Opinion | 26-11-13

The lure of the in-house legal environment

In the first of our in-house focused articles Laila Coffey (née Martin) looks at the growing attraction for lawyers of moving from a law firm to an in-house position and provides some suggestions for those looking to make the transition successfully. 

In-house legal functions began developing in the 1990s and nowadays the appointment of an in-house lawyer is not only seen as a reaction to increasing external legal costs but stems from the genuine commercial value that an in-house counsel can add.  Today many businesses (such as GE, Siemens and Shell to name but three examples) have internal legal teams that could rival an international law firm in relation to quality, size, jurisdictional coverage and technical diversity and there is a steady flow of new companies and growing start-ups that view the hiring of an in-house lawyer as a vital resource. 

Given the increased investment from businesses in the resource, more solicitors than ever are seriously exploring a permanent move from a law firm into the in-house environment. A number of general themes are clear. 

“I want to be closer to the business”

This is arguably the most common driver for lawyers.   We have found that, particularly at the associate level in private practice and specifically within some of the largest law firms, access to clients and relationship development opportunities can be very limited. Often, as external counsel, working on large projects will mean lawyers are only advising on a small aspect of a case/transaction, and it is simply not possible to gain a full understanding of the business and the commercial drivers behind it. By contrast an in-house counsel is able to develop relationships at all levels within one organisation, interacting with a technical engineer through to the CEO.  This allows in-house lawyers to truly become “trusted advisors” and “business partners” and consequently fully integrated and involved in the decision making process.  

“I don’t want to be a partner”

For many, securing and maintaining a partner position in a law firm has lost its shine.  As equity partnerships are tightened, partnership opportunities are more competitive than ever and many solicitors cannot see themselves on the law firm “treadmill” forever.  The attraction of working in a senior capacity in-house offers more of a commercial challenge for a private practice lawyer. 

As more and more of their peers move in-house and come to realise the benefits of its varied workload and daily interaction with executive management and the board, we expect to see even more partners making the leap in-house.  In recent times partner level moves of note into the in-house world in London transacted by SSQ include Richard Hill from Fulbright & Jaworski to Shell as their Associate General Counsel, Global Litigation International and John Cadman from CMS Cameron McKenna to Lancashire Insurance as their General Counsel, while in Germany we have seen other senior lawyers from magic circle firms, including Freshfields Bruckhaus Deringer, moving to General Counsel and other senior counsel roles at international corporates.

“I am looking for more control over my work/life balance but I don’t want a drop in my salary”

In the past, a move in-house was seen as an easy option for over-worked private practice lawyers.  This is no longer the case.  The fact that in-house counsel are onsite with the client means they are at the constant beck and call of the business and as relationships develop with the business so the involvement of in-house counsel increases.  The real benefit for the in-house counsel is that there is more control over the hours they work and with a greater knowledge of the business there is greater opportunity to plan the workload.

Compensation in-house has continued to improve, with the gap between private practice senior associate roles financially and in-house narrowing, and certainly in the UK no longer lives up to the myth that a move in-house results in a cut in compensation.  Whilst the structure of the compensation is different, the total amount is often comparable, if not an improvement, at some levels.  Remuneration packages in-house can include:

1. Basic salary

2. Cash benefits (car allowance, London weighting etc.)

3. Bonus potential (company and personal performance rather than hours billed)

4. Share awards/long term incentive plan (often with a three year vesting period)

5. Other standard benefits such as life assurance, healthcare, pension contributions etc.

“I want to do more general commercial legal work versus I don’t want to lose my specialism”

A move in-house will generally mean that the role will be much broader.  This is particularly true with a sole legal counsel position or within smaller teams where the role requires involvement in ‘anything and everything’ pertaining to the business. However, on the other hand we have seen consistent demand, across many sectors, to hire specialist lawyers. This includes those with expertise in litigation, competition law, data protection, employment, regulation and anti-bribery/anti-corruption. 

“I don’t want to be a lawyer forever”

Some lawyers whom we meet do not want to remain a lawyer for the entirety of their working life and making a move to a legal in-house role can help lawyers to progress their career path to something non-legal/quasi legal based. Within an in-house legal role relationships are built with the different areas of a business (e.g. sales, marketing, HR, compliance) and opportunities might open up for those looking for a transition into a less legal orientated role.  This is certainly not unheard of and there have been interesting senior level examples including Tom Kilroy, who became interim CEO of Misys, having previously been their General Counsel.

“What can I do to improve my chances of securing a role in-house?”

Put yourself forward for a client secondment. This illustrates to clients a proactive interest in moving in-house.  Transitioning from private practice to in-house can often be difficult so having secondment experience is perceived as a helpful tool to any future permanent move.

Gain more “general” experience. If you are looking to move in-house to undertake a more general role, it is helpful to try to gain more “general” experience within the law firm environment.  For example, if you are in the corporate team, ensure you are involved in providing the ancillary corporate/commercial advice following a transaction. 

Get involved in smaller, discrete projects. Whilst it is exciting to work on the high profile, press worthy transactions/disputes, you may often be one of 20 or 30 or even more associates supporting the project.  Getting involved in smaller, discrete projects can be more beneficial where there is opportunity to gain more exposure to the client and thus the potential for honing your business skills and adding more variety to your work experience.

There is no doubt that competition for in-house roles is set to increase as more lawyers become aware of the career benefits, but this will be matched by an ever increasing demand by businesses to grow out their in-house legal functions as the commercial advantages are clear for all to see. 

In our next in-house article we will look more at these commercial advantages and analyse some of the reasons why businesses have expanded their in-house teams and how they have tackled this.