In today’s dynamic business environment many organizations, specifically small to medium sized companies, have begun to hire experienced executives as their C-suite advisors on a part-time basis. These part-time executives have come to be known as “Fractional Executives,” as they split their time between a number of different companies and are attractive due to their affordability and extensive experience in their respective fields. Fractional Executives (sometimes referred to simply as “Fractionals”) can be found in a variety of disciplines including finance, operations, sales, marketing, human resources as well as legal. This new “gig economy” approach (gig economy is a labor market characterized by short term work performed by freelancers as opposed to the hiring of permanent workers) allows businesses to obtain advice and counsel from experienced, knowledgeable professionals who can add immediate value while avoiding the expense of hiring them on a full-time basis.
A legal executive that is part of this trend is known as a Fractional General Counsel. In fact, Fractional General Counsels may actually be more critical to an organization’s success than any other fractional executive, as he or she becomes intimately familiar with the business and develops a trusting and confidential relationship with a CEO, founder or business owner. In choosing a Fractional General Counsel it’s best to engage someone who is a highly experienced legal generalist, with a background in a variety of legal and strategic issues, with the competence to provide advice and counsel across a number of diverse legal areas. This will provide a company with the resources to internally address issues such as legal strategy, contracts, regulatory compliance, corporate governance, intellectual property, litigation, human resources and risk management as well as supervision of outside counsel. The alternative would require a company to hire numerous law firms to address the various legal matters that face all companies in today’s face paced business world. Retaining numerous law firms can be difficult to manage, time consuming to supervise and prove very expensive versus having these legal matters handled and supervised by a single in-house attorney.
So how does a CEO, founder or business owner make the determination that it’s in their company’s best interest to hire a Fractional General Counsel?
The following questions should be considered by a CEO or business owner as guidance regarding the appropriate time and need for an organization to hire a Fractional General Counsel.
1. As a CEO or business owner, are you spending your time managing legal matters for your organization?
As CEO of a growing business, a business leader’s time is extremely valuable and should be concentrated solely on running and growing the business. Some company leaders spend a significant amount of time managing and overseeing legal matters, including dealing with outside attorneys. This can become a major distraction, diverting a CEO’s valuable time which is better spent focusing on the business. These legal issues can be delegated to an internal, experienced attorney, even on a part time basis, allowing an organization to realize immediate value, both financially and strategically. Utilizing a Fractional General Counsel allows the CEO to focus on running and growing their business, secure in the knowledge that the company’s legal matters are being addressed timely, efficiently and cost effectively. It’s also a prudent decision to have someone with legal expertise advising and counseling the business on legal matters, rather than delegating this work to someone who may not have the legal acumen, knowledge and qualifications to do so. While the CEO may be an expert in running the business, they can’t be expected to be an expert in all phases of the company, especially legal matters. They should recognize that certain areas, such as legal, require handling by someone experienced in that area. This is an initial indication that a Fractional General Counsel should be considered as part of a growing organization.
2. As the leader of your organization, are you or someone on your team negotiating, reviewing and drafting contracts for your company?
Contracts are one of the foundations of any successful business and a company’s CEO needs to be confident and comfortable that the company’s contracts are negotiated and drafted in the best interests of and to protect the business. While a CEO may have the intimate knowledge of the company’s business and its objectives, if he or she is not familiar or experienced with the eccentricities of contract negotiation and drafting, the company may become bound to contracts with terms that are disadvantageous to the business and negatively impact the company for an extended period of time. A Fractional General Counsel, with negotiation and contact drafting skills, who intimately understands the business as a trusted partner should be retained to represent the organization in its contract negotiations and drafting. This allows the company to remain on an equal playing field with respect to all its contracts with the organization’s partners, vendors, suppliers, manufacturers, etc., and will result in favorable agreements benefiting the company and having a positive impact on the company’s bottom line. This further supports the need to have an experienced, trusted attorney as a member of the management team, even on a part time basis.
3. Is there someone at your organization that is responsible for compliance, that is, to ensure your company is following all applicable laws, rules and regulations and meeting its regulatory obligations?
Regulatory compliance is an integral area which every organization needs to address to protect against possible fines, penalties and/or business disruption. Depending on the industry, each business operates under different laws, rules and regulations which must be understood and adhered to allowing the business to run smoothly and uninterrupted. There can be significant consequences for failure to comply with these mandatory obligations which may affect every aspect of a business including fines, penalties and potentially shutting down the business until the company can demonstrate it is compliant. In addition, failure to adhere to regulatory compliance obligations can have a detrimental effect on the public perception of an organization causing the loss of customers. Unless a CEO is a regulatory expert, an organization will need some assistance from someone, such as an experienced attorney, who can identify which regulatory compliance obligations apply, what needs to be done to conform to these requirements and ensure that these compliance procedures are properly implemented and followed. This can save a company money and resources and is just another reason a CEO should consider hiring a Fractional General Counsel who can perform this compliance function to benefit and protect the company.
4. Is there someone in your organization familiar with the types of insurance available and how much coverage a business requires to be properly protected?
Understanding the insurance needs of any business can be confusing, with the different types of insurance available, insurance requirements based on the industry involved and how much insurance coverage a company should purchase. This is a critical component of the risk management strategy for any business. Failure to properly protect the company with the necessary insurance and sufficient limits of coverage may result in an event that may be financially devastating to an organization. A Fractional General Counsel with insurance experience is essential to understanding a company’s risks and how those risks can be minimized through effective insurance coverage. A Fractional General Counsel who understands the insurance environment can be critical in providing the necessary advice to minimize such risks by determining which types of insurance are necessary and what the appropriate limits are for the particular business, adequate to protect against potential risks posed to that business.
5. Does your company have someone who is responsible for your intellectual property strategy to safeguard your brand, your products and/or your technology?
The value of a company’s “brand” or other specific intellectual property that is integral to a company’s success needs to be evaluated and safeguarded. Protecting a company’s brand, its products and technology requires a comprehensive intellectual property strategy which may include utilizing trademarks, patents, and trade dress, among other available rights. If a company fails to take the appropriate steps to shield these IP rights there is the risk of exposing its brand, products or technology to other companies who can copy and infringe on such rights, diluting the value of a unique brand, distinctive product or proprietary technology that sets the company apart. Such infringement could have an immediate and detrimental impact on a company’s profitability. Having a Fractional General Counsel on the team, with knowledge and understanding of the business who can internally establish and implement the appropriate IP strategy to shelter the company, its brand, products and technology against any potential infringement is essential.
6. Does your company presently use outside attorneys for certain legal matters and, if so, who oversees this outside legal work?
While sometimes necessary, using outside legal counsel to handle a company’s legal matters can be extremely expensive. Some firms charge high hourly rates. If there is no internal company gatekeeper to oversee and ensure that the outside attorneys are staffing properly with respect to the services they’re providing, numerous issues could lead to exorbitant legal fees. Additionally, outside legal billings are not always accurate and should be reviewed thoroughly by someone familiar with legal invoicing. Hiring an experienced Fractional General Counsel who can address these issues internally can save a company thousands, if not tens of thousands, of dollars, while assisting in building a strong foundation for the company to grow. Not only can a Fractional General Counsel internally perform many of the tasks previously assigned to outside counsel more effectively, more efficiently and more affordably, but they can also contribute additional protection by providing the appropriate oversight and supervision when such external counsel needs to be retained. Utilizing stringent budgeting and close supervision of external counsel, a Fractional General Counsel can ensure the company is getting the most value from any work assigned to an outside law firm. This is not an area for a CEO or other business executive to address. This is the type of unique skill and experience that a Fractional General Counsel can bring to an organization, adding immediate value by lowering the legal expenses of the company.
Summary:
Many CEOs fail to appreciate the benefit of partnering with an experienced attorney. Some either take it upon themselves and attempt to handle legal matters on their own, or they spend thousands of dollars hiring numerous outside law firms. This can be an imprudent business decision for a growing organization. For all the reasons outlined above, failing to retain a Fractional General Counsel could lead to catastrophic results, subjecting a company to significant legal liability and substantial legal costs instead of saving money and resources and reinvesting that back into the business. These concerns can be eliminated by hiring, on a part-time basis, an experienced, affordable attorney who learns and understands the business inside and out, and who can become a trusted advisor and strategic partner to the CEO, founder or business owner. A Fractional General Counsel can add immediate financial value and free up time, allowing a CEO and other executives to focus on growing the business by delegating the legal function to a legal executive with the requisite experience to handle such matters to minimize risk and protect the company.
The above should provide a sound basis for any business leader or CEO to consider bringing aboard a Fractional General Counsel as a member of their team.
IF YOU OR ANYONE YOU KNOW IS INTERESTED IN A FREE CONSULTATION TO DISCUSS WHETHER A FRACTIONAL GENERAL COUNSEL MAY BE THE RIGHT DECISION FOR THEIR ORGANIZATION, I’D BE HAPPY TO DISCUSS THESE ISSUES IN MORE DETAIL.
PLEASE CONTACT ME: rdaniels@intrepidlegalinc.com; 661-645-5450.
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