Ritter and Taylor: Tips for new lawyers to collaborate with in-house counsel

Fostering productive and mutually beneficial relationships between in-house and outside counsel requires intentionality and key fundamental knowledge. As outside counsel in our first year of practice, we want to share four straightforward tips for new corporate attorneys to help identify critical knowledge areas and guide a relationship between in-house and outside counsel toward success.

Building relationships

As outside counsel, one of the most critical factors in helping clients reach their business goals is building a strong, collaborative relationship with in-house counsel.

This partnership is not just about providing legal advice; it’s about aligning efforts with the company’s strategic objectives. In-house counsel brings invaluable insight into the company’s operations, culture and long-term vision, while outside counsel provides specialized legal expertise to navigate complex challenges.

To cultivate this relationship, outside counsel must first create a productive partnership. That starts by thoroughly understanding the client company—its history, product line, market share and competitors.

Performing a SWOT analysis (assessing the company’s strengths, weaknesses, opportunities and threats) enhances outside counsel’s understanding of the business and reinforces to in-house counsel a genuine commitment to their success.

Equally important is establishing a seamless flow of communication, allowing both teams to quickly address immediate challenges and anticipate potential future issues.

When outside counsel understands both the business and legal landscape, advice is proactive and tailored to the company’s goals.

This collaboration not only helps the company stay ahead of legal hurdles but also ensures that every decision supports its overarching objectives, driving success across both legal and business fronts.

For-profits and nonprofits

As outside counsel working with both for-profit and nonprofit organizations, there are often clients who are unsure about how their corporate structure impacts their legal obligations and operational strategies.

While both types of entities share the goal of achieving success, their underlying missions and organizational frameworks differ significantly. Understanding those distinctions is key to ensuring compliance and aligning legal strategies with their core objectives.

For-profit corporations are primarily driven by the need to generate financial returns for their shareholders.

Their organizational structure is typically hierarchical, with a focus on efficiency, profitability and growth. The board of directors, executive leadership and management teams all work toward enhancing the company’s market position and increasing shareholder value.

For-profit clients often seek advice on matters such as mergers and acquisitions, securities regulations and risk management—all aimed at protecting and increasing the company’s bottom line. Legal advice in these settings is closely tied to the company’s financial goals, ensuring they navigate the complex landscape of corporate law while safeguarding their profit-driven objectives.

Nonprofit organizations operate with a mission-first approach. These entities are structured to serve a social, educational or charitable purpose, and their operations are guided by a board of directors dedicated to the organization’s mission, rather than maximizing profit.

For nonprofits, the focus is maintaining compliance with tax-exempt status, managing donations and grants and ensuring resources are directed toward fulfilling their cause.

Offering legal counsel to nonprofit organizations typically involves navigating the specific legal requirements surrounding fundraising, distributions, governance and tax law, all while ensuring the organization’s mission remains central to its operations.

The key takeaway for both for-profit and nonprofit organizations is that their legal strategies must align with their structural goals.

For-profit entities must prioritize compliance in ways that protect financial performance, while nonprofits need to maintain transparency and compliance to continue their work for the greater good. Understanding those operational differences is crucial for both businesses and their legal advisers in achieving long-term success.

Key provisions

Outside and in-house counsel can more effectively collaborate to achieve a company’s goals when both have a thorough understanding of the key provisions in operative documents such as operating agreements, bylaws and purchase agreements.

This understanding is crucial for managing a company’s legal risk and ensuring compliance during corporate governance activities or transactions. These agreements outline critical aspects of an entity’s operations, decision-making processes and ownership rights. As such, they become foundational when outside and in-house counsel work together.

One common activity that typically engages both in-house and outside counsel is due diligence.

Key provisions often identified for review during due diligence include restrictions on member or shareholder transfers, voting thresholds for significant decisions of owners or those operating the entity, indemnification clauses and noncompete agreements.

When in-house counsel collaborates with outside counsel to analyze those documents with a strategic lens to identify ambiguities, inconsistencies or provisions that deviate from standard practices early in due diligence, in-house counsel can help prevent disputes, uncover hidden liabilities and provide leverage during negotiations.

A focus on how the provisions within key documents align with a company’s goals and risk tolerance enables in-house counsel to communicate expectations clearly to outside counsel so that outside counsel can advance the client toward achieving their business goals within the relevant governance framework. That collaborative approach also ensures adherence to applicable laws and best practices for the company.

Asset and equity transactions

Understanding the distinctions between an asset sale and an equity sale transaction is essential for in-house counsel when navigating mergers and acquisitions with support and collaboration from outside counsel.

Each structure carries unique legal, tax and business implications that outside counsel can assist with structuring, while in-house counsel needs to articulate the business priorities and risk tolerance as it relates to the appropriate structure.

Choosing a structure from the outset of a transaction that reflects the priorities of in-house counsel facilitates efficiency and minimizes cost by preventing, to the extent possible, a significant change in deal structure midway through a transaction.

In an asset sale, the buyer acquires specific assets and liabilities of the target company, allowing for greater control over which obligations are assumed, but sometimes requiring more complex assignment and transfer processes for contracts, licenses and regulatory approvals.

An equity sale involves purchasing the ownership interests (e.g., stock for a corporation or membership units for a limited liability company) in the target entity, resulting in the transfer of all assets, liabilities and ongoing obligations to the buyer.

Outside counsel can most effectively assist with choosing the appropriate transaction structure from the outset of a transaction when in-house counsel understands and communicates a company’s risk tolerance and strategic objectives related to factors such as liability exposure, tax consequences and deal complexity.

When in-house counsel engages outside counsel during the early stages of structuring merger and acquisition negotiations, typically before a letter of intent is signed or term sheet is agreed to, there is more effective collaboration to facilitate achieving the parties’ strategic objectives.

Conclusion

Building a positive working relationship between in-house and outside counsel starts with trust and communication. A mutually beneficial relationship expands with early engagement of outside counsel to structure transactions and navigate key governance terms so that new lawyers can facilitate a win-win for clients.•

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Associates Gavin Ritter and Susanna Taylor are members of the corporate practice in the Indianapolis office of Dentons. Opinions expressed are those of the authors.