China focus: When is a “good time” to move in-house?
After working in private practice for a number of years, many lawyers are drawn towards the “work-life balance” that a role in-house may offer. In this article our consultant in China, Li Ji highlights some points for private practice lawyers to consider if they are thinking about a move in-house, specifically into a multinational corporation (MNC) in China and discusses some of the challenges that associates and partners often face.
One of the biggest challenges for associates looking to move in-house from private practice is transitioning from a specific practice area to a more general and varied corporate/commercial role. We often see lawyers who want to work in a specific practice area, for example M&A or litigation, in order to keep their skills current and not lose the knowledge that they have built up working at a law firm. Unfortunately, most of the in-house roles in MNCs focus on general commercial/corporate work with few opportunities to be heavily involved in specific M&A deals or litigation matters. More often than not in cases with specific requirements, outside counsel is brought in to run the matter and the in-house counsel is required to supervise and coordinate. Because of this, in the current market roles that require specialist niche skills are few and far between in multinational corporates in China, and those lawyers who are more flexible and willing to use more generalist commercial skills will find their search much more fruitful. As an associate, before you decide to make a move you need to consider if you are happy to undertake a broad commercial role away from the real sharp end deal processes. Once you have accepted that you will experience a change of pace in-house it will be easier to find your next role.
So when is the best time to make a move from private practice to in-house?
It is difficult to put a specific number of years’ PQE on this question. Theoretically, lawyers can move to an in-house counsel position at any time; however, in reality, it is not as straightforward as this. The number of candidates in the market in China has massively increased from what we were seeing ten years ago and now there is fierce competition for roles at all levels.
The mid level, 4-6 years’ PQE, is the most popular with our MNC clients in China. At this level lawyers have had a good number of years of training, have solid legal research and drafting skills and are capable and confident about working independently. This is important because the main responsibility of a Legal Counsel role is to focus on the legal work, while the communication with the business units is led by the Head of Legal/General Counsel (GC). Therefore, it makes sense to make a move in-house at the legal counsel level so that you can learn about a business and understand how to become an excellent business partner to the company and eventually move up the ladder.
With this in mind it can be a challenge for senior associates with only private practice experience to move in-house. It is difficult for candidates to demonstrate their ability to act as a business partner if they have never worked in-house or have not been on a client secondment; when measured against other lawyers who have that experience, these law firm candidates can be found lacking. Many MNC also find that that candidates coming from private practice are more expensive than those coming from an in-house role, making them less attractive.
Making a move at the more senior end is even more difficult. Candidates at the counsel and partner level seeking Head of Legal or General Counsel roles have to show that they have the knowledge and ability to lead the legal team and influence other business units. In private practice it is much easier to motivate and reward a team because of the nature of the fee earning structure. However, in-house there are no billing targets and client business development to consider when looking at reward and so Heads of Legal and General Counsels need to have the ability to manage, encourage and retain their team in other ways. Strong leadership is imperative and for partners moving out of private practice it is difficult to convey this skill without any real experience. GCs are also responsible for managing the legal spend and budget and are required to make every attempt to act as a cost saving centre.
In China, the General Counsel is also responsible for liaising and keeping in touch with government agencies and this is an incredibly important aspect of their role. It is important for MNCs to stay in touch with government agencies without violating the FCPA and local anti-corruption regulations. A GC therefore needs to fully understand their business and the industry sector concerned, as well as its commercial drivers, in order to properly be able to represent them.
Having said all this, it does not mean that the earlier you make the move the better chance that you have to transition well in-house. It is generally advised that lawyers should not make the move when they are still a junior associate. For many this is not the best time as you can still benefit from further training and skills development in private practice. Also, career development is faster within the law firm environment. While not everyone will achieve partnership, it is easier to move up the ranks simply because of PQE levels; pay rises are much more generally black and white, with each PQE level holding a salary band and as associates increase in PQE their salary increases accordingly.
Essentially there is no specific “perfect time” to make a move in-house. There will always be different pros and cons for each individual and outcomes will always be dependent on your specific experience and qualifications as well as the roles on the market at any given time.
If you are considering a move in-house and would be interested to hear about opportunities or would like more information about the market please contact Shawn Chen on +86 21 6103 7331 or via email [email protected].