Outside In-House Counsel

The outside in-house counsel model

Many companies have an occasional need for full legal representation, but have a frequent need for general legal advice. The high hourly rates charged by external counsel often make legal consultation for minor/routine issues uneconomical, meaning many companies ration their use of lawyers.

The outside in-house model (also known as “fractional counsel”) seeks to address through the engagement of a business-oriented lawyer who is available on demand, does not charge monthly retainer fees (though some offer a subscription model), is well versed in the issues that most small and medium-sized businesses face, and gets to know the company’s business over time, leading to a higher quality and lower cost advice.

At Lampblack, we see ourselves as partners with our clients, don’t believe in making a quick buck, dislike surprise bills as much as our clients, and genuinely enjoy the business of on-point, efficient advice. A few examples help to illustrate the model in action:

Company “A” is a firm of engineering consultants that provide on large scale commercial and industrial projects.

Company A first seeks assistance for a payment dispute. Operating in the IT consulting space, they’ve completed a project for a new client, but have not been paid for a number of months. Up to this point, it had been their standard practice to simply issue purchase orders without terms and conditions, and this new client was on-boarded with minimal paperwork – only a simple one-page “agreement for services”. We start by drafting a demand letter seeking payment and then recommend a comprehensive set of Terms & Conditions be drafted and signed/acknowledged by all new clients. For this we provide a flat fee quote that is multiples less than a larger firm would charge.

A couple of months later they reach out for assistance on another matter – this time they have won a  bid to provide consulting work for a new client with large-scale residential projects in multiple cities. Their new client sends them a detailed Master Services Agreement that sets out the terms of the relationship. Used to operating in a more casual manner, they seek our assistance reviewing the agreement, providing a summary of its contents, and pointing out any problematic sections. We agree to bill by the hour, but to place a cap on our fees – this way our fee may come in under, but will not exceed, a standard flat fee. We end up suggesting some changes to the agreement to make it more balanced, and engage with their client’s own lawyers to negotiate the changes and achieve sign-off.

Shortly thereafter the firm needs assistance with a commercial lease – they’re in the fifth year of a seven-year lease, but feel that they are paying too much due to the decline in demand for commercial office space in light of the pandemic. After a quick call, we connect them to a tenant-side broker who helps them to renegotiate their lease for a $1,800 monthly reduction in rent – they had not been previously aware that these services exited.

Client “B” is British software start-up seeking to set up an office in the U.S. to promote the sales of its business productivity software in the USA

Client B has been selling business productivity software for a number of years, with most of their sales coming from the UK, Ireland, Poland and Germany. One of their British clients also has a U.S. operation and have asked whether Client B has a U.S. operation or presence. This conversation spurs Client B to begin looking at the possibility of opening a U.S. office. Aside from some googling and a few chats with contacts who have some experience doing business in the U.S., they are not sure where to begin.

We first set up an introductory call to introduce our services and learn about their business, their plans for the U.S., and to understand their concerns. For these calls, often a Q&A format works best rather than us giving a lengthy overview of the U.S. business law for overseas companies. As is often case, Company B’s main concerns are a) how to protect their UK operation from liability in the U.S., b) how to structure their business to minimize their tax burden and c) where in the U.S. to set up considering they’ll initially have one single “roaming” employee who will be working from a home office and traveling around the USA to solicit sales. We are happy to provide a general overview of the issues concerned, and then quote flat fees for a) advising on the entity type/location, incorporating their entity and taking care of all initial governance related paperwork, and b) providing a memo on the tax issues they can expect to face. They also have some questions related to U.S immigration and whether their initial business activities require their U.K based personnel to hold any specific kind of U.S. visa. We’re happy to provide answers to these ancillary questions without charge.

A few months later, their entity has been formed and they are negotiating with government-funded entity in Florida for the sale of software. There’s a snag – the company is requiring that they be “registered” in Florida before any sale contract can be completed. They seek our help in understanding what it means to be registered in Florida, how to become registered, and the obligations (if any) that arise out of being registered. For this, we’re able to answer their questions, explain the process and their obligations during a quick 30-minute phone call, for which we agree to bill at our hourly ad hoc rate.

Later in the year, they seek our assistance when they are adopting a new standard contract, and seek our assistance on creating a U.S. agreement that matches their U.K agreement as much as possible, taking into account the legal and corporate cultural differences between the two jurisdictions. We agree on a flat fee, and complete the work by suggesting edits in the agreement related to insurance, indemnification and dispute resolution.

Client “C”

Company C is a group of New York-based branding consultants – they initially seek our assistance with a debt dispute, however over time, as they grow they seek our assistance helping us to draft bespoke agreements  with their employees and independent contractors – they want to put in place fee commission agreements with referrers, employees and clients, and also seek a standardized independent contractor agreement that they can use as they scale up. For each agreement, we agree on a flat fee arrangement

The same year they seek our assistance on a number of matters, including a) understanding the tax/compliance issues involved if they move their business to another state b) understanding New York’s paid family leave requirements, c) registering a trademark, d) hiring an summer intern from New Zealand, e) negotiating a new Master Services Agreement with their largest client, f) how to start an Employee Share Option Plan, and g) navigating a potential Americans with Disabilities Act claim. Some of these questions require no more than a twenty minute phone call, which we bill at our hourly rate, while for others we either quote flat fees, or we agree to bill hourly with a cap. Satisfied with our billing practices and responsiveness, Company C reaches out on many routine legal issues over time, the practical effect of which is to avoid legal issues before they arise, and to ensure they are as prepared as possible when they do. There are also several problems that we can’t assist with, so are happy to provide referrals to those who can assist - e.g. they’re subject to a third party subpoena in Colorado - this requires a referral to a local Colorado law firm. Another relates to a state tax audit issue. Again, we’re happy to refer out to a firm that specializes in this area.