07 February 2007

Value Added

Robert Ambrogi links to an excellent post by Rees Morrison at the Law Department Management blog which tackles a tricky question for many small-but-growing businesses -- when should a company hire its first in-house attorney? Morrison identifies several worthwhile considerations in exploring a question he concedes is "unanswerable":
  1. Overall Satisfaction with Outside Counsel;
  2. Costs Attributable to Use of Outside Counsel;
  3. Adequacy of Cash Flows to Support Internal Counsel; and
  4. Nature of Anticipated Needs (e.g., legally-intensive regulatory compliance, patenting and licensing of intellectual property, etc.).
Morrison's criteria focus, understandably enough, on costs associated with building and maintaining an in-house legal department. However, he also touches on a point which hints at another factor to consider:
I suspect that also on the list of determinants are the personal beliefs and values of the Chief Executive Officer. If that person appreciates lawyers, the department will appear more quickly.
CEO or otherwise, one does not appreciate lawyers solely for our witty repartee and keen fashion sense. Instead, "appreciation" is really nothing more than the consideration of the value an attorney can add to one's business rather than just a calculation of the overhead he or she adds. In considering when to hire an in-house attorney, this essentially boils down to an expectation that an attorney can add value rather than just becoming a cost center.

Cost considerations aside, the principal advantages of inside over outside counsel are continuous accessibility and depth of knowledge concerning client needs. When either of these characteristics would add measurable value to a growing business -- by facilitating an increased number of quality of sales, for example -- smart businesses account for that added value in their cost considerations.

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