Outsourced In-House Counsel: Is It for You?

Not everyone can have full-time legal staff. While there are many advantages to internal lawyers, hiring in-house counsel may not always be possible. Moreover, hiring traditional outside counsel is often expensive and inefficient and can sometime ineffective. Outsourced, in-house counsel can be an elegant solution.

Below are some of situations when outsourced, in-house counsel can help. They include when a company:

·       Has a long or short-term need for legal advice where budget constraints make a full-time hire challenging;

·       Has periodic needs for legal advice but is concerned about keeping a traditional law firm on retainer to handle the company’s occasional, low cost questions;

·       Has a need to grow a legal department organically but is facing immediate needs and concerned about hiring expensive or untested staff;

·       Has a need to develop an intellectual property portfolio effectively, but is concerned with inefficiencies;

·       Is facing complex, multiple and/or unfamiliar litigations and needs a person to manage and explain the situation to the business;

·       Is facing multifaced legal challenges and needs a person to manage and translate the issues into terms the business understands;

·       Is engaging multiple law firms across diverse matters and needs a person to rationalize the engagement process and ensure effective representation;

·       Needs an audit of the company’s processes and procedures to ensure legal compliance, but wants it overseen by someone who understands how companies work and isn’t simply interested in generating large billables;

and

·       Is facing legal issues in distinctive legal realms, such standard essential patent assertions, where most qualified people are locked into situations and are unwilling to leave.

How do companies typically engage outsourced, in-house counsel? Most typically offer a range of flexible approaches to best meet the business, transaction or project specific requirements of their clients.  These include fixed, retainer, and incentive-based pricing. While outsourced, in-house counsel can offer their services on an hourly basis most prefer to establish a long term and set pricing structure.

With fixed pricing, counsel will invest in project management to ensure the scope of work is clearly defined and articulated before price is agreed. The price may be fixed flat pricing for the entire project; fixed range pricing (where the range is a function of a number of variables); or fixed stage pricing where each stage of a project has distinct price.

Retainer structures can be limited to specific workflows or be temporary or permanent depending based on client needs. The retainer model allows for greater certainty and is typically calculated to equate to the average value of the legal work over a prolonged period, thereby smoothing out the peaks and troughs.  Retainers models may include: a retainer for an outsourced, in-house Counsel – a fixed price to a lawyer, payable monthly, to act as a company’s outsourced in-house counsel; or a retainer for an insourced (secondee) lawyer, where a senior lawyer works directly within the company for a designated period of time.

Success pricing is the most flexible of the arrangements and is really only limited by the clients desires and any constraints imposed by the pertinent ethical rules. Thus, for example, it may combine the fixed or retainer fee with an upside component payable only for a successful result maximizing the alignment of incentives.

In sum, outsourced, in-house counsel is flexible arrangement that can provide companies the legal advice it needs in a cost-effective, and efficient way.

David L. Cohen, president and founder of David L. Cohen, P.C. was former in-house counsel at Nokia and former Chief Legal IP Officer at Vringo. His law firm focuses on outsourced IP counsel services including: SEP licensing; F/RAND and anti-trust compliance; offensive and defensive patent licensing and litigation management; IP and public markets concerns; outside counsel management; agreements; and trade secret auditing and protection. Through Kidon IP corp., David also offers: IP and standards white-spacing to guide R&D, patent brokering, patent review and valuation services, IP services for M&A, and global IP portfolio building.