Mohaimina Haque, Attorney & General Counsel. Immigration and Business law expert. Adjunct Law Professor. Interim CEO at Tony Roma’s.
In the ever-changing landscape of the modern-day business world, every entrepreneur and executive faces unexpected and unanticipated challenges and opportunities. With every opportunity and challenge, there is one word that remains constant in the minds of entrepreneurs and executives, and that word is “risk.” Risk mitigation and management require a multi-modal approach, and sometimes companies think having general liability insurance can provide all the protection a company needs to mitigate risks. That’s not quite right.
While planning your company’s growth and success, it’s crucial to remain vigilant and proactive in protecting your business from potential legal issues. As leader of a general counsel (GC) advising business, I want to alert you to the essential role a general counsel can play in safeguarding your business, regardless of its financial capacity.
The Role Of General Counsel: A Strategic Partner
The role of a general counsel extends far beyond that of a legal advisor. My own situation is a living example of this notion. I started advising the global restaurant franchise as an outside general counsel. Over the past two years, I became so familiar with every nook and cranny of the company that the board and the shareholder decided this past summer to put me as an Interim Chief Executive Officer.
To a casual observer, this may pique their curiosity to think how a lawyer can be the CEO of a restaurant franchise. It’s worth noting that more than half of U.S. Presidents who have guided the nation through economic prosperity and unanticipated adversities were lawyers. Lawyers are natural problem solvers and leaders uniquely suited to be strategic partners in your business’s journey. The thought process that law school instills in lawyers helps them to view every issue within that framework. As basic as it sounds, one of the first things you will hear in law school is IRAC. IRAC stands for Issue, Rules, Application and Conclusion. While it may sound very simple, the crux of a brilliant lawyer’s mind starts from the mastery of this framework. Even when encountering a business issue, I have found this mindset extremely invaluable.
A GC is your strategic partner, a trusted advisor in the behemoth of laws and regulations that affect business. Whether your company is a small startup or a Fortune 500 corporation, having a dedicated legal expert can be helpful. Whether engaging an outside general counsel or hiring an in-house general counsel, consider seeking an expert in these areas.
In today’s society, businesses are constantly exposed to potential legal risks and bombarded with demand letters from everywhere for issues that were unbeknownst to a business that could be a legal pitfall. From contract disputes to intellectual property issues, regulatory compliance to employment matters, a GC is your first line of defense. They assess and mitigate these risks, helping you make informed decisions that protect your business.
The legal landscape is ever-evolving. Compliance with local, state and federal laws and regulations is a continuous process. The many exceptions to a rule and its applicability should never be left to a layperson to interpret. A GC can ensure that your company is up to date with the latest legal requirements, reducing the likelihood of fines, lawsuits or reputational damage.
Contracts are the lifeblood of any business. A GC not only reviews and negotiates contracts but also ensures that the terms align with your business objectives. This safeguards your interests and avoids costly disputes down the road. A GC’s review is necessary in reviewing the contracts because sales teams’ uber anticipation closing a deal must need a reasonable check and balance, and an attorney’s review should not be considered a formality but an essential step to avoid exorbitant loss of money down the road.
Intellectual Property Management
Your intellectual property—trademarks, patents, copyrights—is often one of your most valuable assets. A GC can help protect and enforce your IP rights, protect trade secrets, prevent infringement and preserve your competitive advantage.
In today’s world, litigation is becoming more and more common for businesses to face. Just search how many lawsuits big companies face daily. Even then, available search sites will only provide federal cases and not state cases. Given the volume of litigations drastically increasing, a GC plays a critical role in managing litigation efficiently and cost-effectively. They work with external counsel when needed and ensure your company’s interests are vigorously defended.
In-House Vs. Outsourced General Counsel: A Financial Consideration
The question often arises: Should you have an in-house GC or outsourced legal counsel as needed? The answer depends on your company’s financial capacity and specific needs.
In-House Legal Counsel: For larger corporations with substantial resources or a publicly traded company, I recommend seeking out an in-house GC. They provide dedicated, day-to-day legal support, fostering a deep understanding of your business operations. This can be particularly favorable for businesses with complex legal needs.
Outsourced/Outside General Counsel: Smaller businesses, startups and mid-sized companies (SMEs) may not have the financial resources to maintain a full-time in-house GC. In such cases, you might consider outsourcing legal counsel on a part-time or project basis as a cost-effective solution. Outsourced GCs provide expertise when needed, helping you manage legal expenses while still benefiting from strategic legal guidance.
For startups who don’t want to spend an exorbitant amount of fees, they may consider seeking out virtual law firms with a wide array of experience and, most importantly, a sharp acumen for both business and legal (Full disclosure: I run a virtual law firm.). Since the overhead cost to maintain a virtual law firm is low, those attorneys can offer competitive pricing.
The message I want to convey is clear: I want to alert you, not alarm you. Having a general counsel, whether in-house or outsourced, should not be considered not a luxury; I believe it’s an essential investment in the future of your business. By providing strategic legal guidance, risk mitigation and compliance expertise, a GC acts as your invaluable partner in navigating the complexities of today’s business environment.
Regardless of your company’s size or financial ability, the importance of a general counsel cannot be overstated. It’s not about alarmism; it’s about proactive preparedness. Therefore, whether you’re a budding startup or a corporate giant, remember that a general counsel is your ally in ensuring your business thrives, even in the face of legal challenges.