Lawyer… just mention the word to a business owner and you’re likely to get a frustrated sigh or eyeroll in return.
Just about every entrepreneur and business owner has, at one point or another, needed to hire an attorney to deal with some legal matter.
If you sell consumable goods, like my company REDCON1, a potential lawsuit may come in the form of a personal injury claim (your supplement hurt me). If you sell a service, you may be hit with a lawsuit claiming that you did not perform the service up to the standard that you promised. Do you make claims about your product or service?
There’s a group of attorneys out there waiting to bring a class action lawsuit against you for false advertisement. Let’s face it, the more successful your business becomes, the more people want to reach into your pockets and take what you’ve worked hard to achieve.
In comes the “Demand Letters” to pay X amount of money or face litigation! So, you get on the phone and give your lawyer a call or send out an email. Once he/she picks up the phone or replies to that email, the clock starts and up goes the bill that you’re going to end up paying.
Increasing Your Company’s Valuation Through Intellectual Property
In addition to fending off potential litigation, you have probably needed to pay an attorney to do vast majority of things. Thinking of starting a new company or subsidiary? You most likely will need a lawyer to advise you of what type of entity suits your intended purpose, the tax benefits and disadvantages of the entity, and file the entity in the applicable state and draft up the operating agreement and bylaws. Does your business have names that it wants to trademark?
If so, you will need an attorney to conduct a search on the United States Patent and Trademark Office website for the availability of the name and then file the application, respond to any issues that arise during the application process and file the paperwork to maintain the trademark.
Do you operate in a regulated industry… most likely the answer is yes. You will need to hire a regulatory expert, who often is an attorney, to advise you on what regulations you must follow and draft standard operating procedures for your company to follow.
For example, REDCON1 sells dietary supplements and are regulated by the Food and Drug Administration (FDA) as well as the Federal Trade Commission (FTC). As a result, we have to file nuanced labeling regulations that are thousands of pages long. I’m not sure about you, but I don’t have time to read the regulations and go over what font size the Net Weight on my product needs to be.
Accomplish Your Company’s Macro Goals Through Daily Mundane Compliance
After REDCON1’s second full year of business, I realized that the money spent on legal matters was increasing monthly. We needed contracts reviewed daily, trademarks filed weekly, and dealt with frivolous demand letters more and more often. In addition to the cost of using outside law firms, they couldn’t move at the speed at which I needed. If I want to get a deal done, I want the contract reviewed in a few hours and the deal closed as soon as the terms meet my standards. Unfortunately, I was not the only client that these law firms were dealing with and I often wouldn’t get tasks completed for days and sometimes weeks. Not ideal for a person like me who moves quickly. So, I decided to hire In-House Counsel – Jay the Lawyer.
Legal Is Never Cheap. But, It Can Be More Cost Efficient For The Business When Your Legal Is In-House
The financial component made sense, but the real game-changer was the ability to have my own attorney ready and willing to work on whatever was most important at the time. If I need an athlete’s contract drafted, I just walk 10 steps and tell Jay the Lawyer to draft it up. In addition to the convenience, I quickly realized that there were a lot of things that we weren’t doing as a company that we should have been doing. There are some things to consider before making the leap to In-House Counsel:
- Does the attorney specialize in one specific area of the law and is that area applicable to your business?
- Will the attorney mesh well with your current staff? My lawyer wears shorts, a tee-shirt and Jordan’s to work every day… so it’s safe to say he fits right in.
- Can the attorney handle multiple different tasks at one time, or is he/she the type who likes to complete a task before moving on to the next one? My business doesn’t function one task at a time, so my lawyer doesn’t either.
- Does it make financial sense? How much are you spending per year on legal and how much would it cost to pay one (or more) attorney’s salary?
- Are you going to listen to your lawyer’s advice? You can have the greatest lawyer in the world, but if you ignore his/her advise on crucial matters, you may as well not have one to begin with.
Hiring In-House Counsel turned out to be a great decision for me and my company, but you should do your homework before deciding whether or not now is the right time for your company.