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General Counsel: Accelerating Growth, Minimizing Risk and Protecting Businesses

Stuart Blake, co-founder and partner of InnovaCounsel and David Blackwood, partner at InnovaCounsel

In an uncertain economic climate, CEOs of small and mid-sized companies can't afford to take unnecessary risks or to lose precious profits with a badly structured transaction or a hasty management move. Those who look to cut corners by forgoing the expertise of experienced general counsel are likely to incur far greater costs in the long run. A general counsel facilitates the achievement of company goals and profitability by acting as an active, valued member of the management team. This article describes the ways a general counsel can optimize how a company uses inside and outside counsel. It also explores new models that are bringing general counsel within financial reach for smaller and mid-sized companies.

An in-house general counsel can be far more knowledgeable about an industry, business operations, strategy and new product opportunities than outside attorneys unaccustomed to working on-site or serving as hands-on members of a business team. As a result, a general counsel is much more astute about the legal and business issues embedded in a client's business. They understand the company's priorities, and as inside legal experts, can devise action plans, engage in timely and decisive risk prevention strategies and find creative, cost-effective solutions to legal problems.

Outside counsel tend to specialize in one area of the law, such as securities or employment. A general counsel knows a wide range of experts in these fields and strategically calls upon them when a company's affairs warrant doing so. For example, it's common for the general counsel of a publically traded company to work with the internal finance team to prepare the quarterly report on the SEC's Form 10-Q. After the 10-Q is almost complete, the general counsel will send it to a securities partner at a regional or national law firm. The securities specialists at the law firm are always staying abreast of the latest rules and informal nuances coming out of the SEC, so it is wise to have such an expert give the 10-Q a final review before filing with the government.

Daily Access to Expert Legal Insights

A savvy CEO recognizes the business advantages and risk reduction opportunities of retaining a general counsel and ensures that the executive management team always includes a seat at the table for experienced in-house legal talent.

Unlike outside law firms, general counsels are generalists who act as trusted in-house legal and business advisors that operate inside the company for a deeper understanding of risk sensitivity, day-to-day operations and short- and long-term objectives. They offer not just an objective reading of the law but insights and advice that help CEOs make major business decisions. For example, a general counsel can ensure the sales department's contracts and agreements don't overpromise or expose a company to undue risk. They can protect intellectual property, oversee employees' confidentiality agreements, foresee tax liability issues and countless other important business transactions.

As business partners, general counsels focus on what's simplest and most cost-effective for the company—often as basic as a letter or a phone call—rather than gearing up for a fight. The idea is to put out fires, not waste time and money on conflicts and litigation.

Where many law firms consider litigation their bread and butter, the role of the general counsel is about mitigating risk and cost-effectively managing legal issues. Litigation and dispute management are extremely expensive. Even when a company successfully defends itself in a lawsuit, the time, energy and money expended on that defense is a significant drain on resources and morale. With early involvement, inside counsel can realize efficiencies and cost savings through timely conflict detection, creation of sound policies and pinpointing solutions in the inevitable employee and vendor disputes. A general counsel acts as the proverbial pinch of prevention that costs far less than the ounce of cure.

How Cutting Corners Can Cost More in the Long Run

The biggest misconception companies tend to have about general counsel is that they can't afford them. They fail to recognize that in-house counsel is an important component of the risk management function and that the upfront costs are usually recouped through the avoidance of the expensive problems they'll encounter without in-house counsel.

That shortsighted view often involves confusing the law-firm attorney's perspective with the very different role of general counsel, who is more accustomed to balancing a company's needs and culture with risk avoidance. General counsels handle much more than contracts and legal analysis; they provide valuable business input and participate alongside management to steer the company toward success.

Companies need in-house counsel to handle early and continuous risk analysis and problem resolution, keeping executive management focused on what they do best. In a start-up environment, it's crucial that a company formulate the structures and processes that facilitate ongoing success and risk avoidance—everything from employee hiring and firing protocols, patents or trademarks and human-resources standards to employee handbooks and independent contractor guidelines. More mature companies embarking on new growth must constantly monitor and revise policies, procedures and forms to get them to the next level and achieve goals as smoothly as possible. That may also entail referrals to attorneys for outside legal affairs and non-legal consultants for specific projects.

Perhaps the greatest value comes in the sense of comfort a CEO gains in knowing that legal issues and the legal function is being handled by someone who's skilled, trustworthy and knowledgeable about the company's goals as a result of their close relationship with key staff.

The Hidden Benefits of General Counsel

The most common ways companies utilize inside counsel is for intellectual property and employment issues, but there are many other ways they can contribute, such as management training and sales team consulting. When companies hire inside counsel with solid experience and a good fit with the company culture, they'll often have the perspective that supports business goals in such a way that strengthens operations and avoids risks at the same time. They just can't get that kind of value from an outside law firm.

And again, the benefit of taking such stressful tasks off the CEO and CFO's plate can pay great dividends.

Choosing Appropriate General Counsel

Because the general counsel role is embedded in the executive team, personal fit is an important consideration in choosing the right attorney for the job. That right attorney needs to understand the company and its culture as well as the strengths, weaknesses and ultimate goals of the business. That also means choosing someone whose experience is compatible with a particular industry and company culture—someone whose knowledge covers or strongly overlaps the company's needs.

Businesses with no employees and less than $10 million in annual revenue may not find themselves in a position to generate enough work to justify the expense of inside counsel … yet. But those who've experienced the headaches of employee conflicts or contract issues and those who are accumulating assets are well advised to consider bringing in cost-effective expertise to protect their growing businesses with a general counsel.

Innovative and Affordable Options

Innovative new law firms are bringing such necessary legal advice within much easier financial reach of small and mid-sized firms with value-based services and affordable, fixed monthly retainers that contain costs and eliminate surprises. Firms like InnovaCounsel in Irvine, Calif., provide experienced, senior-level general-counsel attorneys on a full- or part-time basis. Such groundbreaking law firms are helping to level the playing field for smaller companies, allowing them access to the same protection and resources as companies with unlimited budgets.

About General Counsel: Accelerating Growth, Minimizing Risk and Protecting Businesses

Stuart Blake, founder and partner of InnovaCounsel, is an attorney with more than 30 years of in-house corporate legal experience. He has vast knowledge of the legal issues involved in consumer products industries, for which he has counseled on general business, commercial contracts, employment matters, litigation mergers and acquisitions, and corporate compliance and government. He has built a solid track record of forging successful working relationships with executive management teams.

David Blackwood, partner at InnovaCounsel, is an attorney with more than 25 years of experience, nearly 20 years of which have been as general counsel. Blackwood has in-depth industry experience in the accounting, investment banking and consumer electronics industries and has particular legal expertise in general business matters, complex contract negotiation, litigation management, employment law, mergers & acquisitions, product marketing and distribution, intellectual property and compliance. As general counsel, Blackwood has worked closely with CEOs, CFOs and other members of senior management as a trusted business and legal advisor.

ABOUT INNOVACOUNSEL:

Headquartered in Irvine, Calif., InnovaCounsel is turning the traditional law firm on its head with an innovative new way of practicing law that brings talented General Counsel in reach for fast-growth and mid-sized companies. InnovaCounsel's unique business model makes it financially possible for companies to enjoy all the advantages of talented and experienced in-house counsel as part of the management team for an affordable flat monthly fee. The firm's in-house General Counsel services offer industry-proven, executive-level general-counsel attorneys on a full- or part-time basis for a fixed monthly retainer that's well below the cost of a traditional hourly-rate law firm—and with none of the burden or overhead of adding a new department. Initially launched as The General Counsel, the firm changed its name to InnovaCounsel in 2012 to better reflect its spirit of innovation. For more information, visit www.innovacounsel.com.

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