How a Fractional General Counsel Is Actually Engaged

What the engagement structure decides

Most conversations about hiring a fractional General Counsel stop at scope and day rate. What gets skipped is the structure of the engagement itself. Is this person your employee for a day a week, or a contractor invoicing you alongside four other companies? Each answer changes their licence, your privilege, and who is covered when advice turns out to be wrong.

The distinction matters because legal regulation in every market treats in-house lawyers as a special case, and the exception is usually written around a single employer. Spread the same lawyer across several businesses and the exception stops fitting neatly. Good fractional counsel have already worked this out and structured around it. The ones who have not are a problem you inherit.

Australia: which practising certificate applies

Under the Legal Profession Uniform Law, a corporate legal practitioner is a lawyer who engages in legal practice only in the capacity of an in-house lawyer for their employer or a related entity. A related entity means a related body corporate under section 50 of the Corporations Act, so a corporate certificate covers the group and stops at its edge.

The Victorian Legal Services Board puts the boundary plainly in its guidance on renewals. A principal practising certificate is not required for someone solely employed as in-house counsel, and it is required where the lawyer advises clients outside their employment arrangements. A lawyer serving several unrelated businesses on their own account is doing exactly that, which brings the obligations of a principal certificate with it, including approved professional indemnity insurance.

Two practical consequences follow. A fractional General Counsel who is genuinely employed part time by your company, on a payroll contract, may sit under a corporate certificate. One who invoices you as a contractor alongside other clients generally should not be relying on one. Contractor and consultant are not practising certificate categories, so the label on the engagement letter settles nothing.

One more thing to keep in view. The Uniform Law applies in New South Wales, Victoria and Western Australia. Queensland, South Australia, Tasmania, the ACT and the Northern Territory run their own legal profession schemes, so the terminology and the categories differ. Practising without the required certificate carries a penalty of 250 penalty units, two years imprisonment, or both.

Sources: Legal Services Council, Corporate lawyers information sheet (July 2022); VLSB+C, applying for or renewing a practising certificate; Law Society Journal, solicitor consultants and independent contractors.

Privilege, and why independence is the whole argument

Legal professional privilege belongs to the client. You hold it, and you are the one who loses it if a court decides it never attached. That makes this your question rather than your lawyer's.

The Australian test comes from Waterford v Commonwealth. The adviser must be qualified to practise law and subject to professional standards and discipline. Where in-house lawyers are concerned, courts have added a layer of scrutiny around independence. In Rich v Harrington the Federal Court treated independence as a separate requirement to be proved. In Martin v Norton Rose Fulbright Australia (No 2), Charlesworth J rejected that reading and treated independence instead as one factor in deciding whether the person was acting as a lawyer at all. Both remain first instance decisions, so the position is unsettled.

Courts have refused privilege where in-house lawyers were found to lack sufficient distance from the business, and where they were making the commercial decision rather than advising on it. Holding a current practising certificate is a relevant factor rather than a decisive one. Courts have accepted privilege without one and have also given its absence substantial weight.

What this means for a fractional arrangement

No Australian court has squarely tested privilege over advice from a fractional General Counsel, so anyone who tells you the answer with confidence is guessing. What is clear is which factors the cases turn on, and most of them are within your control.

In Holman v Warringah Council, the tribunal upheld privilege where the lawyers held practising certificates and their contracts recorded their independence as legal advisers and their paramount duty to the court. One document lost privilege because the person who created it did not hold a certificate. Contracts and certificates were doing real work in that decision, which is a useful signal for how to paper your own engagement.

The risk specific to fractional work is the one that already catches employed counsel. A person wears a legal hat and a commercial hat, with no clean line between the two. If your fractional GC is also running a negotiation, sitting on the deal team, or making the call rather than advising on it, keep that work separate from the legal advice, and keep the record of it separate too.

Sources: Jones Day on Rich and Martin; Baker McKenzie, scope of privilege in Australia; Australian Government Solicitor, fact sheet 31.

Insurance, and who is actually covered

Holders of corporate practising certificates in Australia are not required to hold approved professional indemnity insurance, other than for pro bono work. Some employers extend directors and officers cover to their in-house lawyers instead. A lawyer practising on their own account is in the opposite position and must hold approved cover.

Whether you are covered depends on which of those two structures you chose, and it is easy to land in the gap between them. You engage someone as a contractor and assume they carry insurance the way a firm does. They hold a corporate certificate and carry none. Ask for the certificate category and the insurance position in the same email. Both answers should arrive without hesitation.

Source: VLSB+C, a guide for prospective corporate lawyers.

The same question in the UK and the US

England and Wales

Since November 2019 the SRA has allowed solicitors to practise on their own account without an authorised firm. A freelance solicitor is self employed, works alone without employees, practises in their own name rather than under a trading name or through a service company, and is engaged directly by clients who pay them directly. To provide reserved legal services on that basis, they must have practised for at least three years since admission and must tell clients they are not covered by insurance on the SRA's minimum terms.

The service company point catches people out, because invoicing through a limited company is exactly what a fractional operator would normally do. Solicitors who want that structure use a recognised sole practice instead. Either is fine. Knowing which one you are dealing with is the point.

United States

Bar admission is state by state. ABA Model Rule 5.5(d), adopted in various forms across most states since 2002, lets a lawyer admitted elsewhere provide legal services through a continuous presence in a state where the services go to the lawyer's employer or its organisational affiliates. Many states require registration as in-house counsel on top of that, often within a set window after the work starts.

Read that exception carefully and the fractional problem is obvious. It is written around an employer and its affiliates. A lawyer advising several unaffiliated companies in a state where they are not admitted sits outside it, and the consequences of that fall on the lawyer and on the company relying on the advice.

Sources: SRA guidance on freelance solicitors; Association of Corporate Counsel multijurisdictional practice tracker; American Bar Association on UPL and in-house counsel.

Four questions to ask before you engage

None of this takes long to check, and a good fractional GC will have the answers ready.

Which practising certificate do you hold, and in which jurisdiction? You are listening for a category and a state, and for whether it matches the way you are about to engage them.

Are you my employee for these days, or a contractor? This drives the certificate question, the insurance question, and how the engagement is documented.

What professional indemnity cover is in place, and whose name is it in? If the answer is that your D&O policy will handle it, read the policy rather than trusting the assumption.

How will we keep legal advice separate from commercial decisions? The best answer describes a practice they already follow, including how advice is recorded and who it is addressed to.

If any of that produces a long pause, you have learned something useful early and cheaply.

Where this leaves you

The fractional model suits legal work unusually well. Most growing businesses need senior legal judgement regularly and full time legal volume rarely, which is the gap the role exists to fill. The regulatory questions above are not arguments against it. They are what a careful buyer asks in the first conversation, and the answers separate people who have built a real practice around this model from people who are between jobs.

If you want to hire a fractional General Counsel, brief us once and you will meet two or three vetted candidates within days. If the sharper answer is a specialist, our fractional legal hub sets out how the roles differ, and corporate counsel is often the better fit where the risk sits in structure and transactions.

This article is general information about how fractional legal engagements are structured. It is not legal advice about your situation, and regulatory requirements change. Check the current position with the relevant regulator or your own adviser.