Rethinking Corporate Counsel: Nine Minds Are Better Than One

Regardless of the specific challenges, one thing is for sure: the need for reliable, sound legal counsel is universal. But how does one responsibly fill that need and keep costs manageable? It’s a common question that requires one to rethink the role of in-house counsel.

The decision to engage outside legal counsel is not always an easy one. Many small and mid-size businesses as well as portfolio companies are increasingly finding themselves in a Catch-22. Companies either avoid outside counsel because they are fearful of legal fees that were not previously budgeted or are inundated with legal fees because outside counsel is sought at every turn.

The first instinct may be to hire in-house counsel. But even if the organization can afford it, in-house attorneys will still seek outside counsel to provide subject-matter expertise, market insight and bandwidth support.  A viable alternative is to transition the role of in-house counsel from internal to external. It may seem counterintuitive to utilize outside counsel to fulfill this role, but outsourcing day-to-day legal needs can be the most cost-effective and budget-conscious way to ensure that the organization always receives the necessary expertise to remain competitive. For some companies, it means outsourcing the entire general counsel function, for others the best solution means having in-house counsel utilize the Klehr Harrison team as their outsourced legal department.

For Tom Garland, CEO of PaperWorks, the portfolio company’s rapid growth was the catalyst for outsourcing the entire general counsel role to Klehr Harrison. The full-service packaging company, owned by a private equity firm, has grown from two locations to 19, and its annual revenues increased 500 percent since its formation in September 2008. “Growing from annual revenues of $100 million to $600 million, it was challenging to accurately forecast how much legal counsel would be required at each step of our growth,” admitted Garland. “My needs were broad – everything from real estate law and litigation, to employee agreements and supplier purchase agreements. And to staff in-house counsel with expertise in each of these areas was cost-prohibitive.”

For Klehr Harrison, assuming the role of general counsel translates to a dedicated team of experienced senior-level attorneys working to deliver high-quality legal services on a cost-effective, predictable, retainer basis. For PaperWorks, for the budgeted cost of a single full time equivalent employee, Paperwork employs the same core group of nine attorneys who have represented the paper company since its formation to also carry out the general counsel function means a consistent, seamless approach to all legal needs.

Garland continued, “Beyond consistency, as our outside GC, Klehr has the on-demand bandwidth in every area of law so that I have immediate access to the senior-level expertise required to address my specific need and the frequency of that access can ebb and flow. It’s like a faucet; if the needs slow down, I shut it off… and that off-on flexibility is mission critical to a company that is growing at the rapid rate that we are.”

Whether the matter involves the review of a basic service contract, employment advice, environmental compliance or a choice-of-entity question, Klehr Harrison acts as PaperWorks’ legal gatekeeper or as what Garland refers to as “deep generalists.”

He adds, “The team brings the resources to bear at all times; I never experience the bottleneck effect that is typical of an in-house general counsel that can get overwhelmed with the diverse range of legal work and fail to complete it in a timely manner. The response rates of Klehr’s GC team are impeccable, and that is invaluable to PaperWorks because it’s not enough to simply operate at the speed of business; that’s why Klehr operates at the speed of our business … and we’re running at full throttle.”

The monthly fixed fee, which Garland adds “is really fair and appropriate,” is determined based on an initial analysis of daily legal needs. It is a business model that works equally well for outsourcing the entire general counsel function or for having in-house counsel engage the Klehr Harrison team as their outsourced legal department. Klehr’s corporate counsel services typically cover the following categories of legal needs:

Contract Review
Corporate and intellectual property attorneys will review, draft and negotiate any standard business contracts specific to your industry, including vendor, supplier, customer and services agreements, licensing and distribution agreements and information technology agreements, as well as other types of contracts that arise in the ordinary course of business.

Corporate Governance
Partners in the corporate department will provide advice with respect to the duties of officers and directors, governance policies (including review of any articles of incorporation, by-laws, operating agreements and other corporate charters) and legal compliance (including contract review policies, board committee charters, crisis management and whistleblower policies).

Regulatory Compliance
Partners in the litigation and corporate departments provide general advice with respect to regulatory matters, including consumer safety, product labeling and state and local licensing.

Employment Counseling
Labor and employment specialists provide general guidance with respect to labor, employment and HR matters, including hiring and termination; compensation and benefits disputes; workers’ compensation and unemployment benefits claims; employee handbooks and training regarding workplace conduct, employee retention and hiring and termination practices.

Corporate and Tax Matters
Corporate and tax attorneys will provide general advice regarding business formation and federal and state income tax planning, and structuring new business initiatives, including the creation of new subsidiaries, joint ventures and management incentive programs.

Real Estate
Real estate attorneys will provide general advice pertaining to real estate matters, including lease review, zoning and land use issues and other fundamental land acquisition and leasing issues.

Litigation and Disputes
Experienced members of the litigation department provide guidance and advice regarding how to address new or threatened litigation, and will assist your company in supervising litigation being handled by other law firms anywhere in the country.

Bankruptcy
Senior bankruptcy attorneys will provide general advice in situations where the company finds itself a creditor or interested party in the bankruptcy of a customer, vendor, supplier or other business partner, as well as general advice regarding bankruptcy and insolvency issues.

Environmental Concerns
Environmental specialists will provide general advice pertaining to a variety of environmental issues, including due diligence during leasing and acquisition, assistance with fit-out to meet LEED Certification or other sustainability needs, environmental compliance for operations and questions related to asbestos, mold, indoor air quality, clean-up issues and other matters.

Intellectual Property
Experienced registered patent attorneys are available to provide general advice on patent, trademark, copyright and trade secret issues that arise in the ordinary course of business, including advice regarding federal registration of trademarks, patents and copyrights, review and negotiation of licensing agreements and questions of potential infringement of the rights of others.

For more information on Klehr Harrison’s outside corporate counsel services, please contact:
Michael K. Coran at 215.569.2497 or mcoran@klehr.com
Bradley A. Krouse at 215.569.1598 or bkrouse@klehr.com
William Matthews at 215.569.4281 or wmatthews@klehr.com