September 25, 2023

law departments Flexible Legal Resourcing innovation

It’s too much to argue that no business needs to employ lawyers in-house. As a business grows – in size or complexity – having a law department becomes near-inevitable. However, when staffing a law department – to paraphrase a line from the film Moneyball – a general counsel’s goal shouldn’t be to hire lawyers; the goal should be to obtain expertise.

General counsels understand this, at least intuitively. A law department typically engages outside counsel because law firms offer expertise the law department does not possess. And, unless a lawyer with needed expertise will have enough work to do in-house to justify a salary and benefits as a full-time employee (FTE), law firms have the advantage of selling lawyers’ services by the hour (or, often, the tenth-of-an-hour).

If this paradigm of engaging expertise in small increments is pervasive, why don’t law department leaders apply it to staffing their organisations? After all, earlier this year, several law industry publications reported on the emergence [subscription required] of the ‘fractional general counsel’; why stop there? Why not a fractional law department?

The idea, however fanciful, is especially worth considering about in light of the unprecedented availability on a flexible basis of mid- and senior-level practitioners with extensive expertise in sought-after practice areas. Indeed, the rise of fractional general counsels is a function of the growth in the number of highly experienced lawyers who have chosen to work on a flexible basis.

With highly skilled and experienced lawyers available, the fractional paradigm offers a law department a new way to think about staffing that has practical, financial, and strategic advantages over in-house FTEs.

Better Talent. Virtually all full-time in-house positions require working in a specific geographical location, which restricts viable candidates to those already living in the area or willing to relocate. A fractional approach to law department staffing removes those constraints for law departments that allow WFH or flex lawyers who are amenable to relocate temporarily for shorter-term projects.

Lower Costs. Fractional lawyers do not incur the significant expenses – e.g., health insurance, administrative overhead, etc. – that come with every FTE. The fractional approach also minimises the switching costs – time and money necessary to attract, screen, and onboard a new hire – when a law department FTE proves unsuitable.

Improved Scalability. The fractional paradigm allows a law department to quickly scale up or down as workloads ebb and flow. This increases the capacity of a law department to handle surges in work. It also makes the expense of legal expertise a variable cost rather than a fixed one.

Reduced Risk. Staffing a law department position involves the calculation that, on average, a lawyer will be busy enough to justify the position’s salary. If the workload is less than projected, the law department ends up overpaying for expertise. But piling on work so an in-house lawyer stays busy raises the risk of burnout. The fractional paradigm lowers both risks – overpaying and overworking.

The fractional law department is not an all-or-nothing proposition – some roles and circumstances lend themselves to the fractional approach; others do not. And although the fractional concept is new as far as law department staffing, remembering: all sorts of paradigms in the legal field evolve. Decades ago, the billable hour did not exist; instead, the retainer model reigned supreme. Times have changed. We may yet see a similar transition from law departments predicated on the full-time employee model to an approach that more closely calibrates the expertise the department uses (and pays for) to its actual needs at a given moment.