Three Reasons In-House Counsel and Liability Coverage Might Not Be Enough in a Lawsuit

Three Reasons In-House Counsel and Liability Coverage Might Not Be Enough in a Lawsuit

An unfortunate truth about running a business is that lawsuits shut down companies all the time. Regardless of a lawsuit’s merits, the demands of legal defense can blindside many companies. To minimize the risks of your company stumbling onto shaky ground, you need to make sure that you have adequate legal representation.

Now, you probably already know that. Perhaps you have a business that employs less than 50 people and brings in six to seven figures in revenue. You realized a long time ago that paying lawyers for one-off projects is probably not sustainable as your business matures. However, you don’t want to spend over $150,000 a year for an in-house attorney, nor do you want to shell out big bucks for a fancy firm lawyer. Perhaps you already have in-house counsel and liability insurance. Because your in-house counsel does an outstanding job and your policy seems comprehensive, you might feel like you don’t need any other legal representation.

Just because you bought insurance and hired a lawyer to help run your company doesn’t mean you’ve protected it. Even if your business hasn’t done anything wrong, you need to defend against a lawsuit. As such, it’s worth having outside general counsel with you every step of the way as you grow your business.

1. Your In-House Counsel Is Not Litigation Counsel

In-house counsel is an excellent start towards securing your company’s legal footing because they provide crucial services, including contract review, labor and employment law advice, and corporate governance and compliance. However, in-house counsel’s holistic business focus lacks specialized knowledge on a host of issues that could impact your business. They are there to provide legal advice for the operation of the company, not serve as your litigation counsel, advise on serious tax issues, or manage a complicated patent filing. Your business needs someone with more specific knowledge and robust experience, especially if your company engages in complex business transactions or interacts with regulated markets or industries.

2. Your Liability Coverage Is Not Dependable

Additionally, you can’t depend on your insurer to provide litigation counsel. Sure, your insurer might hire attorneys to defend you as a policyholder, but at the end of the day, your insurer’s goal is to protect itself. On top of refusing to pay claims, insurance companies are notorious for finding ways to avoid indemnifying policy owners. This situation forces the policy owner to find their own litigation counsel. You could be right back where you started.

3. Not Having Outside General Counsel Can Get Expensive

Scrambling to find specialized counsel can be expensive. If you don’t have an existing relationship with outside counsel, you will waste time and money searching for a new attorney and might need to turn to a big firm for help. Moreover, your new attorney will spend even more time learning about your business to represent you properly. In the long run, it is wiser and more economical fail to cultivate a working relationship with outside counsel, even when you don’t have a pressing legal need.

Keep in mind that retaining outside general counsel is not as expensive as paying for a fancy firm lawyer or an in-house attorney’s salary. In fact, outside general counsel is the middle ground and can cost half of an in-house attorney’s salary while still offering valuable services.

You’d be surprised by how effectively you can work with outside general counsel when they don’t work in the same office as you. They are committed to working with your business, which means they are skilled at finding different ways to communicate and collaborate. This is especially helpful for your in-house attorney (if you already have one), who will serve as the liaison between your company and outside counsel.

What nuanced legal questions have you run into? Has your business faced a lawsuit and benefited from outside legal counsel? Don’t wait until you’re in a crisis to build that relationship. To learn more about how outside general counsel can strengthen your business, schedule a consultation

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