As a business scales, so does the complexity of its legal needs, eventually leading to an expensive question for many growing companies:
Is it time to hire an in-house lawyer?
It’s a major decision for any business that may not be the best choice in every case considering engaging external legal counsel on a retainer has its own advantages.
In this article, we break down the pros and cons of both models to help business owners and decisionmakers navigate the in-house vs outsourced legal services dilemma and find the best legal support structure for their businesses.
In-house counsel
An in-house lawyer is part of your team, not just a legal adviser but a colleague who knows your business inside out. They attend strategy meetings, understand your culture, and focus solely on your company’s legal needs.
Outsourced counsel
Outsourced counsel involves engaging an external law firm either for specific matters or on a retainer. The key advantage is access to a wide pool of specialists across multiple practice areas, offering expertise no single in-house lawyer could match.
Support can be increased or reduced as needed without the long-term cost of full-time hiring.
Quick comparison
To make the decision clearer, let’s compare the two models across several key factors. There is no single “best” option; the right choice depends on what you value most.
| Factor | In-House Counsel | Outsourced Counsel |
| Cost Structure | Fixed, high overhead | Variable (ad-hoc) or fixed (retainer); generally lower overhead |
| Business Integration | Deeply embedded; full-time focus on your business | External partner; integration level depends on the model (deeper with a retainer) |
| Breadth of Expertise | Limited to one person’s knowledge and experience | Access to a full team of specialists across various practice areas |
| Availability | Immediately available during business hours | Highly responsive, often with guaranteed response times (SLAs) in a retainer |
| Scalability | Difficult to scale; hiring and firing are slow and costly processes | Easy to scale legal support up or down based on business needs |
| Objectivity | May be influenced by internal politics or an “employee” mindset | Provides an independent, objective perspective from outside the organization |
For an early-stage startup, outsourcing is almost always the most sensible choice, while for a large, established company, a dedicated in-house legal team is often a necessity.
It is for a growing SME that the decision becomes more nuanced, and the answer often depends on where the business is in its lifecycle.
Matching legal service type to SME’s growth stage
The key question to ask is whether the volume of work is both consistent and concentrated in one area, and from there:
- if you have a steady stream of similar needs, an in-house lawyer might make sense
- if your needs are varied, the outsourced model gives you access to the right specialist for each job
Of course, the choice between in-house and outsourced counsel doesn’t have to be binary.
Combining in-house and outsourcing
Many businesses of all sizes find success with a small in-house team to handle day-to-day legal matters while outsourcing more complex, specialised work to an external firm.
This approach provides the benefit of an integrated internal team while still providing access to a deep well of external expertise when needed.
Get in touch to find your fit
For SMEs, a legal retainer service can often function as a “quasi-in-house” counsel, offering the deep partnership and proactive support of an internal team but with the flexibility and broad expertise of an external firm. Get in touch today for a complimentary initial discussion to help you think through these options.
