Law Firm to In-House: Things to Consider before Climbing Mountains

Whether a partner or an associate, most private practice lawyers I speak with raise the option of going in-house as the next professional step they want to pursue. There is a certain allure to being an in-house attorney. What lawyer doesn’t fantasize about being in the legal department at a pre-public company with the potential for stock options and a life-changing payday? However, very few in-house opportunities fit that scenario, and in-house jobs can vary tremendously in a variety of ways. Lawyers considering a transition as part of their career planning should thoughtfully approach those differences BEFORE pursuing an in-house move.

  • Outside a law firm, lawyers are an expense. Unlike in a law firm where lawyers are fee earners, revenue centers, or whatever term you prefer, the vast majority of in-house lawyers are an expense. Their salaries take away from the bottom line (although not as much as paying for outside counsel). In the law firm setting, lawyers generate revenue and are supported as the money-earning assets of the firm necessary to maintaining profitability. 

  • You have less control over your pay, because compensation structure is entirely different. Depending on the industry and compensation structure, in-house lawyers may have less control over their pay. In a firm, lawyers can multiply their hours and rate to determine quickly the revenue brought to the firm; and most firms provide bonuses or profit-sharing related in some manner to billed- and collected-time. Because in-house lawyers no longer generate revenue from clients, employers may have a more difficult time valuing the work of lawyers. Although in-house lawyers provide tremendous value, which is why most companies continue to hire lawyers for law departments and reduce spend on outside counsel, that total value-add may not be fully reflected in their compensation when the company is doing well financially, and it certainly is not reflected when the business falls on hard times.

  • You don’t track your hours, and time is valued differently. Some favor the in-house world, because in most cases, you are no longer required to keep a detailed record of your billable time. I'll take a contrary view to the popular notion that not tracking your hours is an upside of going in-house. Recognize that in-house lawyers have a significant amount of responsibility, which goes above and beyond managing outside counsel. At a firm, lawyers have a tangible record of the amount of time spent on various matters. Sometimes, what doesn’t get measured or recorded doesn’t get acknowledged or rewarded. For example, if an in-house lawyer is covering company litigation, that active trial schedule will be in addition to regular responsibilities. In-house positions don’t account for the long days preparing for a trial, or handling a merger or another transaction. Without a record, employers and colleagues may not even be aware of the hundreds of hours spent on work that was previously “billable time” at a firm.

  • You have one client. The diversity of clients and variety of work is a positive aspect of working in a law firm. In contrast, in-house lawyers work for one client. This allows a lawyer to dive much deeper into content, be more involved within the business, and become a trusted part of the management team. The downside is the focus on only one business or industry, which some may find limiting both in their current job and in looking for future opportunities.

  • It’s tough to go back to a firm. What if you decide the in-house role isn’t a fit? Once you’ve been practicing in-house, it’s difficult to jump right back into a law firm. Law firms typically want books of business from lateral partners, and that’s not something maintained once you switch to an in-house role.

These points should not dissuade lawyers considering a move in-house; but instead support those in the research process as they consider moving from a law firm to an in-house position. Understanding these shifts in business mindset, process and work are important before making a transition.

This article was also featured on Today's General Counsel, November 14, 2014.

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David Maurer is a member of Major, Lindsey & Africa's Partner Practice Group in Northern California where he specializes in recruiting prominent law firm partners for top law firms. David most recently served as in-house counsel at Morgan Stanley in San Francisco, where he spent six and one half years as a Vice President and attorney defending the firm and its employees in litigation and regulatory matters. He can be reached at (415) 646-0344 and dmaurer@mlaglobal.com.

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