Outside General Counsel
Every company makes legal decisions. Without a lawyer on staff they still get made — and the cost of undoing one arrives years later, far larger than the advice would have been.
The practice
The call worth making early.
A company reaches the size where legal questions arrive faster than they get answered. Someone sends a contract. A first employee needs an offer letter. The bank wants a resolution. A partner wants out. No single one of these justifies a lawyer on the payroll. Each gets decided anyway.
This practice is the standing arrangement that answers them. One lawyer, who has read the operating agreement, knows who owns what, and knows what the business actually runs on. The work gets faster as that knowledge accumulates, because the reading is already done.
Most of what this practice does has nothing to do with securities law. It is contracts, employees, records, and the ordinary decisions of running a company. When a business does take outside money, or bring in an investor, or restructure who owns it, that work happens here as well — without starting again somewhere else.
Twenty years
in practice, for clients ranging from small growth companies to public companies — and the lawyer you speak with is the lawyer who does the work.
Why it matters
An ounce of prevention.
Benjamin Franklin wrote that an ounce of prevention is worth a pound of cure. He was writing about fire safety in 1735, and it holds for the paperwork a company runs on. The difference between the two is rarely close.
An indemnity clause nobody negotiated. A customer’s agreement says the company will cover the customer’s losses arising from the work. Nobody reads it closely, because the deal is small. Two years later a claim lands against the customer, and the company is paying to defend it.
A contractor who was never a contractor. Someone works full time, on the company’s schedule, with the company’s equipment, and is paid on an invoice. The arrangement holds until the state looks at it. Then it is back payroll taxes, penalties, and whatever else attaches.
Minutes nobody kept. The company operates for six years without recording a single decision. A buyer’s lawyer asks who authorized the lease, the loan and the option grants. The answer exists, but nothing shows it, and the price moves while it gets reconstructed.
None of these is a hard problem when it is in front of you. Each is expensive once it is behind you.
Coverage
What a year actually looks like.
Listed in full, because the range is the point. Select any item for what it covers.
Keeping the company in order
Minutes, consents and resolutions
The record that the company authorized what it did. Nobody wants it until somebody wants it.
Records of who owns what
Ownership records that agree with each other, which is the first thing a buyer or investor asks for.
Authorizations for the bank
The resolutions a bank asks for to open an account, borrow, or change who can sign.
Signing authority
Who is allowed to bind the company, and what happens when someone who is not does it anyway.
Annual filings and good standing
The filings that keep the entity alive, and what happens when one is missed.
Doing business in another state
When crossing a state line creates an obligation to register.
Changing the structure
Adding an entity, moving assets, or restructuring what exists. See also LLC, corporation or partnership.
Contracts, day to day
The contract the other side wrote
What to negotiate, what to accept, and which clause is the one that matters in two years.
The company’s own form agreements
A standard customer or vendor contract the business can send without asking each time.
Confidentiality before a conversation
What may be shared, with whom, for what purpose, and for how long.
Vendor and supplier terms
Service levels, limits on liability, and how either side gets out.
Who owns what was made
Work by employees, contractors and agencies, and who ends up owning it.
Resellers, distributors and referral partners
Terms for other people selling or introducing the product.
The agreement nobody wrote down
A working arrangement running on a handshake, and putting it on paper without blowing it up.
Taking on money
Before the raise starts
What has to be true about the company before it takes outside money, and what it may and may not say while raising.
Terms an investor asks for
What is standard, what is not, and what a term costs later.
Early money before a valuation
Notes and simple agreements that convert into equity later.
Who may be approached
The rules on who can be solicited and how, which are easier to break than most people expect. Drafted under Securities.
What the paperwork has to establish
Subscription documents and investor questionnaires, and what they are actually for.
One investor, different terms
Side letters, and what giving one investor something changes for the rest.
Growing
A new line of business
What a new activity changes about licensing, insurance, contracts and risk before it starts.
Opening somewhere new
A second location or a second state, and what follows the company there.
Buying something small
An acquisition that does not need a full transaction team, and the diligence that still has to happen.
Bringing in an owner
Admitting a new member or shareholder without unsettling what the existing ones agreed.
Equity for key people
Options, units and profits interests: giving staff a share of future growth without handing over value that already exists.
A board, or people who advise like one
Service terms, confidentiality, compensation, and what those people are and are not responsible for.
When something arrives
A demand letter
The first response, and the decision about whether it needs more than one.
A customer complaint
Answering it without conceding something the company will meet again.
A regulator’s inquiry
What is being asked, what is required, and what the deadline actually is.
A departing owner
A partner or member leaving, and what the documents already decided about it.
A claim from someone who worked there
What to do in the first week, and what not to put in writing.
Employment
The first employee
What has to be in place before someone starts, and what the company is signed up to the moment they do.
Offer letters and employment agreements
What is promised, what is at will, and what happens if it ends badly.
Contractor or employee
The classification the company chooses, and the one the state would choose. They are not always the same.
Separations
Ending an employment cleanly, and what a release does and does not buy.
Handbooks and policies
The written rules the company will be held to, including the ones California requires.
When a complaint arrives
An allegation about a manager or a colleague, and the internal investigation that follows.
What survives someone leaving
Confidentiality and non-solicitation terms. California voids most non-competes, which changes what is worth drafting.
Selling, succession and the end of this arrangement
Getting ready to be looked at
What a buyer, lender or investor will ask for, assembled before they ask.
Selling the business
Handled as a transaction. See Business and Corporate Law.
Passing it to the next generation
Succession in a family or closely held business, and the documents that have to agree with the plan.
Hiring a general counsel
The point at which a company outgrows this arrangement, and handing over cleanly when it does.
Winding down
Ending an entity in order, when that is the right answer.
Firms registered with FINRA or the SEC have their own practices here — Broker-Dealer Services and Investment Adviser Services — which cover compliance as well as counsel.
The arrangement is sometimes called fractional general counsel — a share of a lawyer’s time rather than a full-time hire. It begins by reading what already exists: the formation documents, the operating or shareholder agreement, and the contracts the business runs on. Most companies have not read those since the day they signed them.
Litigation and larger transactions are quoted separately from the standing arrangement. That is a note about how work is priced, not a limit on what the firm takes on.