There are many ways to structure a legal department. As the saying goes, there’s more than one way to skin a cat.
While some teams have a single legal hire, some employ over 100 in-house lawyers, while others have no legal department to speak of and depend on outside counsel. There is no one-size-fits-all legal department structure. Instead, the layout of legal teams depends on the size of the business, the legal practice areas, and the sophistication of the legal function.
On average, companies with less than $1B in revenue average anywhere from three to six legal team members, while companies that net more than $20B average 98 legal staff. Obviously, the six-person legal department is structured very differently from the 100-person team and includes a smaller range of titles for in-house counsel.
So how do companies decide how to structure the titles within their legal department? When do you bring on a General Counsel (GC) versus a Chief Legal Officer (CLO)? Should you go for a flat or a layered department structure? These are important questions to consider as you build out your legal function.
And the ever-true legal answer to these questions is: it depends.
Wait, isn’t the General Counsel (GC) the same as the CLO (Chief Legal Officer)? This is a common question for an executive who is starting to build out their legal department. While these two roles perform similar functions, they can exist as two distinct positions, depending on the needs and structure of the business.
While GCs tend to direct the more tactical aspects of running a legal department — managing direct reports and acting as the primary lawyer of the business — the CLO tends to be a more strategic business partner and often has a seat at the executive table. There are also often other teams reporting to the CLO, like HR or Finance.
However, this distinction can be a little blurry. Firstly, it is rare for businesses to have both a CLO and GC. Given shifts in the function of the legal department over the last few decades, the GC can be both a tactical and strategic arm of the business. With legal teams required to contribute to the bottom line and do more than just protect the business from risk, the GC is often the de facto head of these strategic initiatives and therefore has a seat in executive meetings.
Second, if a company does have both CLO and GC, it’s often to ensure the smooth transition of power from the old head of legal to the new one or because the company is large enough that there is little to no overlap between their roles. Otherwise, it would be difficult to know who the head of the department is, and egos can be bruised in the process.
Whether or not you employ a CLO or GC depends on your business’s legal needs, as well as size, practice areas, and industry. These factors also influence the way other legal titles are constructed.
Should you hire an Assistant General Counsel or an Associate General Counsel? And what are the differences in their roles in the company? Like the GC vs. CLO consideration, this is often more company-specific than it is set in stone.
Some companies have both, and some have neither. Likewise, while in some companies the Associate GC is higher ranked than the Assistant GC, in other companies, the reverse is true. This is likely why some in-house counsel struggle to determine where they will land on the legal food chain when they jump from one company to another.
By the same token, some teams build out subordinate roles using business-specific variables. For example, some organizations honor a flat structure in which everyone under the GC has the same level of authority, while others are more layered by practice area or seniority.
There are no hard and fast rules about how to structure your department. It is different for every business and varies from industry to industry. Here are some factors that can help determine how you structure your legal department titles.
The size of your company will significantly influence how you structure the titles. Smaller companies tend to have fewer legal team members, whereas bigger enterprises have a more robust team and a wider range of generalists and specialists.
As a result, the legal department titles in smaller companies might be more generic — Director of Legal, Commercial Counsel, Legal Ops Manger, etc. — while larger companies have more complex titles that reflect functional areas of practice (e.g. Associate GC of Privacy and Technology ).
The company size also often dictates whether or not organizations have a flat versus layered structure to their team titles. At smaller organizations, for example, there’s often a head of legal and a few in-house legal teammates that report to them. At larger companies, on the other hand, there might be a couple of Assistant or Associate General Counsels who report to the GC and junior and senior counsel employees that report to them.
The practice area is another way of determining legal department titles. Function-specific titles tend to exist in more layered departments in bigger companies.
For example, roles like IP Counsel, Data Privacy Officer, and Compliance Officer are more needed as companies grow and specialties are needed. Each practice area can have its own hierarchy, existing parallel to one another.
This is more the case in larger companies than smaller ones since companies with lower revenue tend to require their sole in-house counsel to wear more hats and assume a generalist role.
Industry can also determine the structure of legal department titles. For example, some heavily regulated industries like finance and healthcare are more likely to require a Chief Compliance Officer to ensure that the company is up to date on regulations.
Further, companies that meet the criteria of several data privacy laws would need more data privacy specialists on their teams than those who don’t and might build their entire team structure around that need. Likewise, B2B SaaS companies would have a more functional use for Product Counsel than B2C eCommerce companies.
While several resources can guide you in developing your legal department titles, much of the structure will be determined by your company size, industry, and strategic needs. For more tips and insight into legal department function, subscribe to LinkSquares blog.