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The Case for Outside General Counsel: A Strategic Move for Small Companies

For many small companies, the idea of having an in-house legal department may seem like a luxury reserved for larger organizations. However, the legal landscape is complex, and navigating it without expert guidance can be a costly gamble. This is where the concept of “Outside General Counsel” (OGC) comes into play. In this article, we explore the compelling reasons why small companies, long before they are large enough to hire in-house counsel, should consider engaging the services of an Outside General Counsel. We’ll also provide practical examples of how this strategic move can ultimately save them money.

1. Cost-Effective Legal Expertise:

Example: Imagine a small tech startup facing a trademark dispute. Engaging an Outside General Counsel on an as-needed basis is more cost-effective than hiring a full-time attorney. The OGC can efficiently handle the dispute resolution process, saving the company substantial legal fees.

2. Risk Mitigation:

Example: A small manufacturing company is expanding its product line. OGC can proactively review contracts, intellectual property rights, and regulatory compliance to ensure that the expansion proceeds smoothly, avoiding potential legal pitfalls and costly disputes.

3. Business Continuity:

Example: In the absence of an in-house legal team, sudden legal issues can disrupt a company’s operations. OGC provides consistent access to legal expertise, ensuring that the business can navigate legal challenges without major disruptions.

4. Customized Legal Guidance:

Example: A small e-commerce business may need specific legal advice regarding e-commerce regulations, data privacy, and online sales contracts. OGC tailors their services to address these precise needs, providing focused guidance.

5. Strategic Planning:

Example: A startup looking to raise capital can benefit from OGC’s expertise in structuring investment deals. OGC can assist in negotiations, contract drafting, and compliance, ensuring that the fundraising process aligns with the company’s long-term goals.

6. Scalability:

Example: As a small company grows, its legal needs evolve. OGC can adapt to these changing needs, providing flexible legal support without the need to hire additional in-house staff.

7. Regulatory Compliance:

Example: A small food and beverage company must adhere to complex food safety and labeling regulations. OGC can help the company navigate these regulatory waters, avoiding fines and reputational damage.

8. Access to a Network of Legal Specialists:

Example: OGC often has a network of legal experts in various fields. When a specialized issue arises, such as patent law or international trade, OGC can tap into this network to provide comprehensive support without the need for multiple in-house hires.

9. Litigation Preparedness:

Example: Small companies may face unexpected legal disputes. OGC can proactively establish legal processes and documentation to bolster the company’s position in case of litigation, potentially saving significant legal costs in the event of a lawsuit.

While the concept of hiring an Outside General Counsel may seem counterintuitive for small companies striving to manage costs, it is, in fact, a strategic investment in their long-term success. The legal landscape is intricate, and legal challenges can arise unexpectedly. Engaging an OGC provides cost-effective, customized legal guidance, reduces risks, and ensures business continuity. Moreover, it equips small companies with the legal foundation needed to scale and prosper. In essence, the dollars spent on an OGC today can save small companies significant sums in legal fees and potential liabilities tomorrow, making it a smart and forward-thinking choice for businesses of all sizes.