Business Law

Outside General Counsel vs. Hourly Firms: How Growing Companies Should Buy Legal Services

By Ingrid Rainey · March 3, 2026 · 7 min read

Companies between roughly 10 and 200 employees face a structural problem: they generate enough legal work to need continuity, but not enough to justify a full-time general counsel. The three ways to solve it — hourly outside firms, a flat-fee outside general counsel relationship, and an in-house hire — differ less in total spend than in behavior. The model you choose determines whether people in your company pick up the phone before a problem hardens.

Key takeaways

Hourly billing works well for discrete, high-stakes projects: a financing, an acquisition, a lawsuit.
A monthly flat fee scoped to expected volume, with defined inclusions.
A full-time California general counsel typically costs well into six figures in salary before benefits, equity, and overhead.
Pre-revenue or early: project-based hourly work for formation, founder documents, and the first customer template.

The hourly model

Hourly billing works well for discrete, high-stakes projects: a financing, an acquisition, a lawsuit. It works poorly for the steady stream of small questions that make up most of a company's legal life, because every question carries a metered cost and an unknown total.

The predictable failure mode is not overspending. It is underspending — a manager sends the contract unreviewed because a review felt like it would cost more than it was worth, and the problem surfaces two years later.

The outside general counsel model

A monthly flat fee scoped to expected volume, with defined inclusions.
Unlimited or generously bounded routine questions, so calling is free at the margin.
Standard contract review and template maintenance within scope.
Employment and compliance guidance as issues arise, rather than after.
Larger projects and litigation quoted separately, usually at a preferred rate.

The in-house hire

A full-time California general counsel typically costs well into six figures in salary before benefits, equity, and overhead. That is a rational purchase when legal volume is genuinely continuous, when a specific regulated function requires day-to-day presence, or when the company's scale demands an internal owner.

Below that threshold, the practical outcome is often a generalist handling work outside their specialty and retaining outside counsel anyway.

Have a question about your situation?

Rainey Law P.C. advises San Diego businesses and employees on matters like this one.

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Choosing by stage

Pre-revenue or early: project-based hourly work for formation, founder documents, and the first customer template.
Growth stage with employees: outside general counsel, where the recurring value is employment, contracts, and compliance rhythm.
Scaling with multi-state or regulated operations: outside general counsel plus specialist counsel for regulatory matters.
Enterprise scale: in-house lead with outside counsel for litigation and specialty work.

What to ask before signing anything

What is explicitly in scope, and what triggers a separate quote?
Who handles the work — the named attorney or a rotating bench?
What is the expected response time for routine questions?
How does the fee adjust as headcount or volume changes?
What does exiting look like, and who owns the templates you built together?

Frequently asked questions

How much does outside general counsel cost in San Diego?

Monthly flat fees are scoped to volume and complexity rather than a single market rate. The purpose of the structure is predictability, so the engagement should state exactly what is included before you sign.

Can outside general counsel handle litigation too?

Usually as a separate engagement. Keeping routine counsel and active litigation on distinct fee structures avoids one absorbing the budget for the other.

When does hiring in-house make sense?

When legal work is genuinely continuous, when a regulated function requires daily presence, or when the volume of routine questions exceeds what a flat-fee relationship can reasonably absorb.

This article is general information, not legal advice, and does not create an attorney-client relationship. Outcomes depend on the facts of each matter.

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