If you could use a trusted advisor who is on your side, who understands your business and is ready to roll up their sleeves at any minute, then yes you need one. If you view lawyers as hired guns who don’t know anything about running a business, well then you should probably take a pass.
A general counsel performs different functions at different companies. Most know what a large public company General Counsel looks like, they are usually part of the C-Suite and they manage a team of attorneys who oversee all of the legal needs of the company. A public company general counsel generally focuses his or her individual time on communicating with the board of directors, preparing the public filings and dealing with shareholder matters. This type of general counsel is an essential part of a large company because they can maintain a 10,000 foot view about the legal risks facing an enterprise and advise the top management and directors accordingly.
A general counsel at a private company is much more of a ”Jack of All Trades.” The private company general counsel is usually a hands-on generalist who can perform many different functions on any given day. In addition to being a direct provider of legal services, they are undoubtedly a valuable member of the business team who understands the fiscal implications to the company of potential and actual legal liabilities and the impact such liabilities have on the bottom line. A general counsel at a smaller company can be called upon to draft an asset purchase agreement, handle an administrative or court hearing and review a benefits plan all in the same day. It goes without saying that not every lawyer is well suited to this position. Lawyers used to delegating rather than self-performing have a particularly difficult time trying to be this kind of general counsel.
Having a general counsel at a small or medium sized company does not mean that there has to be a lawyer on the employee payroll, often business people have been using the same outside legal counsel for many years, and these attorneys have acquired detailed knowledge about a company’s operations, its management, its culture, and its ownership’s goals and risk tolerance. A symbiotic relationship naturally develops over time with such long term legal representation, so that even if not given the title of general counsel, many of these attorneys are ostensibly the same thing. If you are lucky enough to have someone you think of as your “lawyer” they may indeed be your general counsel.
Each business is a little different and runs according to its own beliefs and principals. Often the tone at the top permeates throughout an organization so that if a CEO is an entrepreneurial risk-taker, so too is the rest of the organization. An effective general counsel will integrate into that culture, rather than run in opposition to it and thus understand the client’s needs. The client and the lawyer have to be a good “fit” for a general counsel relationship to work, if the lawyer is too conservative and constantly acts as the deal prevention police, then the relationship is doomed from the onset. The most important thing that a competent general counsel does is understand the corporate “you” and helps maintain a reasonable level of business risk at any given time in line with the company’s risk tolerance.
Assuming you don’t already have one, the next question is how do you get a general counsel? Depending on your needs, you can hire a full time employee, but I generally believe that is overkill at most small or medium sized companies. What is likely needed is a part-time general counsel, supplemented by a paralegal or other legal professional who can effectively handle many of the lower level day to day tasks, like contract review. So look for someone who has these resources available.
One you have identified someone – the next step is to get them on boarded and up to speed. When one doesn’t have a long term relationship with outside counsel, the parties can use a legal “audit” (as mentioned in a prior article) to accelerate the attorney’s learning curve and develop a deeper understanding of the enterprise. Satisfaction surveys or client interviews are also an invaluable tool to determine what the goals of the company are and how legal services can help accomplish that future vision.
Overall, the prospective general counsel needs to begin to develop a level of trust with management that will allow the whole apparatus to function seamlessly. The foundation of trust will really be built through future deals that move the business forward, but starting with knowledge, honesty and the setting the right expectations is really the first step on the journey toward obtaining real business value from a general counsel. That value is what most companies are looking for in the end.