In-House Counsel vs. Outside Counsel - What's the Difference?

Often, we are asked, as lawyers, what is the difference between having an in-house counsel versus having outside counsel (meaning someone who has a separate office outside of regular operations). What the benefit of having either one? Do you need both?

Short answer: It depends.

Outside Counsel: Group Effort

When you have an outside counsel, it means that you have hired a law firm to represent you and your company. It means usually you will have to pay a retainer fee and also pay your attorney and the firm on an hourly basis. 

What does that look like? That means for anyone who does any work on your business at the firm, you will be charged for it. If the secretary does any filing of internal folders, they will charge you or her time. If the junior attorney does work on your file, they will charge you. If a partner does any work on your business (partners normally charge at a higher rate), then you will see a higher rate charged to you. This charging also includes any printing, any mailing, any filings they would have to do for you, etc. 

Here is a plus to having outside counsel: you now have a team attorneys and junior attorneys working for you. If you are at a point where you need a team to work on certain matters such as litigation, then it makes sense to have outside counsel. Especially if this is going to be a large matter where a number of people need to be working (think mergers or acquisitions). 

However, the downside of outside counsel is normally the cost. It can get expensive quickly. If you are a startup or a small business, you might be unable to drop $5,000 - 10,000 on a retainer fee. Even if you tell the firm to keep costs low as possible, it doesn't always end up that way. Here is a bit of an Insider tip: traditional law firms are beholden to the billable hour. In order for you to show that you are being productive, you have to bill for everything that you do. That includes emails, phone calls, reviewing, drafting, meetings, meetings outside of the office, etc. But you do again take advantage of a wide berth of different areas of expertise if the law firm is an expensive one.

In-House Counsel: One of the Team

Now let's talk about in-house counsel. When you have an in-house counsel member(s), you have someone who is focused solely on you and your company. They are involved in the maintaining of your corporate documents. They are also involved in maintaining your contracts. They are your first go-to person if you have a legal question and is a resource to your team to ask questions first before they act. 

The biggest plus for an in house counsel: they are normally an employee. For every phone call or for every email that is sent, there is no nickel-and-diming you. You can take advantage of the full expertise that they have and feel confident that they can handle the legal things that you have in front of you. 

The downside for in-house counsel is they may not have the ability to handle everything that is before. This is normally an issue when you have a litigation case. You will have to refer to outside counsel because a litigation case is much more involved than the day to day matters in-house counsel would deal with. 

But the good news is, because an in-house counsel is an attorney, they can review and cut back on the number of things outside counsel would take advantage to charge you. For example, let’s say you are being sued and you have been asked to provide documents to the other side that is suing you. Rather than having an outside counsel come in and review the documents, charging you for the time and the travel, your in-house counsel can do that for you at their normal time. There is no additional cost to you and they can recognize what is protected under client-attorney privilege and can supervise the outside counsel from running up the bill. 

What Does That Mean For you?

There are a number of pros and cons when reviewing what fits best for you. It might make better sense to use outside counsel if you need more attorneys with different areas of expertise. It might make sense for you to hire an in-house counsel employee if you are dealing with a number of legal issues on a daily basis like contracts, negotiations, legal questions, etc. 

However, there is a third option.

Attorneys like myself and my firm CounselUp Legal have done away with the billable hour. We understand startups and small businesses do not have a lot of resources to devote to maintaining their legal paperwork. That is why we bill on a project, flat-fee basis. There is no nickel-and-diming you. There is no keeping track of emails and or phone calls. There is no charging you for travel time. The price quoted to you to complete whatever you need is the price you pay. You as a startup or a small business can plan and pay accordingly. 

This is the great thing about the flat fee firm: we want to be your outside counsel but give you the time and effort of an in-house counsel. If you are curious to know how we can save you money, be a member of your team or are interested in a free consultation, please reach out and drop a line.