Author: Attorney-at-law Aleksandar Popović
Anyone running a company knows that legal issues tend to arise at the worst possible moment. While everything is going smoothly, legal prevention may seem like an unnecessary expense and unwelcome pessimism. But when a problem surfaces, it’s often too late to intervene. A single error in a contract clause can cost a company as much as its entire monthly revenue.
When considering legal support for a company, three common models of cooperation emerge:
- Hiring an in-house lawyer
- Engaging an attorney on an ad hoc basis
- Engaging an attorney on a retainer basis
Hiring an in-house lawyer
This model appears to be the safest solution. The company gains someone who is available daily, integrates into the business environment, and understands the company’s operations in detail. Management feels in control and perceives this as the fastest way to operate.
However, this model comes with high costs: salary, taxes, contributions, paid leave, sick days, bonuses, and other incentives—especially if the company wants to retain a motivated and ambitious legal professional.
Additionally, in-house lawyers often have limited exposure to diverse legal scenarios. They know their company well but may lack the broader perspective gained from working with multiple clients or industries.
Lawyers with broader experience—especially those who are licensed attorneys and can represent the company in court—typically expect significantly higher compensation. The monthly budget required in such cases often exceeds the cost of legal services provided by an external attorney.
In summary, this model offers loyalty and availability but at a high price for a limited scope of services and experience.
Ad hoc engagement of an attorney
This is the most common choice for small and medium-sized businesses because it’s flexible, simple, and seemingly the most economical.
Occasional legal assistance aligns with “lean” business logic: an attorney is hired only when a problem arises. There are no fixed costs, contractual obligations, or the need to create work when there’s none. Payment is made only when services are used—clear, simple, and seemingly cost-effective.
Unlike an in-house lawyer, an external attorney can better anticipate risks—having seen similar issues with other clients—and can be easily replaced if the collaboration doesn’t work out.
As the company grows and faces legal issues cyclically, this model offers freedom and flexibility: attorneys are chosen by specialty, collaboration is tested without commitment, and management often relies on personal networks for quick responses. For one-off cases, this approach is efficient and justified.
However, this flexibility is also its main drawback. Each time an attorney is engaged, they must study the legal context from scratch, often with insufficient information about the company’s operations. In practice, this means slower collaboration, longer onboarding, and often higher costs than initially expected.
A one-time attorney (or worse, a different attorney each time) doesn’t know the company’s history with partners, typical contract clauses, or past business risks. There’s a difference between a company representative’s emotionally influenced version of events and an attorney’s neutral, independent assessment. Thus, the advice may be accurate but not necessarily strategic.
One-time engagements also carry a higher cost per unit of work due to:
- Lack of planning—attorneys must allocate time outside of regular commitments and take on responsibility without a long-term trust relationship. It’s like buying a plane ticket last minute versus booking weeks in advance.
- Urgency—when problems arise, solutions are more expensive. You’re not paying for the attorney’s knowledge but for their availability, stress, and urgency. It’s like paying a mechanic when your engine overheats versus regular oil changes.
- Economies of scale—larger volumes reduce costs. Think of buying a single item at a supermarket versus bulk purchasing.
Retainer-based engagement of an attorney
An attorney engaged on a retainer basis follows the company’s operations as if part of the team: familiar with internal procedures, partners, communication style, and risks—without burdening the company with salary, taxes, contributions, or labor law obligations. The contract defines the monthly scope of legal support and a fixed retainer fee.
Unlike ad hoc engagement, the retainer model offers stability and a predictable monthly cost, with no surprises—even when work expands or is delayed. The price doesn’t increase with the number of services provided, and time isn’t wasted on explanations or reviewing documents from scratch. Advice is delivered faster, more precisely, and with reduced risk of future errors. This highlights the difference between the reactive approach of one-time attorneys and the proactive approach of retainer-based attorneys.
Mistakes can still happen with retainer-based attorneys, but they’re less likely due to their integration into the company. Unlike in-house lawyers, who may be financially penalized for mistakes (though such penalties rarely cover the actual loss), attorneys are required to carry professional liability insurance—maximizing the possibility of compensation for damages caused by professional errors.
Retainer-based attorneys, though integrated into the system, maintain independence and professional distance—offering a more objective approach. This results in an attorney who can alert the business owner to an approaching deadline for legal action, a legislative change that enables business optimization, or ways to protect their position during ownership restructuring.
Conclusion
Legal security is not a luxury. In fact, its cost is lower than that of a single poor business decision—and it can never hurt.
A legal retainer isn’t just another expense—it’s an investment in a business partner who saves time, money, and nerves.
In business, every decision has its cost—but also its value. Although retainer-based engagement may seem like a hybrid between the first two models, in practice it proves to be the most rational and predictable option.
