What is the Difference Between Fractional and In-House Counsel?
Fractional counsel refers to a lawyer that provides legal services on a part-time and flexible arrangement through a contractual agreement.
Fractional counsel lawyers are not employees of the company, but embed themselves within the executive team as if they were. Fractional lawyers may be retained for specific projects or to provide ongoing legal advice and representation on a regular basis. This fractional counsel model allows lawyers the flexibility to work for one or multiple companies, and allows company executives to hire one or more fractional lawyers as they need their services or special expertise without the commitment of hiring an employee.
In-house counsel refers to a lawyer or team of lawyers who are employees of a company and provide legal advice and representation exclusively to that company.
In-house counsel lawyers typically work full-time. A company with one in-house lawyer will typically employ a corporate generalist who can assist with all or most aspects of the company's legal matters, whereas a large company may employ a team of lawyers with many different specializations to serve all aspects of the business’ legal needs.
How does a business decide to move from external counsel to fractional counsel or in-house counsel?
For many company executives, their early strategy to cover the business’ legal needs involves hiring a law firm. This external support typically does not provide the responsiveness, flexibility or scaling power needed for a business to grow efficiently.
- Increasing Legal Needs: As a company grows, so do its legal needs. If a company finds itself requiring legal services from an external law firm on a regular basis, it may be time to consider switching to fractional or in-house counsel.
- Time Sensitivity: If a company requires immediate legal support, waiting for external counsel to become available may not be feasible. By having fractional or in-house counsel on staff, a company can receive timely and immediate legal support.
- Cost: If a company is spending a significant amount of money on external legal fees, it may be more cost-effective to switch to fractional or in-house counsel. By having legal counsel on staff, a company can avoid high hourly rates charged by law firms and work more efficiently.
- Industry Expertise: If a company operates in a specialized industry, it may be beneficial to have in-house counsel with industry-specific expertise. In-house counsel can provide more tailored legal support that external counsel at a generalist law firm may not be able to provide.
- Company Culture: In-house counsel and fractional counsel lawyers can become more integrated with a company's culture and operations, allowing them to provide more personalized legal support that aligns with the company's goals and values.
How much does an In-House Counsel lawyer cost?
Typically an in-house counsel lawyer is a full-time employee of a company and receives a salary and benefits package. The salary of an in-house counsel lawyer will vary depending on the experience of the lawyer and their expected deliverables for the company. A generalist in-house counsel salary could range from $150,000 to $400,000 or more per year.
In addition to the base salary and benefits, in-house counsel lawyers may also receive bonuses and equity compensation, and the total cost of an in-house counsel lawyer will also include additional expenses such as office space, equipment, and support staff.
How much does a Fractional lawyer cost?
The cost of a fractional lawyer will depend on the lawyer's level of experience, if they have unique industry expertise, and the complexity of the legal work involved.
In general, fractional counsel lawyers tend to charge hourly rates for a set number of hours, or flat fees for their services. Hourly rates can range anywhere from $150 to $500 per hour or more, and flat fees can also vary widely depending on the scope of the work involved and the expected time commitment.
Fractional lawyer engagements tend to be more flexible, contract-based, and a lower cost than hiring full-time in-house counsel.
What factors contribute to a business choosing one form of legal counsel over another?
One of the key benefits of fractional counsel is that it can be a more cost-effective option for businesses that don't need full-time legal support. It also provides flexibility in terms of the scope and duration of legal support, as well as the ability to tap into a broader range of legal expertise and experience.
Traditional in-house counsel can work well for companies that can afford to hire a full-time lawyer as it offers long-term continuity in their legal support, and in-house counsel lawyers will develop a strong grasp of the company's legal history over time.
Some scaling companies are also finding value with a hybrid model where they supplement their external law firm or in-house counsel with fractional counsel as projects require additional support or as demand for legal services within the company grows rapidly.
Ultimately, the decision between fractional counsel and in-house counsel depends on the needs and budget of the company, as well as its legal goals and priorities.
Key Steps for Hiring Fractional Counsel:
Identify your company's legal needs:
- What legal issues has your business encountered over the past 6 months?
- What legal challenges are expected in the coming 6 months?
- Has a recent change in business resulted in a new realm of legal services being required on a regular bases?
- Is an industry specialist needed for your particular legal projects?
- Is the legal work requiring the expertise of a senior or specialized lawyer?
Determine your budget:
- What budget is currently allocated for legal services at your company?
- Could the current budget be more efficiently spent through a fractional counsel engagement than through external counsel?
- Has recent growth unlocked more capital to cover growing legal needs?
- Is there an upper limit to the hourly rate or flat fee your company is able to pay for legal services?
Find a lawyer for fractional counsel:
- Work with Goodlawyer to connect with potential lawyers and get assistance with scoping legal needs and budget (if required).
- Meet with lawyers to assess fit for legal needs, experience, and company culture.
- Agree to scope, timelines, and a trial project with one or more fractional lawyers.
- Establish regular communication with lawyer(s) and the Goodlawyer team.
- Evaluate project outcomes and ongoing feasibility.
How fractional counsel will benefit your business:
- Access top-tier legal talent
- Free up your executive team
- Get flexible, efficient and reliable support
- Develop legal competencies inside your business
- Clarify, prioritize & operationalize your legal function