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Don't Get Caught in the Legal Silo

Written by John Rabil | Jul 31, 2016 1:45:00 PM

Legal Silos in Corporations

Legal services for small businesses are almost always offered in a "silo". What does this mean? Businesses often use lawyers infrequently and usually just need some transactional work, which the lawyer undertakes without gaining a full understanding of the business and what it's trying to accomplish.

What a business should really be doing to help itself succeed is looking for a partner who can understand where your business wants to go and how to help you get it there. This type of relationship requires more than just showing up every now and then to get a document drafted.

Silos in the Legal Industry

The business model for most law firms lends itself to the silo problem. While there are alternative billing options, the truth is the vast majority of law firms still use the billable hour, and will continue to since that is what they are built on.

This goes against the needs of most business clients; businesses have budgets and want to know what their expenses will be, charging by the hour means uncertainty in cost, or high cost for work. Since a lawyer understanding what the business is doing will take time (hours), this means additional cost for the business just for the lawyer to catch up on what the business is doing before even providing/producing any work. Most businesses aren't interested in paying an hourly rate for a lawyer to get up to speed on the company.

Integrating Your Legal Team

While it's true that a business may not need a contract or legal document every week, or every other week, those aren't the real reasons why and how businesses should be using lawyers.

There is a reason why large companies have general counsel on staff, it’s not so much for the legal work they provide, it's because they are trusted business advisers and can deal with issues proactively with a global view of the company and how it works. This type of service is rarely available from irregular use of a lawyer who doesn't understand how a client's business really operates.

I'm not suggesting every company needs an in house general counsel, but there are better options than just showing up at a lawyers office when you need some paperwork done that will allow companies to better utilize the services of a lawyer and control fixed costs. Additionally, while there are more alternatives than ever for lawyers (google, DIY services and websites) that may be cheaper, they don't provide what businesses should really be getting from their lawyer: a trusted member of the team and peace of mind.

So, if possible, make sure your business isn't getting legal work done sporadically in piecemeal, it usually isn't the most effective or efficient way for businesses to work with lawyers.