Introduction

Micro, Small, and Medium Enterprises (“MSMEs”) constitute the backbone of the Indian economy, contributing significantly to employment generation[i], industrial output, exports and overall economic development. According to the Ministry of MSMEs, the sector contributes nearly one-third of India’s Gross Domestic Product (“GDP”) while providing employment to millions across manufacturing, services and trade sectors.[ii] Apart from their economic contribution, MSMEs promote innovation, entrepreneurship and bridge regional developmental disparities by responding to the local market demands with agility and resilience.

Despite their pivotal role in India’s economic landscape, MSMEs continue to operate in an increasingly complex legal and regulatory environment[iii]. Every stage of an enterprise’s life-cycle, that is from incorporation and commercial contracting to employment, taxation, intellectual property (“IP”) protection and fundraising is governed by a growing network of statutory obligations.

Founders are primarily occupied with product development, customer acquisition, operational management and business expansion. Legal matters therefore receive attention only when a dispute arises. By this stage, the cost of rectifying legal deficiencies is substantially higher than the cost of preventing them in the first place.

It is within this evolving commercial landscape that the concept of the Fractional General Counsel (“Fractional GC””) has emerged as a practical and commercially viable alternative. Rather than engaging legal advisors solely on a transactional basis or incurring the substantial costs associated with hiring a full-time in-house counsel, MSMEs increasingly prefer retaining a firm on a structured and continuing basis to perform the role of an embedded legal function.

Unlike the role of a traditional external counsel, who is generally instructed only upon the occurrence of a specific legal issue, a Fractional GC functions as an extension of the enterprise’s management team along with the legal support. It provides continuous legal oversight, strategic guidance and regulatory support while remaining external to the organisation’s reporting hierarchy. This enables MSMEs to institutionalise legal risk management without assuming the financial and administrative burden associated with building an internal legal department.

Moving Beyond the Traditional In-House Counsel Model

The comparison most MSME founders instinctively draw is between the annual salary payable to an in-house legal counsel and the professional fee quoted by a law firm. However, this comparison is fundamentally incomplete.

The actual cost of employing an in-house counsel extends far beyond basic remuneration. Furthermore, despite maintaining an in-house legal team, organisations frequently continue to engage external specialists for niche areas such as IP, competition law, data protection, employment disputes, taxation or regulatory investigations. Thus, a Fractional GC offers a materially different value proposition, that is, instead of hiring a single legal professional with expertise confined to a limited number of practice areas, the enterprise retains an entire legal team possessing layered seniority and multidisciplinary specialisation under a single engagement, thus gaining access to specialists in corporate law, commercial contracts, employment law, IP, dispute resolution, regulatory compliance and data privacy without separately engaging different professionals for each assignment. Therefore, rather than representing an outsourced legal expense, a Fractional GC becomes an integrated risk-management function that continuously supports commercial decision-making alongside.

A Shift in Legal Compliance from Regulatory Obligation to a Business Strategy

Regulatory compliance is one of the most underestimated areas within the MSMEs. Compliance with corporations is generally extensive, technical in language and is subject to frequent legislative amendments. The consequences of non-compliance are rarely immediate, giving a false impression that delayed filings or procedural lapses are of no commercial significance at instance. But in reality, these small defaults often add up to becoming serious legal and financial exposure over time.

A Fractional GC solves this problem by transitioning compliance from being founder-dependent to a structured organizational process. Instead of responding to regulatory deadlines, the Fractional GC develops an entire compliance structure according to the enterprise’s corporate structure, sector and growth stage.

Sector-Specific Regulatory Guidance and Support

The compliance obligations applicable to MSMEs differ considerably depending upon the nature of their business activities. A technology-enabled financial services company operates within an entirely different regulatory ecosystem from a Software-as-a-Service (“SaaS”) enterprise or any other company per se.

For fintech companies, regulatory oversight frequently extends to Reserve Bank of India (“RBI”) licensing requirements, outsourcing guidelines, payment system regulations and audit preparedness. Conversely, SaaS businesses providing enterprise solutions increasingly confront obligations arising under the Digital Personal Data Protection Act, 2023 (“DPDP Act”)[iv], alongside international privacy frameworks such as the General Data Protection Regulation (“GDPR”)[v], particularly where services are provided to overseas customers.

The legal obligations that apply to these sectors are dynamic and often altered to reflect technological advances or shifting regulatory priorities. A Fractional GC has the responsibility to stay up to date on these legislative changes and to advise the business on how they impact them in practice. Compliance thus moves from a legal exercise carried out occasionally to a governance device that is institutionalized and integrated into the overall enterprise business operations.

Preventing Disputes Before They Arise Concerning Commercial Contracts

Every MSME enters into a significant number of commercial arrangements during the ordinary course of business. Vendor agreements, customer contracts, employment agreements, consultancy arrangements, lease deeds, software licensing agreements, distribution arrangements and non-disclosure agreements collectively govern the enterprise’s commercial relationships. Despite their commercial significance, these agreements are frequently executed under considerable business pressure and without dedicated legal review.

A Fractional GC addresses these issues by establishing a standardised contractual framework that is aligned to the commercial activities of the enterprise. Rather than reinventing the wheel with each agreement, the legal function creates customized templates for recurring transactions such as master service agreements, vendor contracts, employment agreements, consultancy arrangements, IP assignment agreements and confidentiality documentation. In addition to template development, the Fractional GC also engages in ongoing review and negotiation of material commercial contracts to ensure that contractual obligations accurately reflect the enterprise’s commercial objectives while appropriately allocating legal risk.

A Multi-Disciplinary Legal Function Under a Single Engagement

The legal exposure of an MSME is rarely in isolation to one area of law. With enterprise development, legal issues are encountered simultaneously in corporate governance, commercial contracting, employment law, IP, taxation, data protection and sector-specific regulatory compliance. As the business moves towards institutional funding or strategic expansion, these obligations become more interdependent.

A single in-house legal counsel is unlikely to have specialist expertise across all legal disciplines relevant to a growing enterprise. Therefore, companies often continue to use a number of external advisers on specific issues such as IP registration, employment disputes, competition law, taxation or regulatory investigations. Such a piecemeal approach is usually expensive and results in inconsistent legal advice. A Fractional GC firm addresses this limitation by providing access to a multidisciplinary legal team operating under a single engagement. Instead of depending upon one generalist, the enterprise benefits from specialists across different practice areas while maintaining continuity in legal strategy. More importantly, legal advice is delivered with a comprehensive understanding of the enterprise’s commercial objectives, allowing different legal issues to be addressed cohesively rather than in isolation.

Investor Fundraising

As MSMEs grow, securing external funding becomes important for business expansion. Investors always conduct a legal check before they invest into any company/enterprise. This check goes beyond how the business is doing financially and looks at the company’s compliance with laws, business contracts, documents about workers, who owns the ideas, and any lawsuits or other risks.

A Fractional GC helps the business prepare for such check-lists by ensuring that all legal documents and compliances are properly organized and up to date. Thus, the business is always prepared to secure an investment. This way of doing things does not speed up the process but also makes investors feel more confident because it shows that the business is well run and has good rules.

Dealing with New Legal Risks: Privacy, Artificial Intelligence, and IPs

With the advent of the digital era and technology, there has been a surge in the challenges faced by MSMEs. Companies now use cloud computing, artificial intelligence (“AI”), online tools, and cross-border data movement in their work. Now, the DPDP Act, 2023, requires the companies to follow rules on how they handle data, keep it secure, manage permissions, and notify in case of any breach[vi]. Therefore, the companies that handle customer information, employee records, or online services need to ensure they have the rules to comply with this new privacy law. Also, when MSMEs work with companies outside their country, they often have to comply with the foreign rules and regulations, like the GDPR, and in case of any such contravention, the company may face material consequence.

Further, it is often difficult to manage the IP rights while running a business at an individual level whilst scaling a company. A Fractional GC takes an approach that finds these ideas early, ensures they are registered when needed, protects secrets, and ensures the business owns the ideas rather than individuals[vii].

Conclusion

The Fractional General Counsel model gives a balance. It offers legal help across different areas of expertise, compliance checks, and predictable support for the business. This allow MSMEs to have an access to continuous and specialised legal support without paying for an in-house legal team.

Therefore, the real value of a Fractional GC lies not in following the law but in making legal help part of the business plan at a sustainable level, as the legal landscape is closely monitored, concerning the investors and the business deals, and the complication that follows.

References:

[i] Bandyopadhyay, D. A., Tewary, A., & Saw, P. (2025), AI-Powered MSMEs in India: Productivity Growth Without Scale or the Illusion of Technological Empowerment
[ii] Ministry of Micro, Small and Medium Enterprises, Annual Report 2023-24 (Government of India 2024), accessed 04 August 2026.
[iii] Sidheswar Jena, Between Burden and Bias: Regulatory Discretion, Procedural Complexity and The Survival of MSMEs in India, Indian Journal of Legal Review (IJLR), 6 (1) Of 2026, Pg. 496-507
[iv] Digital Personal Data Protection Act, 2023
[v] General Data Protection Regulation, 2016
[vi] DPDP Act, 2023
[vii] Vijay, R. (2026). Intellectual Property Due Diligence in Transactions: Legal Framework, Risk Mitigation, and Best Practices. International Journal of Innovations & Scientific Research Review, 13(01).

Gaurav Gupta is the Founder and Managing Partner at Bridge Counsels & Aadhya Dadu is an Associate at Bridge Counsels.