News in Practice

Sole counsel: carrying the legal function of a company that is growing

An answer given verbally on a Tuesday, in three minutes. What it becomes eighteen months later, and why you could not have done it otherwise.

For sole counsel and heads of legal in small organisations. What makes the position untenable beyond a certain volume, and where to act first.

Tuesday, 3 p.m. A salesperson puts his head round the door and asks whether a liability cap at six months' fees is acceptable on a contract under negotiation. You know the client, you know the stakes, you answer yes provided confidentiality breaches are carved out. Three minutes. The answer is right. It will exist nowhere.

Eighteen months later

Another salesperson, on another contract, asks a related question about an equivalent cap. You answer again, still from memory, and this time you do not mention the confidentiality carve-out. Not through carelessness: because the context of the first answer has gone and you do not remember imposing that condition.

Two contracts with the same client now carry liability clauses that do not match. Both are defensible. Neither is the result of a conscious decision to treat those situations differently.

Nobody notices, and there is no reason anyone should. The contracts live separately, each in its own folder, and nothing brings them together.

What you could not see

At the moment you answer the second time, nothing signals that the question has been asked before. Not the salesperson, who was not there the first time. Not the contract, which is new. Not your memory, which has handled several hundred subjects since.

That is the blind spot peculiar to the position: you are the organisation's only memory, and a memory does not interrogate itself. It returns what it is asked to return, provided one knows there is something to ask for.

What happened in between

Between the first Tuesday and the second, you handled roughly four hundred questions of that kind. Contracts, employment matters, a customer complaint, two compliance points, preparation for a shareholders' meeting.

None of them was difficult taken alone. That is precisely what makes the position bearable day to day, and it is also what makes it fragile over time: nothing ever justifies stopping to write.

Of those four hundred, around thirty produced a written record, because a written record was needed for a third party. The other three hundred and seventy produced a verbal answer or a short message, and nothing else. That is the normal proportion in a small organisation, and it would be the same in any other.

You are therefore, on your own, the support for three hundred and seventy legal decisions. Not their author, which would be normal, but their support: the only place where they still exist.

When it surfaces

An investor comes into the capital. The legal review lists the material contracts and compares the liability clauses. The discrepancy appears within two hours.

The question asked is not “why do these clauses differ”, which would have an answer. It is: does the legal function of this company follow a policy, or does it decide case by case? That is a question about governance, not about law, and it is difficult to handle because it is well founded.

You know that you follow a policy. You cannot demonstrate it, since what would constitute it — the decisions and their reasoning — was never written down.

Documenting for yourself has no immediate use. It is a rational economy, and it becomes expensive the day a third party looks.

The immediate cost is a few days of work to reconstruct and explain. The real cost lies elsewhere: it bears on the confidence placed in the legal function within the rest of the process, and it is not recovered within the timetable of the transaction.

Why you could not have done otherwise

Someone may have told you that you should have documented. That is easy to say and it is wrong.

It has to be said plainly, because the reproach is usually framed backwards: not documenting was the right calculation. Sole counsel who wrote down the reasoning behind every decision would add a task whose immediate usefulness is not obvious.

The arithmetic is simple to set out. Writing the reason for a decision takes two to three minutes. Across four hundred decisions a year, that is around fifteen hours, or two full days. That is not enormous in absolute terms, and it is enormous relative to what those two days produce immediately: nothing.

Documentation for oneself has no use value. It acquires value only when a third party arrives, and that moment is unpredictable. That is what makes the trade-off impossible to settle rationally day to day, and it is why every sole counsel makes the same choice.

What outside counsel does not solve

The usual answer to an overloaded sole counsel is to outsource more. It genuinely relieves the load, and it displaces the problem without addressing it.

The firm produces a high-quality deliverable, often better than what you would have produced yourself. It does not preserve, for your organisation, the context in which the question arose or the internal decisions that preceded it. It cannot: it has no access to them.

You therefore end up with excellent advice and no continuity between the pieces, because the only point of continuity remains you. Outside counsel increases the material to be held without increasing the capacity to hold it, and it adds a category of documents that nobody will connect to the decisions they supported.

Where to act

Externalise the decision, not the document. The signed contract is already preserved; what will be missing is the reason a particular clause was accepted.

Make what has already been answered consultable. That is the only realistic protection against inconsistency, and it applies first of all to yourself two years later.

Attach outside counsel's deliverables to the internal question that prompted them, failing which they remain isolated items.

These three actions have one thing in common: they do not require any additional discipline. A new discipline imposed on someone handling four hundred questions a year will not survive three months, and it would be dishonest to suggest otherwise. What can survive is preservation as a by-product of the work rather than as an added task.

The point is not to replace you, nor to protect the company against your departure. It is to stop being the mandatory crossing point for every legal question, which is the condition for becoming an adviser again rather than a counter.

There is a second benefit, less obvious, which appears at the moment of growth. A company hiring a second lawyer generally finds that the newcomer takes six to nine months to reach full capacity, not for lack of competence but because everything they must learn sits with one person who has no time to transmit it. That delay is the deferred cost of what was never externalised.