Growing companies eventually reach a point where occasional legal help is no longer enough.
At that stage, business owners often face a choice: should they hire an in-house attorney or use a fractional legal department?
Both options can provide ongoing support. The right choice often depends on cost, workload and the company’s growth plans.
What Is a Fractional Legal Department?
A fractional legal department gives a business ongoing access to multiple outside attorneys without adding full-time lawyers to payroll.
Unlike traditional outside counsel, which may be retained for a specific dispute or transaction, fractional counsel can become part of a company’s regular operations. Experienced attorneys focused on different practice areas may review agreements, advise leadership, identify risks and help manage day-to-day matters.
The arrangement can be tailored to the business. Some companies need a few hours of support each month. Others require regular involvement across several practice areas.
This model can be useful for startups and growing businesses that need consistent guidance but are not ready to build an internal department.
What Does It Cost to Hire In-House Counsel?
Salary is only one part of the cost of hiring in-house attorneys.
Compensation varies based on experience, industry and location. A company may also need to provide health insurance, retirement contributions, paid leave, bonuses and other employment benefits for lawyer employees.
The company hiring in-house counsel also typically covers technology, professional development and other costs.
An internal attorney may still need outside counsel. One or two lawyers hired full-time are unlikely to have deep experience in every area that affects a business. Specialized matters involving intellectual property, litigation, employment law or complex transactions may require additional outside support.
As a result, the true expense of an in-house hire often extends well beyond base salary.
How Does Fractional Counsel Compare?
Fractional arrangements can provide greater flexibility.
Instead of paying a fixed salary regardless of workload, a company can select a level of service that reflects its current needs. Depending on the arrangement, fees may be structured on a flat monthly price or another predictable model.
When engaging a Fractional Legal Department, there are also no employment-related expenses. The business generally does not need to provide benefits, payroll taxes, office space or other resources associated with employees.
The company may also gain access to several attorneys rather than relying on one or two employed individuals.
That distinction can matter.
A business might need contract assistance one week and intellectual property guidance the next. Later, it may face an employment or lease issue or begin negotiating an acquisition. A fractional department is often able to draw from attorneys with different areas of experience.
When Does In-House Counsel Make Sense?
Hiring internally can be the right decision for companies with substantial and predictable legal workloads.
In-house lawyers work exclusively for one organization. Attorneys can develop detailed knowledge of its operations, employees and long-term strategy. Large organizations may have enough daily work to justify a dedicated employee.
The calculation changes when demand is inconsistent or needed on an interim basis.
If in-house attorneys spend significant time without enough work to justify full-time positions, the company may be paying for unused capacity.
Fractional Counsel Can Support Growth and Fill Interim Needs
Legal needs rarely remain static. A fractional model allows the business to increase or decrease support as circumstances change.
A startup may initially need help with formation documents and founder agreements. As it expands, the focus may shift to customer contracts, hiring, trademarks, leases, licenses and financing.
A later stage could involve acquisitions, regulatory questions or disputes.
Fractional counsel can grow alongside the company. Businesses can increase support as operations become more complex without immediately hiring an internal team.
This approach may also help leadership understand its legal workload before committing to a permanent position. If demand eventually supports an in-house hire, the company can make that decision with better information.
Companies with a single General Counsel or with small in-house legal departments might lose one or more lawyer to illness, resignation or retirement. Replacing a General Counsel with an appropriate candidate can often take several months. In these situations, an interim legal department can be helpful to bridge the gap, while the company interviews experienced candidates.
Conclusion
Romano Law provides Fractional Legal Department services for businesses seeking ongoing guidance without building a traditional in-house department. We also provide an Interim Legal Department for companies that have lost one or more attorneys and want to fill a gap, while recruiting for a new General Counsel or are in the midst of restaff.
Our attorneys can assist with contracts, corporate matters, intellectual property, employment issues and other concerns that arise as companies grow.
If your business is evaluating its legal needs, consider whether a fractional legal department may be the right fit.
Contributions to this blog by Kennedy McKinney.
