Doing business in Kazakhstan involves addressing numerous legal issues. Companies must review contracts, prepare personnel documents, comply with legal requirements, interact with government agencies, and protect their interests in the event of disputes.
Therefore, many entrepreneurs are faced with the question: should they hire an in-house lawyer or outsource legal support to an external consulting company?
Both options have their advantages. However, for small and medium-sized businesses, legal consulting is often a more flexible and cost-effective solution. It allows for professional assistance without the need to employ a dedicated specialist.
Let's figure out how these formats differ and which one is better suited for different companies.
Who is an in-house lawyer?
An in-house lawyer is a specialist who works directly with a company on a full-time basis. They are part of its structure, familiarize themselves with internal processes, and provide legal support for its day-to-day operations.
The responsibilities of an in-house lawyer typically include:
- preparation, verification and approval of contracts;
- consultations with management and employees on legal issues;
- preparation of internal company documents;
- support of labor relations;
- interaction with government agencies;
- claims work and representation of the company's interests in courts within the limits of authority;
- monitoring changes in legislation affecting the organization's activities.
The main advantage of a full-time specialist is their constant presence within the company. They have in-depth knowledge of its structure, operational specifics, and the history of emerging issues.
At the same time, maintaining a full-time lawyer requires regular expenses for wages, taxes and social contributions, workplace organization, and other related costs.
What is legal consulting and legal outsourcing?
Legal consulting is the receipt of professional advice and legal assistance from an external law firm or independent specialists.
Legal outsourcing is a broader form of cooperation in which a company outsources certain legal functions to an external provider. This type of support can be one-time, project-based, or ongoing.
Depending on the business needs, the external team may be involved in:
- preparation and verification of contracts;
- legal consultations;
- corporate issues and registration changes;
- support of labor relations;
- claims and litigation work;
- interaction with government agencies;
- assessment of legal risks;
- ongoing legal support for the company's activities.
This allows businesses to access professional legal assistance without having to establish their own legal department.
The scope of services, deadlines for completing tasks, the procedure for interaction, and cost are determined by the terms of the contract.
In-House Lawyer vs. Legal Consulting: Key Differences
To choose the right format, it is important to compare not only the costs but also the capabilities of each option.
| Criterion | Staff lawyer | Legal consulting |
|---|---|---|
| Expenses | Constant costs of maintaining a specialist | The cost depends on the terms of the contract and the scope of services |
| Competencies | Experience and specialization of one employee | Possibility of attracting specialists from different fields |
| Number of specialists | Usually one lawyer | If necessary, a team of experts |
| Immersion in business | Permanent presence within the company | Formed in the process of cooperation |
| Continuity of work | Depends on the availability of a specific employee | Possibility of distributing tasks between team specialists |
| Flexibility | Depends on the employee's work schedule and workload | The required scope of support can be agreed upon |
| Scaling | An expansion of the legal department may be required | It is possible to change the scope of services within the contract |
Each format has its own unique characteristics. An in-house lawyer ensures a permanent presence within the company, while legal consulting allows for the outsourcing of external resources in line with current business objectives.
Benefits of legal consulting
For many companies, working with an external legal team is becoming a convenient alternative to retaining an in-house specialist. Let's look at the main advantages of this solution.
1. Cost optimization
Employing an in-house lawyer involves more than just salary. The employer also bears the costs of taxes, social security contributions, workspace, equipment, and other organizational issues.
When providing legal consulting services, the company pays for services based on the terms of the concluded agreement. This allows us to tailor the format of our collaboration to the number and complexity of our legal tasks.
This approach is especially relevant for small and medium-sized businesses: there is no need to maintain a separate position if the specialist's ongoing workload is small.
2. Access to a team of specialists
A single lawyer cannot always possess equal depth of understanding across all areas of law. Moreover, a business may simultaneously require expertise in corporate, tax, labor, and contract law.
Legal consulting provides the opportunity to consult with specialists with different competencies.
For example, when changing the composition of a limited liability company's participants, assistance with corporate matters may be required. When concluding a complex contract, assistance with analyzing the contractual terms may be needed. If a labor dispute arises, assistance with labor law consultation may be needed.
An external team allows you to attract the necessary competencies depending on the specific situation.
3. Saving the manager's time
It is important for the company's manager to focus on business development, working with clients and managing the team.
However, legal issues can take up a significant portion of working time: negotiating contracts, preparing documents, consulting with employees, and interacting with government agencies.
Delegating these tasks to professional consultants helps reduce the administrative burden on management.
4. Reducing legal risks
Errors in contracts, corporate documents, or personnel records can lead to financial losses and disputes.
Professional legal support helps promptly identify potential risks, verify documents, and choose legal solutions to emerging issues.
In addition, legal consultants monitor legislative changes and help take them into account when working with clients, partners, and employees.
5. No dependence on one employee
If a full-time lawyer falls ill, goes on vacation, or resigns, some legal tasks may be temporarily left unattended.
When working with a consulting company, tasks can be distributed among team members. This reduces the business's dependence on a single employee.
The specific procedure for substitution and the timeframe for completing tasks depend on the terms of the contract and the organization of the contractor's work.
6. Flexibility and individual approach
Not every company requires the same amount of legal support.
Some businesses may only need periodic contract reviews and consultations. Others require regular support for corporate matters, HR processes, and interactions with government agencies.
Legal consulting allows us to agree on a list of services taking into account the specifics of the company's activities and, if necessary, revise the scope of work.
Potential Disadvantages of Legal Outsourcing and How to Eliminate Them
Despite its advantages, outsourced legal support has its own unique features that are important to consider when choosing a contractor.
1. Insufficient knowledge of the company's internal processes
External specialists are not always immediately familiar with the specifics of a business, its structure and internal procedures.
To avoid misunderstandings, it is important to provide consultants with the necessary information about the company, its activities, and its main legal objectives at the initial stage of cooperation.
It is also useful to identify responsible employees for prompt interaction.
2. Privacy issues
During the course of their work, lawyers may be provided with contracts, financial documents, employee information, and other sensitive information.
Therefore, before starting cooperation, it is necessary to agree on confidentiality terms, the procedure for transferring and storing documents, as well as the responsibilities of the parties.
Particular attention should be paid to the provisions of the data protection agreement.
3. Dependence on the quality of services of an external company
The result of cooperation largely depends on the professionalism of the consultants and the organization of their work.
Before signing a contract, it is recommended to study the company's experience, its areas of activity, customer reviews, and terms of service.
It is also important to determine in advance the list of services, response times to requests, the procedure for coordinating documents, and the responsibilities of the parties.
What is more profitable for small, medium and large businesses?
The choice between an in-house lawyer and a legal consultant depends on the size of the company, the number of legal tasks, and the complexity of its activities.
Small business
For small companies, retaining a dedicated lawyer is often not cost-effective. The number of legal tasks may be insufficient to fully support the specialist.
In such a situation, legal consulting allows you to receive assistance as needed and avoid the ongoing costs of maintaining a separate position.
This is especially convenient for companies that need contract review, consultations, document preparation, and support on specific legal issues.
Medium-sized businesses
As the company develops, the number of contracts, employees, partners, and corporate tasks increases.
Legal outsourcing allows you to receive regular support and, if necessary, expand your range of services.
If the volume of legal work becomes significant, a company may consider a combination of retaining one lawyer within the organization and outsourcing complex or specialized tasks to external consultants.
Big business
Large companies with many divisions, employees, and complex business processes often need their own legal department.
In-house lawyers provide ongoing support for internal matters, while external consultants may be retained for specific projects, complex disputes, or tasks requiring specialized expertise.
Thus, for large businesses, legal consulting often serves as a supplement to the in-house legal service.
Legal Framework for Legal Outsourcing in Kazakhstan
The provision of legal services and interaction between the client and the contractor are carried out within the framework of the legislation of the Republic of Kazakhstan.
When organizing such cooperation, the following regulations must be taken into account:
1. Civil Code of the Republic of Kazakhstan.
Defines the general principles of civil legal relations, including contractual obligations and the procedure for the provision of services.
2. Labor Code of the Republic of Kazakhstan.
It regulates labor relations and the rights and obligations of employers and employees. Its provisions are particularly important in distinguishing between labor relations and contractual interactions with external contractors.
3. The Law of the Republic of Kazakhstan "On Advocacy and Legal Assistance".
Establishes the legal basis for advocacy and the provision of legal assistance, as well as the relevant requirements for participants in this area.
When choosing a legal consultant, it is important to consider the nature of the services provided, the legal status of the contractor, and the terms of the concluded agreement.
How to choose the appropriate format of legal support?
Before making a decision, we recommend evaluating several factors:
- Number of legal tasks. How often does the company require consultations, document preparation, and contract review?
- The complexity of the issues. Is a single, generalist needed, or experts in various areas of law?
- Budget. How justified are the ongoing costs of a full-time employee?
- Speed of work. What response and task completion times does the business require?
- Confidentiality. What documents and information will be transferred to the contractor?
- Liabilities of the parties. What obligations and guarantees should be included in the contract?
If legal issues arise regularly and require the constant presence of a specialist, an in-house lawyer may be the right solution.
If a company requires professional assistance in various areas without establishing its own legal department, it is worth considering legal consulting.
In some cases, a combination of both formats is the optimal solution.
Conclusion
The choice between an in-house lawyer and a legal consultant depends on the needs, scale, and specifics of the business.
An in-house specialist ensures a constant presence within the company and intimate knowledge of its internal processes. External legal consulting allows for the engagement of specialists in various fields, flexible scope of services, and optimization of legal support costs.
For small and medium-sized businesses, legal outsourcing is often a practical solution. Large companies can use it to complement their in-house legal department.
EGSAT Consulting offers legal support for businesses in Kazakhstan. We help companies resolve current legal issues, prepare and review documents, support corporate processes, and obtain professional advice.
If your business requires legal support, contact EGSAT Consulting. We will help you determine the appropriate support format based on your company's objectives.
EGSAT Consulting — providing legal support to businesses in Kazakhstan since 2007.
Regulatory acts used
- Civil Code of the Republic of Kazakhstan.
- Labor Code of the Republic of Kazakhstan.
- Law of the Republic of Kazakhstan "On Advocacy and Legal Assistance".
