Should you engage external counsels or have your very own in-house legal counsels? Well, the typical answer would be “It depends”. It is important for companies to receive quality legal support to ensure that it properly discharges its business affairs, whether on a retainer basis or having in-house legal counsels. Before we determine which is more suitable for your business, let us discuss the differences between these two.
RETAINER BASIS
Engaging a lawyer on a retainer basis means you retain the services of a lawyer whom you trust with your business' affairs for a period of time. A retainer is also known as a deposit or lump-sum which a client will pay in advance to the external lawyer to secure the services of the said lawyer. This ensures that the client’s company or business will be given priority over other clients when services are needed.
You will be asked to sign a Retainer Agreement upon retaining a lawyer. Here are some general clauses which can be found in a retainer agreement[1]:-
● Scope of work (for instance, providing general legal advice, liaising with external lawyers, vetting or reviewing agreements etc).
● Retainer fees (including the payment method and schedule, disbursements and other costs).
● Term of engagement.
● Right to termination
In most cases, the parties will discuss and negotiate the terms of the engagement before the finalization of a Retainer Agreement.
The main benefit of hiring a lawyer on retainer basis is none other than the speed of access to a lawyer who is familiar with the way your business runs and whom you trust. Not only can this help to save valuable time, but it also allows you to run your business confidently with a peace of mind with minimal cost.
However, the company is still required to pay for the services even if it did not require any legal service during that period. This may constitute unreasonable expenses to some businesses. Moreover, any dispute over the scope of services or the charges may cause a breakdown in the client-solicitor relationship which might make the whole experience unpleasant.
IN-HOUSE LEGAL COUNSELS
On the other hand, in-house legal counsels are employees of the company and they serve primarily to advance the needs of the business. Like any other employees, they will receive salaries as well as other fringe benefits and perks offered by the company.
By having its own legal department, companies can avoid the cost of hiring external counsel which can be quite costly while making sure necessary legal advice and representation can be obtained as and when required. Apart from offering practical and sensible legal solutions, legal counsels today work as strategic business partners, participating in issues relating to corporate strategy, such as capital allocation, competitive strategy, new products, and emerging technologies[2]. While adding legal dimensions to key decisions, it will certainly improve the company’s risk management profile[3].
However, your legal counsels may not have the necessary knowledge or experience when dealing with specific issues that require urgent or immediate attention such as Intellectual Property and Human Resource. Therefore, it is better to engage external lawyers who are skilled in that area to resolve any such issues. Businesses are also encouraged to outsource certain matters to specialised legal services, which have the requisite resources and a high degree of experience to deal with the matter.
In conclusion, these two options offer similar benefits to businesses in the sense that they provide adequate level of security, protection, and access to a trusted legal source for those who can afford it. It all depends on the complexity of the legal issues.
[1] Legal Info Nova Scotia “How lawyers charge for their work”, <https://www.legalinfo.org/lawyers-legal-help/lawyers-fees > last accessed 8 March 2021 [2] Robert Walters Malaysia, “Top 5 reasons why companies need an in-house legal counsel” <https://www.robertwalters.com.my/hiring/hiring-advice/Top-5-reasons-for-an-in-house-legal-team.html> last accessed 8 March 2021 [3] The Hartford, “Pros and Cons of Having a In-house counsel” <https://www.thehartford.com/business-insurance/strategy/in-house-counsel/pros-cons>last accessed 8 March 2021
Authored by Tiffany Ding & Wendy Tan
Kindly note that this legal article does not, and is not intended to, constitute formal legal advice by the Firm, instead all information, content and materials available on this site are for general informational purposes only. If readers require further clarification or legal advice, please email office@kevinwuassociates.com.
