be surprised if it is a common misconception that employing both means duplicating costs for the same role.

I have decided to take up this challenge and explore this topic in depth. Contrary to this belief, the roles of in-house and external lawyers are distinct yet complementary. Leveraging both can offer substantial benefits to a company, providing a robust legal framework and enhancing overall business strategy.

The Unique Value of In-House Counsel

In-house lawyers are integral to a company's daily operations. They are embedded within the corporate environment, providing continuous, on-the-spot legal advice and support. Their proximity to the business allows them to (this list is by no means exhaustive):

1. Understand the Business Inside Out: In-house counsels have an intimate knowledge of the company’s operations, culture, and strategic objectives. This enables them to provide tailored legal advice that aligns closely with the company's goals.
2. Quick Response and Immediate Action: Being on-site, in-house lawyers can address issues as they arise, offering immediate solutions and preventing potential legal problems from escalating.
3. Cost Efficiency for Routine Matters: For day-to-day legal issues, such as contract reviews, compliance checks, and employment law matters, in-house counsel provide a cost-effective solution compared to the higher hourly rates of external law firms.
4. Strategic Planning and Risk Management: In-house counsels play a pivotal role in strategic planning and risk management, helping to navigate the company through complex regulatory landscapes and mitigate potential risks before they turn into costly litigation.

The Expertise of External Lawyers

While in-house lawyers are indispensable for routine legal matters and strategic alignment, external lawyers bring specialized expertise and resources that are crucial for certain situations, (and I particularly love mine):

1. Specialized Knowledge and Experience: External lawyers often have deep expertise in specific areas of law, such as intellectual property, mergers and acquisitions, or complex litigation, which may not be feasible for an in-house team to maintain.
2. Scalability and Flexibility: Engaging external lawyers allows a company to scale its legal resources according to the demands of specific projects or cases. This is particularly valuable during peak periods or for large, complex transactions and disputes. I must note, however, that every day is a peak period for a sole in-house counsel or one with a small team. This constant demand may not be as pronounced for larger corporations that can afford to employ 4-8 lawyers.
3. Objective Perspective: External lawyers can provide an unbiased viewpoint, offering fresh perspectives and insights that might be overlooked by those too close to the day-to-day operations of the company.
4. Network and Resources: Large law firms have extensive networks and resources, including access to global legal databases and a broad range of legal talent, which can be leveraged to the company's advantage.

Complementary Roles, Not Redundancy

Employing both in-house and external lawyers is not about redundancy; it's about synergy. The key is to leverage the strengths to create a robust legal strategy. Here’s how they complement each other:

1. Routine vs. Complex Matters: In-house counsel handle routine legal work and offer immediate legal support, while external lawyers tackle more complex and specialized issues that require deeper expertise.
2. Cost Management: By managing routine legal work internally, companies can control costs, reserving the use of external lawyers for cases where their specialized skills justify the higher expense.
3. Strategic Partnership: In-house and external lawyers can work together as strategic partners. In-house counsel can provide background and context to external lawyers, ensuring that external advice is aligned with the company’s broader strategy and operational realities.
4. Crisis Management: In high-stakes situations, such as major litigation or regulatory investigations, a coordinated effort between in-house and external lawyers can provide the comprehensive legal support needed to navigate the crisis effectively.

Conclusion

The misconception that employing in-house lawyers and engaging external lawyers means paying twice for the same function overlooks the nuanced and complementary roles each plays. By strategically leveraging both, companies can enhance their legal capabilities, manage costs effectively, and ensure robust legal support across all facets of their operations. The collaboration between in-house and external lawyers creates a synergistic partnership that drives the company forward in a complex and dynamic legal landscape.