Under this approach, a company realizes it needs some legal expertise. Because it does not have a legal department to turn to, they hire outside legal counsel to advise them on a specific issue. They may negotiate a flat fee or pay per billable hour for the services of an outside law firm. However, the work is limited to a single issue.
Once the matter is concluded, the company becomes a former client of the outside legal counsel. When another legal issue comes up, the company may turn to the same firm and hire them again as outside counsel for a specific issue.
Companies seeking to tightly control costs often use this approach. It works best when companies do not anticipate a lot of legal issues in their business. Even though the company only hires outside counsel for a single issue at a time, it still has the opportunity to develop a professional relationship with the outside law firm.
The firm is able to learn about the structure, culture, and business needs of the company throughout the relationship. The knowledge that grows out of the regular collaboration allows the firm to become more efficient. This helps keep legal costs manageable for the company.