How Many Lawyers Should Be In a Company's Legal Department? 6 Tips

The question of how many attorneys is the right number is not only age-old in corporate counsel circles but has proven to be a hot topic of debate.  Too few and in-house counsel becomes heavily dependent on outside counsel for big and small matters.  Too many attorneys on a legal team and it may compromise efficiencies for the company's bottom line and create the issue of too many cooks in the kitchen.  In a time when economic factors have drained company coffers and strained legal departments to do more with less, re-assessing a company's needs can prove to be vital.  And can yield surprising results.

So, how should General Counsel and corporate executives evaluate their legal needs and determine a "Goldilocks" strategy for tailoring a legal department that's just the right size?  Here are a few tips compiled from podcasts, articles, blog posts, and online media (as listed in the "Related Resources"):

1. Use a benchmark to start.  One benchmark that has been cited by various consulting firms is one attorney for every $200-$300 million in corporate revenue.  The equation can be misleading as it is blind to particulars of the company and its unique legal needs.  However, it is starting point and can give attorneys on the team an idea of the numbers and accounts they will be relied upon to safeguard.

2. Think outside the benchmark.  Once you have a ballpark number , consider what makes the company unique.  What industry is the company in, how does that affect issues surrounding liability, compliance, and regulation?  If the company function is marked by greater risk or inherent complexity, a larger legal team may be justified. 

3. Consider the everyday and the once-in-awhile.  Take a bird's eye view on the company's legal needs.  Which kinds of matters are regular, ongoing--such as mergers & acquisition work, employment law, eDiscovery issues--and which kinds matters are unique or few-and-far-between--such as specific litigation or unique international business scenarios calling on domestic and foreign law.  Rely on the niche experience of outside counsel for "commodity" issues that occur once-in-awhile.  And for more regular legal needs, consider strategies for being able to address them in-house.

4. Stream of work: is the current strong enough to justify a new hire?  Piggybacking on the previous point, consider the quality of regular work to determine whether it can justify a new permanent hire.  Though it may be tempting to hire a new full-time attorney during a busy legal time, take a step back to see if there will still be a robust stream of work in 2 months or 6 months time.  By clearly defining any particular on-going needs, an in-house counsel team can find an attorney who is well-versed in specific areas of the law that will benefit the company or organization.

5. Determine how creative you can be with outside counsel.  Sophisticated outside counsel can mean the difference between resolving issues quickly or expending countless time and funds on legal matters.  In determining the size of an in-house legal department, consider creative deals that would incentivize engaging outside counsel instead of hiring internal staff for particular legal matters.  Flat-rate billing or completion incentives such as cash bonuses for finishing work ahead of a stipulated deadline--can make the inside-outside counsel connection more fruitful.

6. Look to the future.  Your company's legal needs today may not reflect what's ahead in the pipeline.  Considering the recovering economy, proposed legislation on everything from energy, securities regulation, and health care reform--if your company's "stream of work" justifies new hires, consider finding attorneys who are versed in these fields.  If the company's intellectual property needs are on the verge of expanding, think about infusing the team with some in-house IP expertise.

Building a strong in-house team can help prepare the company for addressing foreseeable legal needs, and for being able to effectively respond to the unforeseeable.  Choose the right number with the right combination of skills and experience...and Goldilocks will have nothing on you.

Related Resources:

• "Right-Sizing" the In-House Legal Department (LegalNetwork)
• Another clue toward the number of lawyers practicing in-house in the United States (Law Department Management)
• Minimum department size recommended by book is two (Law Department Management)
• Many US companies with less than $100 million in revenue have an in-house lawyer (Law Department Management)
• Corporate Counsel Facing Budget Cuts and Need to Address Outside Law Firm Costs (FindLaw's In House)
• The Yin and Yang of Corporate Counsel Convergence (FindLaw's In House)