In-House Practice Settings
At some point in a small and non-public company’s existence, its executives may decide that it makes business sense for the company to hire an in-house lawyer. The reasons may include the expense and inefficiency of using outside counsel for all legal matters or the desire to include a mind with legal training among the company’s decision makers. Depending on a lawyer’s level of experience and that lawyer’s anticipated role within the company, the lawyer may be hired to manage and oversee all legal relationships—internal and external to the company—or, in some less frequent cases, to perform a more narrow function, such as administering commercial contracts.
- Some common responsibilities for this type of in-house position may include:
- Setting up the appropriate corporate structure for the company, whether it be a C corporation, subchapter S corporation, limited liability company, or partnership, and reviewing use of subsidiaries to limit liability and obtain favorable tax treatment.
- Making sure that the company is complying with all corporate formalities, such as by-laws, board meetings, board minutes, resolutions, annual meetings, state filings, and stock issuance, to name a few.
- Ensuring that all company assets are properly protected (particularly intellectual property) and that patents have been filed, trademarks applied for, and copyright labeling properly utilized by the company, particularly with regard to its sales and marketing function.
- Developing and implementing a code of conduct and employee policies, including training and employee agreements, in areas such as sexual harassment, confidentiality and non-disclosure, ethics, government relations, bribery, conflict of interests, and so forth.
- Complying with state and federal employment laws.
- Reviewing tax status and coordinating with the finance department’s tax group.
- Complying with applicable federal, state, and international regulations, including obtaining any necessary licenses to conduct the company’s business such as service authorizations which, in a regulated industry, take on great importance.
- Documenting all legal relationships with written contracts, standardizing frequently used agreements and forms, and implementing an approval process for decision-making.
- Managing litigation, generally handled by outside counsel, particularly if it involves substantial risk or assets.
- Overseeing outside counsel, determining what to outsource, managing the legal budget, and supervising staff, if any.
The in-house counsel for a small company thus serves as a jack-of-all-trades and should be prepared to handle everything from first-year associate-like matters to problems that senior law firm partners would typically handle. Because a company will usually seek as its first lawyers people with experience and demonstrated abilities, and because those lawyers will not be robustly surrounded by legal colleagues and supervisors, the opportunity to serve as a company’s first several lawyers will likely come after several years of legal practice.
To grow, a company needs capital. A company can take many avenues for obtaining that capital: it can seek to go public by listing its stock on an accredited exchange for purchase and trading by the general public; it can sell shares in a private placement; or it can exchange equity for capital from venture capitalists. To go public and for most private placements, a company must comply with the requirements of the Securities and Exchange Commission (SEC). That means the company needs lawyers.
As a company prepares to sell part of its equity to raise capital, the role of the in-house lawyer is enhanced. In taking the company public, the general counsel will work with outside counsel to coordinate preparation of all filings with the SEC, comply with state blue sky laws, as well as work with investment bankers and underwriters as applicable. At this point, the attorney’s primary client is probably the company’s chief financial officer, who is generally managing the fundraising process for the company. Additionally, the company may be ready to expand its legal department as its day-to-day legal requirements increase and become more varied.
A lawyer with only a few years of experience may be well-suited to one of the secondary roles in a growing company (typically known as an assistant or deputy general counsel). In addition to the benefits noted above, a lawyer joining a company at this stage will have the experience of working and networking with the legal and investment communities in a concerted effort to take the business to a new level.
Large companies, such as Fortune 500 companies, will have many in-house lawyers. Headed by a chief legal officer or a general counsel, the legal department in a large company may have numerous associates or attorneys holding the rank of assistant general counsel, and perhaps 100 or more staff attorneys working to service the needs of the company.
The responsibilities of an attorney in a large in-house legal department vary depending on the department’s structure. The department may be centralized, with attorneys working in groups supervised by an assistant general counsel and ultimately the general counsel. In this structure, each group is typically given responsibility for certain discrete areas, such as litigation, corporate governance, tax, contracts, regulatory affairs, or employment. In the other model, the attorneys are decentralized and each division or business unit of the company may have lawyers who handle a wide range of general issues involving just that particular division, with the division legal head reporting dually to the division business head and the corporate legal head.
In many cases, a significant part of an in-house attorney’s time in a large company is spent interacting with outside legal counsel. As a result, it is critical that an in-house attorney has excellent communication skills, interpersonal skills, and business savvy.