Many small and middle market companies may not have a General Counsel. Here are the advantages to having an outside general counsel on a fractional basis.
1. You will save money in the long run because you often spend 10 times or more what you save now.We have seen it time and time again. A company skimps on an employment agreement with a key officer of the company, and the officer starts a competing business. Or a CEO decides to retire and sell his company but reduces legal spend on counsel to reduce fees on the deal. The representation and warranty provisions favor the buyer, and a few years later after the deal closes, the seller learns that the buyer failed to disclose material facts. Now the seller has to take the buyer to court to recover the carry back provision of the sale. Or a company fails to memorialize an agreement with their manufacturer, and now the manufacturer is going insolvent and has not delivered the goods that were paid for. We see these, and unfortunately many other types of matters, time and time again. More often than not, deals go sideways, and what would have cost a small amount of time, effort ,and cost now has turned into a five or six figure loss, or more. Only this delay occurs 2-5 years down the line, so the consequences are masked in the short term. Having a general counsel that you can pick up the phone and call during these critical moments can make all the difference.
2. Avoid the “long tails” of unanticipated problems. A prudent Outside General Counsel can advise you of the risks that you undertake so that you can make a fully informed decision. For example, often executives can get “deal fever”, where the excitement of the transaction clouds judgement. In an M&A transaction, you must pay attention to potential financial, legal, and regulatory issues, or they will threaten your company. Stepping into these problems can linger for months, or years, driving precious executive time and attention away from the core business (hence the term “long tail”). Your General Counsel can help you avoid these types of issues and the long tails associated with them.
3. You create sustainable growth. Growth is often the goal, but sustainable growth is the key. Sustainable growth is growth that can be duplicated. This requires the thoughtful and hard work of strategic planning, solid corporate governance, and financial and capital market planning. An outside general counsel can help you create sustainable growth so that you can continue to invest in R&D and capital projects that lead to future growth.
Fogel & Potamianos LLP‘s General Counsel Group serves as outsourced general counsel to small and middle market companies.
This blog is provided for general informational purposes only and no attorney-client relationship with Fogel & Potamianos LLP is created. By using the blog, you agree that the information on this blog does not constitute legal or other professional advice. The blog is not a substitute for obtaining legal advice regarding a potential matter from a qualified attorney licensed in your state.