In today’s business environment, managers rethinking how to build the right team are looking for ways to make the most of their limited resources. As businesses face tighter budgets, stricter legal requirements, and the pressures of rapid growth, demand is rising for executive talent and fractional general counsel services that can adapt quickly. That’s where fractional general counsel comes in. These are qualified lawyers who undertake senior responsibilities on a part-time or project basis. Indeed, for companies that are doing very well, top-quality legal advice is necessary to resolve commercial disputes, protect intellectual property, and maintain regulatory compliance. On the other hand, it is difficult to justify the expense of employing a full-time corporate lawyer, particularly at an executive level.
Increasingly, the decision-makers who founded companies are viewing the fractional legal general counsel as the solution for both startups and companies that are growing: they can employ a strategic advisor who provides the advantages of working closely with a legal team on a day-to-day basis to give corporate legal support without having to pay the full cost.
What Is a Fractional General Counsel?
A fractional general counsel is simply a senior attorney who provides part-time assistance to your company’s board regarding legal matters. People commonly use the phrases ‘outsourced general counsel’, ‘outside general counsel’, and ‘part-time general counsel’ to refer to this type of lawyer. This position suits organizations that want a senior legal leader involved but either don’t have the time or don’t consider it worthwhile from a business point of view to employ a full-time legal executive.
A fractional general counsel (GC) has a very different role compared to that of a traditional lawyer or lawyer firm where you reach out to them only when you have some specific issues related to your business. A fractional GC will be involved in various aspects of your company during early stages so that as and when required, you get constant legal guidance from them that backs up the main goals of your company. Having experience advising C-suite executives, a fractional GC can also come up with top-notch legal advice whenever a law-related issue crops up.
What Does a Fractional General Counsel Actually Do?
Fractional general counsels are usually involved in different business areas, but their primary role is to coordinate the legal aspects of running a business with the company’s objectives. By hiring a fractional general counsel, your company can rely on them to be responsible for these vital areas:
1. Contract Review and Negotiation: Contracts are the driving force of business; the faster the contract process, the faster a business move. A fractional GC helps draft, review, and negotiate complex commercial contracts with vendors, partners, and clients. Contract law in Canada is continuously changing. As an example, the Supreme Court of Canada’s landmark decision in Bhasin v. Hrynew, 2014 SCC 71, laid the foundation for the duty of honest performance and good faith in contractual dealings. Beyond contractual drafting and negotiations, a fractional GC also ensures your contractual documents are clear, legally binding, and fully compliant with these substantive common law principles.
2. Corporate Governance and Compliance: Raising standards for legal compliance with the Canada Business Corporations Act (CBCA) or, in provinces, the provincial Business Corporations Act is mandatory for a business. A fractional chief governance officer (GC) manages your company’s internal corporate governance and minute-keeping on a day-to-day basis. Your GC will also ensure your board of directors performs its Section 122 fiduciary duties under the CBCA, keeping your company legal compliant.
3. Employment Agreements and HR Support: Rising workforce management involves many responsibilities and liabilities. Fractional GC offers you the option to have an audit and drafting of your agreements and documents for employment, covenants and termination. Since the key Ontario Court of Appeal decision Waksdale v. Swegon North America Inc. 2020 ONCA 391, the case that nullified numerous termination clauses, it has become even more important to have your employment contracts verified and brought up to date with the requirements of the ESA by an experienced lawyer to prevent serious financial damage.
4. Managing Legal Operations and Outside Counsel: If you are involved in complex lawsuits or patent issues and require expertise at the highest level, a fractional in-house counsel can assist you. This role can handle the operations of your legal department. They assess the situations, hire external lawyers as appropriate, and make sure that the legal services are not only excellent but also cost-saving.
When Should a Business Hire a Fractional General Counsel?
The right time is the key. Companies often reach a point where they can no longer rely on informal or sporadic business legal counsel. You might want to hire a fractional general counsel if:
- You Are Scaling Rapidly: As your team grows and you expand abroad, business risk also expands, and you’ll need reliable ongoing legal support.
- Preparing for Major Business Transactions: Should you intend to attract external investment through fundraising for Series A or B, prepare for going public, or your company needs a legal team to deal with the purchase that your company is making, your company will definitely miss out on having a highly experienced general counsel. Investors will want to see that shareholder agreements, company registers, and shareholder records are in order.
- Entering Heavily Regulated Markets: If you’re launching financial tools, health-related services, or dealing with private consumer data, you should definitely seek legal advice and avoid the risk of penalties that the regulator might impose. Proactive legal risk management is a must.
Ultimately, an executive committee whose members spend many hours a day trying to understand and interpret legal documents indicates that legal counsel for startups should come in and help them instead of focusing on the main product or service development.
Fractional General Counsel vs Full-Time General Counsel
Fractional general counsel and full-time general counsel mainly differ in how they use their time, how they are paid, and the stage of the business they support.
They receive a strong executive salary, bonuses, company benefits, and, in most cases, equity or stock options, which makes this hiring decision suitable only for large, well-established companies that need legal services regularly and at high daily volume.
But a fractional GC offers the same quality of strategic legal advice without the commitment of a full-time staff member. You get a flexible working arrangement, as the GC will most likely be a contractor. They are a great source of innovative ideas, as they are independent legal experts who can offer an outside perspective not tainted by internal company politics. Fractional GC is a practical solution for handling major legal problems, mainly those of a high-level nature, without adding additional burden to your payroll when the workload that is produced on a daily or weekly basis is not sufficient or does not justify permanent employment of a full-time general counsel.
How Much Does a Fractional General Counsel Cost?
Engaging a part-time law partner can be the most suitable and cost-effective solution when hiring someone for your business instead of getting a full-time attorney. In Canada, seasoned attorneys usually command annual base pay around $200,000 and $300,000 on top of bonus perks, stock awards, etc. On the other hand, part-time legal advisors may have various fee schedules, like hourly/daily flat fee or monthly retainers on which fixed number of work hours/weeks are accounted for. Much like this business arrangement works, such an option will provide flexibility and cost control to law expenditures, since payments are only made when you actually require your lawyer’s help. This way your cash flows are not being unnecessarily tied down, yet you still get quality legal services.
What Businesses Can Expect from a Fractional GC?
Engaging a fractional general counsel introduces a different dimension to risk management and business planning. Actually, you will not only get a legal person who will sign papers for you but also a business partner to rely on.
A fractional GC will not only handle the legal details but also streamline the legal function and provide ready-to-use templates for commercial contracts. The legal counsel will be the one to advise you on how to maintain day-to-day legal compliance so that executives will not be able to make guesses about whether their actions are against the rules. As a professional, the GC will flag major issues immediately, helping prevent potential financial loss. The GC will figure out, based on the nature of legal risks, to what extent the company can go on with an aggressive business strategy, ensuring it aligns with a secure legal strategy.
The Business Case for a Fractional General Counsel
Unfortunately, the history of highly scaling startups is mostly one big tale of founders making serious legal mistakes which could have been easily avoided. Whatever it is that a founder has done, be it writing a poor IP assignment contract, neglecting to include a compliant termination clause, or mismanaging a cap table, the law will always come to your rescue, but at a high cost. You pay much more when you have to do legal fixes retroactively than if you had done it the right way in the first place.
The commercial argument for a fractional general counsel is obvious: it’s a matter of employing smart lawyers to help startup founders safeguard your assets, make revenue generation more productive, and secure long-term growth as legal counsel for growing businesses without incurring the full-time executive overhead cost.
How Pacific Legal Can Empower Your Business & Why Choose Us?
Setting up a startup needs first-rate legal assistance, but employing a full-time lawyer, since such a lawyer often costs more than $200,000 a year, is a serious financial strain.
Pacific Legal Professional Corporation provides fractional general counsel services by incorporating highly qualified lawyers directly into your executive team. We offer proactive, hands-on legal advice on a flexible retainer or project basis, avoiding the full-time costs.
If you are raising funds, launching in regulated areas, or growing your business very fast, we do the hard work for you.
- Putting together the commercial agreements
- Coordinating external specialists
- Reducing the possible risks
You’re welcome to hand over business negotiations to us and focus on developing your business as efficiently as possible. We are with you from start to end to protect your capital. Our presence is your guarantee.
Frequently Asked Questions
A fractional general counsel, or a GC-on-demand, is a professional legal expert who advises and helps businesses with general counsel-related matters. Businesses are not limited to having their legal advisor by hiring only a full-time executive. In other words, fractional general counsel enables companies to have a legal officer on the main board without paying full-time executive salaries for that position. Fractional general counsels provide the same services of legal planning, giving support, and handling legal risks as an in-house lawyer or a chief legal executive would do.
Unlike a general counsel, a fractional general counsel performs a different function. They mostly handle general business legal issues and act as the primary legal counsel for businesses. Besides their regular point-of-contact tasks, they can work as a legal director and deal with contract compliance, corporate governance issues, HR-related workplace conflicts and legal concerns, give opinions to the board of directors, and direct the legal department. The strategy of hiring a fractional general counsel, in this way, enables you to maintain legal costs within a minimum range and be assured that the legal services are delivered effectively.
If the amount you pay in the given circumstances hinges heavily on the nature and extent of the work as well as the pricing model adopted, there could be several factors in the payment; for instance, it can be a monthly retainer, a project fee, a flat rate, or even a day rate. Because it is significantly more cost-effective than employing a full-time in-house General Counsel, it gives small-sized enterprises the advantage of getting legal expertise at a much, much, much lower cost.
There are also several number of circumstances where a firm may find it appropriate to hire legal advisory services partially rather than fully: the firm is rapidly growing, it’s about to close a major funding round, a series of complex agreements has been signed with suppliers or clients, a supervisory regulatory agency is scrutinizing its work, and/or the company founders are frustrated because, instead of devoting all their time to business development, they feel that they spend so much of it on legal matters.
While the company does not employ them, these two types of legal service providers fulfill different functions. A lawyer from outside the company office is usually called in when a specific transaction or court-related matter is to be dealt with. On the other hand, the fractional GC will always be around; they will be one of the senior staff you can go to for everything. Very soon, they can be your most trusted person at a high management level, can give you complete company insight, and from then onwards will manage legal work within the company like part of your staff.
The role of an in-house attorney is filled by an employee in an employment role employment that is exclusive, full-time, and permanent role, where the lawyer dedicates all of his or her working hours to the company’s tasks and interests. In contrast, a fractional general counsel is a contractor or an outsourced lawyer who collaborates with the company only occasionally, typically part-time, while also serving other clients on their side.
Absolutely. Outsourced general counsel for small businesses and startups is one of those ways they can gain a competitive advantage. It gives them access to top-tier legal services and strategic planning, without having to take on the associated costs. This is often the case with large enterprises where such services are a given.
Contract-related functions are among a fractional GC’s core responsibilities, including contract review and negotiation. They ensure commercial agreements, vendor contracts, and client terms of service are drafted in a legally sound, commercially attractive, and business-protective way.
Providing M&A legal support is often the most compelling reason a business hires a fractional GC. They handle the complex due diligence process, negotiate term sheets, draft the definitive contracts for the deal, and coordinate with external specialist M&A lawyers to get the deal approved and closed smoothly.
No. A fractional GC is your legal point man, as it were. Most of the time, you’ll rely on them internally for legal matters. However, you will still call on external law firms for highly specialized work like commercial litigation, complex tax, or patent prosecution.
When a company goes through many changes, it often faces legal issues and, at the same time, is determined not to make costly errors. This sort of situation makes it highly profitable to have a legal expert working on an outside basis. One legal misstep can cause big problems for the business; let’s say, for example, that the fundraising has been arranged incorrectly, or that the company has been forced into a lawsuit after an employee has been wrongfully dismissed based on a legal misunderstanding. That’s why it is very wise to have a fractional general counsel not just for a matter of cost-saving but to prevent the company from suffering serious damages in such cases.
