As the number of contracts, legal questions and compliance requirements grows, a business usually faces a choice: hire in-house legal staff, or engage outside lawyers or an outsourced legal service. This is not only a budget question. The two options differ in their legal relationship, which leads to differences in control, breadth of expertise, liability for mistakes and how information is kept confidential. Choose wrongly, and the business may pay fixed costs for capacity it does not fully use, or lack someone who can react in time when a deal needs a quick decision. This article compares in-house and outsourced legal support on 7 criteria, explains the relevant rules of the Law on Lawyers and the Labour Code, analyses the hybrid model and suggests how to choose.
- In-house legal staff are employees of the business; outside lawyers or an outsourced legal team provide legal services under a contract. The different legal relationship leads to differences in liability and confidentiality.
- Decree No. 55/2011/ND-CP (as amended by Decree No. 56/2024/ND-CP) on legal affairs work applies to state bodies and state-owned enterprises. It is not a mandatory model for private businesses.
- Under the Law on Lawyers, a law practising organisation must compensate clients for damage caused by its lawyers’ fault and must buy professional liability insurance for its lawyers.
- A lawyer must not disclose information about a case or a client, unless the client agrees in writing or the law provides otherwise. In-house staff are mainly bound by their contract and internal rules.
- A cost comparison should include hidden components (recruitment, training, tools, management time, risk of disruption), not only salary versus service fees.
- Many businesses choose a hybrid model: an internal contact person runs day-to-day work, and an outside firm handles specialist matters, disputes and independent reviews.
1. What is the root difference between in-house legal staff and outside lawyers?
The two options differ in their legal relationship:
- In-house legal (pháp chế nội bộ): staff who work under an employment contract and are directed by the business. They may be legal officers or lawyers practising in an individual capacity.
- Outsourced: the business signs a legal services contract with a law practising organisation, per matter or as a regular package.
The differences in control, liability for mistakes and confidentiality all come from this point.
Article 49, Law on Lawyers (Law No. 65/2006/QH11, as amended by Law No. 20/2012/QH13): a lawyer practising in an individual capacity works under an employment contract for a body or organisation that is not a law practising organisation, and may not provide legal services to others, except in cases set by law. Registration to practise follows Article 50.
Decree No. 55/2011/ND-CP on the functions, duties, powers and organisational structure of legal affairs units, as amended and supplemented by Decree No. 56/2024/ND-CP (in force from 2 June 2024), applies to ministries, ministerial-level agencies, government agencies, specialised agencies of provincial People’s Committees, state-owned enterprises and public service units within the scope of the Decree.
A private business decides for itself how to organise its legal function; Decree No. 55/2011 should only be used as a reference. State-owned enterprises, however, should check this Decree before replacing their legal affairs unit with an outsourced service.
2. In-house vs outsourced legal: 7 criteria compared
| Criterion | In-house legal | Outside lawyers / outsourced legal |
|---|---|---|
| Scope of work | Flexible, as assigned; easily given other duties on top. | As set in the contract; work outside the scope needs further agreement. |
| Control and direction | Tasks, priorities and performance managed directly, like any employee. | Through the contract: contact person, response times, reporting. |
| Expertise | Deep understanding of the business context; breadth depends on the individual. | Can draw on lawyers in many fields; needs time to learn the context. |
| Continuity | Always available; disrupted when the person leaves. | Less dependent on one individual if there is a team; needs good file handover. |
| Liability for mistakes | Material liability under labour law, which is limited. | The law practising organisation compensates for damage caused by its lawyers’ fault; professional liability insurance is in place. |
| Confidentiality | Through the employment contract, a confidentiality agreement and internal rules. | A professional duty under the Law on Lawyers, plus contract terms. |
| Cost structure | Mainly fixed: salary, insurance, benefits, recruitment, tools. | Package or per-matter fees; work outside the scope is charged extra. |
Neither option wins on every criterion. In-house legal is strong on speed and understanding of context, but one or two people can hardly cover tax, employment, intellectual property, personal data and disputes. An outside firm offers wider expertise and more independence, but is only effective when it receives full information.
A less discussed risk of the in-house model is the loss of independent challenge when the staff member reports directly to management. With an outside firm, the opposite risk is advice that leans towards safety and lacks commercial practicality.
Score each criterion against your own business priorities (speed of contract approval, or depth of expertise), instead of reaching a general conclusion that “in-house is better” or “outsourcing is cheaper”.
3. When something goes wrong, who is liable and to what extent?
Article 129, Labour Code 2019 (Law No. 45/2019/QH14): an employee who damages property must pay compensation under the law or the work rules. If the damage is not serious, is caused by negligence and is worth no more than 10 months of the regional minimum wage, the employee pays at most 3 months’ salary, deducted monthly from salary under Clause 3, Article 102 (no more than 30% of the salary actually paid after compulsory insurance and personal income tax).
Clauses 5 and 6, Article 40, Law on Lawyers: a law practising organisation must compensate its clients for damage caused by the fault of its lawyers, and must buy professional liability insurance for its lawyers under the law on insurance business.
Employee liability for damage is designed to protect the employee. A business should not expect to recover large commercial losses from an employee’s mistaken advice. When it engages a law practising organisation, the business has an additional basis to claim compensation under the contract and the Law on Lawyers.
Even so, outsourcing is not a “full transfer of risk”: fault, damage and causation must still be proved; insurance has limits and exclusions; and the final business decision still belongs to the business.
- For an outside firm: ask about professional liability insurance and read the scope and limitation of liability clauses carefully.
- For in-house legal: control risk through process (approval levels, standard clauses, a second opinion on major transactions).
- Keep legal opinions in writing, stating what information they are based on.
4. Confidentiality: how are in-house staff and lawyers protected differently?
Article 25, Law on Lawyers: a lawyer must not disclose information about a case or a client that they learn in the course of practice, unless the client agrees in writing or the law provides otherwise. The Code of Professional Ethics and Conduct for Lawyers also sets this duty.
Precedent No. 69/2023/AL (Council of Judges of the Supreme People’s Court): a confidentiality and non-compete agreement between a business and an employee is independent of the employment contract; disputes may be resolved by commercial arbitration if there is a valid arbitration agreement.
A lawyer’s duty of confidentiality is set by law, even when the lawyer works under an employment contract. For a legal officer who is not a lawyer, this duty mainly comes from the contract, the confidentiality agreement and the internal rules. Both have legal exceptions, so you should not assume that every legal communication is exempt from disclosure to the competent authorities.
With an outside firm, the practical risk usually lies in how documents are transmitted and in sharing more personal data than necessary, which must comply with the Law on Personal Data Protection (Law No. 91/2025/QH15).
- Sign a separate confidentiality agreement with in-house legal staff, stating what information is confidential and for how long after they leave.
- The outsourcing contract should set the communication channels, access rights, and the return or destruction of documents at the end.
- Share personal data only as far as necessary; see also Personal data compliance check: a 20-point Legal Health Check.
5. Comparing costs: which components to look at
Putting one legal officer’s salary next to the fee for a service package and drawing a conclusion is an incomplete comparison. Actual costs depend on the market, the industry and the scope of work; the business should fill in the table of components below with its own data.
| Component | In-house legal | Outsourced |
|---|---|---|
| Direct costs | Salary, bonus, compulsory insurance, benefits. | Regular package fee or per-matter fee. |
| Set-up costs | Recruitment, onboarding time, training. | Time to hand over files and context. |
| Tools and infrastructure | Workspace, equipment, legal research software. | Usually included in the fee; this should be stated clearly. |
| Additional costs | Hiring extra experts for work beyond the person’s capacity. | Work outside the package, litigation, large deals. |
| Hidden costs | Management time, risk of resignation, recruiting a replacement. | Internal time spent coordinating. |
Count the legal workload of the last 12 months and separate repetitive work from specialist work. This ratio shows whether the fixed cost of in-house staff would be used efficiently.
6. How does a hybrid model divide the work?
A hybrid model keeps one internal contact person who receives, sorts and handles day-to-day work; specialist or high-risk work, or work that needs an independent opinion, goes to the outside firm. A reference split:
| Type of work | Internal contact person | Outside firm |
|---|---|---|
| Contracts | Template contracts, standard NDAs, renewals, tracking deadlines. | Counterparty-drafted contracts with unusual clauses; major transactions; building a template set. |
| Employment | Employment files, work rules, routine discipline. | Terminations with dispute risk; complex breaches; review of internal rules. |
| Intellectual property | Tracking protection terms, collecting documents. | Filing strategy, handling infringement, disputes. |
| Personal data | Following the internal procedures already issued. | Designing the compliance framework; transfers of data abroad. |
| Disputes | Initial negotiation, collecting documents. | Case assessment, strategy, representation before a court or arbitration. |
This model only works when there are clear criteria for passing work on (transaction value, contract type, a foreign element, risk of dispute) and consistent rules on signing and approval authority; see also Authority to sign commercial contracts. For litigation, the business may authorise an employee to act as its representative under the Civil Procedure Code 2015, but complex disputes usually need a lawyer with litigation experience.
Need a legal department but not ready to hire?
FC Legal provides an outsourced in-house legal service within an agreed scope, and can act as the outside partner in a hybrid model alongside your internal contact person.
7. How to choose: 6 questions to answer
- Does legal work arise steadily every day, or in waves and by project?
- Is the work mainly repetitive, or does it need several specialist fields?
- How fast does the sales team need answers, and do they need someone at meetings regularly?
- Is there anyone able to manage and assess a legal staff member?
- Is the business within the scope of Decree No. 55/2011 (a state-owned enterprise)?
- How sensitive is the information that needs to be shared?
A lot of repetitive work, a need for on-the-spot answers and someone to manage the work professionally: an in-house legal function is worth considering. Irregular, multi-field work, or no one able to assess the quality of advice: outsourcing is usually a better fit. Both sets of features: a hybrid model. A roadmap by headcount is set out in A legal function model for businesses with 20–200 staff.
8. Where should your business start?
- Count the legal work of the last 12 months
- Separate repetitive work from specialist work
- Decide which of the 7 comparison criteria matter most
- Assess the current state of contracts, internal rules and records
- Choose a model and write down the scope, contact person and criteria for passing work on
- Review again after 6–12 months of operation
Assess the current state of your contracts, internal rules and compliance records before hiring someone or signing a service package, so that the scope of work is defined correctly. You can do this review yourself or ask a lawyer for an initial assessment.
Frequently asked questions
Must a private business have a legal department?
Decree No. 55/2011/ND-CP (as amended by Decree No. 56/2024/ND-CP) on legal affairs units applies to state bodies, state-owned enterprises and public service units. A private business usually decides for itself how to organise its legal function, unless the sector law for its line of business has a specific requirement.
If we engage an outside lawyer, are we covered by insurance if the advice is wrong?
The Law on Lawyers requires a law practising organisation to compensate clients for damage caused by its lawyers’ fault and to buy professional liability insurance for its lawyers. Whether you are compensated also depends on proving fault and damage, and on the limits and terms of the insurance contract and the service contract.
How much must an in-house legal officer pay if their wrong advice causes damage?
Under Article 129 of the Labour Code 2019, the employee pays compensation under the law or the work rules. If the damage is not serious, is caused by negligence and is worth no more than 10 months of the regional minimum wage, the compensation is at most 3 months’ salary, deducted gradually from salary.
Can a company hire a lawyer to work for it full time?
Yes. Under Article 49 of the Law on Lawyers, a lawyer may practise in an individual capacity under an employment contract with a body or organisation that is not a law practising organisation. In that case, the lawyer only provides legal services to their employer, except in some cases set by law.
Is a hybrid model more expensive than choosing just one option?
Not necessarily. The cost depends on how the work is divided: the internal contact person handles repetitive work, and the outside firm only takes work above the threshold. If the criteria for passing work on are unclear, costs may overlap. The business should count its workload before choosing.
9. Legal basis and references
- Law on Lawyers No. 65/2006/QH11, as amended and supplemented by Law No. 20/2012/QH13 (Consolidated Text No. 12/VBHN-VPQH): Articles 25, 40, 49, 50. An amended Law on Lawyers is in the 2026 law-making programme; this should be updated when the new law is passed.
- Labour Code No. 45/2019/QH14: Articles 102, 129.
- Decree No. 55/2011/ND-CP on the functions, duties, powers and organisational structure of legal affairs units; Decree No. 56/2024/ND-CP amending and supplementing it.
- Precedent No. 69/2023/AL on the jurisdiction of commercial arbitration over disputes on confidentiality and non-compete agreements.
- Civil Procedure Code No. 92/2015/QH13.
- Law on Personal Data Protection No. 91/2025/QH15.
Outsourced in-house legal support with FC Legal
Regular legal support, with the scope and cost agreed to suit each business.
- Review of day-to-day contracts, documents and transactions
- Standardising governance records and internal processes
- Working alongside your in-house legal staff, if you already have them
Please do not send confidential documents or personal data through the form.
This article is for reference. It reflects the rules in force at the time of publication. For legal advice on a specific case, please contact an FC Legal lawyer.
Prepared by the FC Legal legal team and reviewed by FC Legal’s Managing Lawyer. Updated 4 October 2026.
