When it comes to contracts, compliance and legal matters generally, there’s no one-size-fits-all solution. Like in other areas of your business – sales, finance, marketing, ops, etc. – you need different resources, from people and processes to tech, for different needs.
Avoid extremes in your legal set-up
We find companies are usually one of two extremes. They either rely on AI, templates, platforms and other DIY set-ups for too long, or they outsource everything to a law firm from the outset.
- What is the DIY set-up? AI, platforms, templates, etc. can be useful, but companies – preferably people who know what they’re doing – need to use them with caution and generally only for low-risk matters. For example, this set-up is fine in situations where it won’t matter too much if it doesn’t work or isn’t right, or when it helps churn out volume work. We’re surprised by how many companies use platforms for things such as cap table management without proper oversight as this often emerges as a problem during due diligence and can halt an investment or exit.
- Law firms provide deep legal expertise at a high cost and take a zero-risk approach, which is often too cautious for day-to-day business needs. These firms are not part of your business, so they can’t be proactive, and they don’t triage or prioritise legal work, which leaves you and your team to do that yourselves.
- In-house counsel takes a commercial, risk-based approach (legal + legal ops). They focus on building a scalable legal function, managing the budget and supporting with the right tech, tools and guidance. They control costs and support sustainable growth. But a full-time resource or General Counsel (GC) is expensive for smaller companies.
When to use law firms
There are times when you need to use law firms. Their lawyers are specialists who are great for high-risk or high-value work such as:
- specialist regulatory advice (e.g. FCA compliance)
- high-value fundraising (Series B+)
- large M&As and other deals
- high-value or high-risk dispute management or litigation
When to use in-house counsel
In-house lawyers are generalists who balance legal risk with commercial reality. They:
- align legal support with business goals
- get deals done with the appropriate level of risk
- build and implement systems for scalable legal support, including platforms and AI
- help protect core assets (IP, data, people)
- manage legal spend and decide when and what to outsource
Legal tech and platforms as efficiency boosters
Legal tech doesn’t replace a legal function, but it can optimise a well-run function if used properly. Tools include:
- AI-powered contract reviews
- cap table and share option scheme management
- contract lifecycle management (CLM)
- GDPR and other compliance or risk management tools
But tech is only as good as its implementation and management. So it’s important for your in-house lawyer and/or legal team to be involved in the choice, set-up and management to ensure it fits your business needs, boosts efficiency and is worth the cost.
Fractional in-house counsel: a flexible resource
Fractional in-house lawyers are ideal for companies that need experienced legal support but don’t yet have the volume or budget for a full-time hire. They provide senior-level expertise at a fraction of the cost of a full-time hire. And their support can scale up or down depending on business needs.
What are the benefits?
- You free up your leadership team: managing contracts/deals, compliance and other legal matters typically falls to a combination of founders, CFOs, COOs, HR, etc. and other team members at scaling companies. Having in-house counsel takes that burden off their plates, which frees them up to focus on their main roles and provides a single source of truth.
- They are strategic and growth-focused: in-house lawyers triage and prioritise based on business needs and risk appetite. They generally oversee or support key areas such as deals, compliance, IP protection, data management and employment matters. They put in place processes for self-service on lower-risk matters and help prepare for milestones like fundraising or exit – to prevent expensive surprises.
- They help mitigate risks: in-house counsel can proactively spot and address legal risks before they escalate and help prepare for new legislation – that’s because they work inside the business. Part of the job is to run regular assessments to ensure key legal risks are managed appropriately.
- They manage your budget: your in-house counsel will oversee and manage the legal budget, ensuring there is a dedicated line item in the budget for ‘legal’ (covering people and tech). By carefully managing the budget, they reduce the risk of unforeseen legal fees.
- They are adaptable as you scale: as you grow, your legal needs grow more complex, so a good fractional in-house lawyer will evolve with you. They will introduce the right tools, processes and outsourcing strategies, and help with hiring when the time comes.
- They provide valuable networks and oversight: experienced in-house counsel foster connections and know-how. They buy into and manage tech and specialists when needed and help you get the best value from them.
Building an effective legal function
A well-run legal function supports business goals without slowing your team down. With the right in-house or fractional legal support, you can:
- prioritise and manage legal risks
- streamline processes and reduce bottlenecks
- support faster decision-making
- ensure compliance without overkill
When legal is embedded in your business, you move faster, smarter and safer.
Need guidance with your legal support?
If you’re unsure about your current legal set-up or want to explore your options we’re happy to have a chat. Book some time in for a chat here.
