Is Bringing on In-House Counsel the Right Move?

Josh Conley \ June 28, 2018

Your business is growing and with it is an ever-expanding intellectual property portfolio that carries a significant cost. It is starting to look like the best option to manage the portfolio is hiring in-house counsel. There are a lot of misconceptions that go along with this line of thinking, and the best choice is often not bringing someone in-house but re-evaluating your outside counsel. Here are a few quick factors to consider before posting your job listing on LinkedIn.

Focus

Many companies believe that having in-house counsel for their intellectual property will provide them with an individual who is dedicated and focused on the particular needs of their company. This is not always the case. It is not uncommon for in-house counsel to get encumbered by the day-to-day inner workings of the business that extend outside of intellectual property such as patents and trademarks and into things like regulations and tax implications.

Outside intellectual property counsel, on the other hand, is focused only on portfolio management and development. Although there is the risk that your business will become one of a deluge of other clients, this risk is limited due to the niche practice of intellectual property. This risk can be restricted even further by selecting a small boutique intellectual property firm that specializes in this area of law.

The focus on intellectual property by outside counsel also avoids “brain drain” that can accompany an attorney taking an in-house position. Legal know-how is just like other knowledge — either you use it, or you lose it.

Accessibility

Accessibility is another related consideration. Having in-house counsel can give the illusion that someone is always available to address your company’s concerns. Typically, though, in-house counsel has more clearly defined hours that mirror those of other employees, and that includes time away from work. Outside counsel usually includes a team of attorneys that are knowledgeable about your business and are available nearly year-round and even after hours.

Project Management

Another perceived benefit of in-house counsel is that they can handle the management of your intellectual property portfolio. However, without expensive docketing software that can manage the multitude of deadlines, an in-house hire will struggle to keep things in order.

In comparison, most intellectual property firms use software to maintain their clients’ docketing. Backup or manual dockets are also used to avoid the significant harm missing a deadline can cause. In addition, dedicated and experienced support staff assists outside counsel with maintaining client dockets and handing the variety of ever-changing filing systems.

Cost-benefit

The cost is normally the primary reason for seeking an in-house attorney. Bringing someone on does not necessarily mean that costs will go down, though. It is likely that costs will actually rise.

This is because, in addition to lacking the necessary (and expensive) framework and support needed to manage a portfolio, there are numerous other costs. The most blatant of those are the necessary reliance on outside counsel. Almost all in-house counsel work with outside counsel to implement a company’s intellectual property portfolio. There is no shame on this reliance as outside counsel is more familiar with how the intellectual property game works because they keep up with the rapidly evolving area of law. Something an in-house counsel runs into maybe once a year, is something outside counsel encounters monthly, weekly or even daily.

Merely paying for in-house counsel may not be cost-effective. According to the American Intellectual Property Law Association (AIPLA) in 2014, the median gross income for in-house intellectual property counsel was just over $250,000. At an outside billing rate of $450, your company would need over 500 hours of legal work or 10 hours each week to break even.

Depending on your local market, the salary for in-house counsel can be more or less. However, relying on outside counsel allows your company to look anywhere for legal expertise. For instance, if you are in the high-cost coastal regions (let’s say Silicon Valley), the cost for hiring in-house counsel will be significant. In comparison, seeking an attorney in the Midwest, i.e., the Silicon Plains, the cost for intellectual property support will be significantly lower in many instances.

Conclusion

Hiring in-house counsel should not be a hastily made decision. It is important to consider the needs of your company and the costs that will be associated with making an in-house hire functional. A key aspect of evaluating the need for in-house counsel is an evaluation of your current outside counsel. You may find that the fresh face your company needs already has a position at an outside firm that is both focused on the unique qualities of your business and is cost-effective.

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