The number of attorneys who are interested in making the transition in-house is increasing, despite current economics. While securing an in-house position has always been difficult because of supply and demand, doing so in this economy is even more challenging. There is a significant distinction between wanting to go in-house and being ready to go in-house – something that many attorneys tend to miss when conducting their job search. In this article, we discuss what it takes to become a strong candidate for an in-house position in today’s marketplace.
The ideal in-house candidate is an experienced attorney with at least five years or more of professional practice experience, who can operate fairly independently. Why five years or more? In-house legal departments are not good training grounds for recent law graduates and junior-level attorneys. Companies generally do not have the resources available to train attorneys. Moreover, in-house attorneys, unlike their law firm counterparts, are viewed as part of overhead. Therefore, while attorneys are a necessity, they do not contribute to the financial bottom line of the companies they serve. Therefore, in-house legal departments have every incentive to want to hire experienced attorneys who require little training or supervision.
Is there such a thing as too much experience? In some cases, there is. Companies tend to value hiring attorneys who have both law firm and in-house experience. Partner-level attorneys who only have law firm experience are at risk of being passed for positions, junior-level or otherwise. They tend to be viewed as too specialized, not business-oriented enough, and lacking in industry experience. That prejudice tends to grow in accordance with the length of time they have remained in private practice without ever having held an in-house position. Partner-level attorneys are often viewed as too “inflexible” and expensive to successfully transition in-house. In an employer-driven market companies get what companies want, whether or not these preferences are justified. Therefore, the best time to consider an in-house transition is after five years of practice and before partnership.
When it comes to the type of practice area in-house legal departments are interested in when hiring, it is important to remember that not all practice areas are created equal. While corporate law departments do hire attorneys in a variety of specialized practice areas, including litigation, labor and employment, intellectual property, real estate, and tax – to name a few, these positions are few and far in between. In other words, there are very few in-house legal opportunities available for these practice areas. Moreover, because of the type of competition that is generated for these few position, outstanding candidates are often kept from ever making the final cut.
If you are playing a numbers game, which is what you have to do when considering an in-house attorney position, and you are interested in moving up on the in-house totem poll, you should have general corporate and commercial contracts experience. In other words, transactional attorneys have an edge in the number of positions available to them, not to mention improved prospects for advancement within law departments, including general counsel positions.
To improve your odds even further, you should supplement your transactional practice with some exposure to litigation, employment, corporate governance, finance, intellectual property, and governmental regulations, to be able to assist a company gets its goods or services to market. Corporate law departments tend to look for “generalists,” or attorneys who are able to spot issues and handle matters in a wide variety of areas. In other words, most in-house counsel act like ER doctors conducting triage when the ambulance gets in. They have to quickly identify the problem, establish priorities, determine what they can handle themselves and whether they will require the services of a specialist, or in this case an outside counsel.
Even if you have the required experience and practice area to be a good candidate for an in-house position, there are a number of “soft skills” you need to be competitive and successful for these positions. First, as an in-house attorney you need to have business sense. When a company hires in-house counsels, they are expected to provide legal advice in a business context. The ability to understand business objectives and provide legal advice to non-lawyers is crucial to succeeding as an in-house counsel. Along those lines, the ability to persuade is also an important quality to have, as counsels often have to defend their positions. This assumes strong negotiation skills, as well as superior oral and written communication skills.
In-house attorneys are also required to work with a wide variety of people, from senior executives to employees on the floor. Therefore, having strong interpersonal skills and the ability to be comfortable in a variety of situations, from conducting formal board meetings to dispensing informal hallway advice, it very important as well. Finally, a successful in-house attorney must be able to provide practical advice. In other words, companies tend to turn to their counsel for solutions to their business problems, rather than for textbook advice or opinions. To be an effective problem-solver, an in-house attorney must not only be familiar with his company’s business, structure or industry, but also its culture and its risk management standards. Of course, these are but a few of the soft skills that are required to be an effective in-house counsel; there are others, many of which are company and industry-specific. What is to be remembered is that being an experienced and skilled legal practitioner, while a requisite, is not always sufficient to become a strong candidate for in-house positions in today’s marketplace.
A good legal recruiter can help you find the job you’ve always wanted. That said, candidates generally don’t understand what legal recruiters do, or how best to use them. To maximize this partnership and motivate them to be your advocate, here are 5 myths that need to be dispelled:
MYTH 1: A Recruiter's Job Is To Find Me a Job
FACT: Legal recruiters are paid by their employer clients—not their candidates. Their job is to find the best talent for the position the employer is seeking to fill. They have to keep in mind all of the employer’s requirements and deliver candidates that are an exact match. They aren't paid to help people transition to new practice areas, find jobs for those that have been unemployed for long periods of time, or practiced on their own as solo practitioners. Instead, they are seeking talented individuals who have done the job already in a different context, or candidates ready to move up to the next level in their same career path. Also, companies simply do not accept unsolicited resumes from recruiters. They hire them for specific jobs. So it is not within a legal recruiter’s capacity to present you to their current or former clients just based on your strength as a candidate; it simply does not work that way. While good recruiters dedicate extensive time and resources to working with candidates who are likely to meet their employer clients’ expectations, they are not an employment agency, career counselor, or coach for job seekers. Therefore, recognize their role and advantage of your legal recruiter’s knowledge regarding the search and hire process, and the legal marketplace.
MYTH 2: Recruiters Are Rude and Unresponsive
FACT: The truth is that most recruiters simply don't have the time to respond to the hundreds of unsolicited resumes and phones call they receive every week. It is also common for a recruiter to make over fifty calls each day, and with that kind of volume they simply don't have the time to deal with unplanned conversations. Legal recruiters, like anyone, have limited time and resources, and have to prioritize who is worth speaking with, and for how long. They are likely to be very responsive to clients or potential clients who have job orders for them to fill, and people who they see as strong candidates for those job orders. They are likely to be much less responsive to those who approach them out of a sense of desperation, with a career change in mind, or for whom they don’t have a job to submit them to.
MYTH 3: It’s Best to Work With Multiple Recruiters or Bypass Them Altogether
FACT: If you are seeking a law firm job, you need only one good recruiter to handle your search. Virtually all law firm searches are done on a “contingent” basis, meaning any reputable recruiter can submit a candidate to a prospective employer for consideration. Choosing one good recruiter ensures that you have access to all law firm openings. In contrast to a law firm search, if your goal is an in-house position, then you should engage multiple resources. However, while most in-house positions are filled on a “exclusive” basis, some in-house searches are conducted on a “contingent” basis, much like firm searches, meaning that the company accepts candidate submissions from a number of reputable recruiters. You should authorize your chosen recruiter to monitor such opportunities on your behalf. When you hear about a job from recruiters, and decide to bypass them by sending your resume directly to the employer, so you don’t come with a fee, think again. Chances are the recruiter and employer are working on an “exclusive” basis, so you’ll still have a fee attached to your candidacy, and you’ll likely have to be vetted by the same recruiter you tried to bypass. Rather than optimizing your goodwill and have the recruiter help put your best foot forward before an employer, you may have lost your only internal ally. The same can be said in a contingent situation; for the legal recruiter will have an incentive to make you stand out from the rest of the applicants. They will be able to discuss your candidacy directly with the employer, and potentially make the difference. On your own, you will not have anyone able to help you get a leg up on the competition.
MYTH 4: Recruiters Aren't Interested in Negotiating The Best Compensation Package
FACT: The majority of legal recruiters are paid recruiting fees that are a percentage of the new hire's first year base salary. The more you earn, the more they earn. Therefore, it is generally in their best interest that you obtain the best possible compensation package. Legal recruiters often they have inside information about what a company is willing to pay, and are able to negotiate a higher salary than what a candidate initially thought they could get. However, the opposite is often true. The company may have already discussed what they would be willing to pay for a top notch candidate, or made it clear that they are not willing to negotiate. In these cases, legal recruiters can do little but to advise candidates of the same, and not enter into negotiations that will not only produce no results, but also potentially damage the newly created relationship between the candidate and the employer. Companies do not take the recruiter's commission out of the new hire's compensation. Employers who have decided to hire a recruiter to assist them with the search understand that they must pay a premium for candidates sourced through recruiters, and are willing to do so.
MYTH 5: Recruiters Don't Care About Creating Long-Term Relationships
FACT: Legal recruiting is a relationship-building business. Successful recruiters know that their long-term success is based on building their network of relationships. Repeat business that comes from gaining multiple job orders from the same company is a key ingredient to any successful legal recruiting firm. The same can be said of candidates that were not a good fit for a current job, but went out of their way to introduce them to someone who was, or tried to provide them with job leads. These are the sort of candidates that a recruiter will remember and likely contact when they have a good job order to fill. Recruiters also have connections that can help candidates; and they are likely to offer them to those that showed a great deal of professionalism and respect of the process. One surefire way to get a recruiter's attention and build a long-term relationship with them is to offer to provide the names of people who are strong connectors to others, thought leaders, and high performers in their specialized field. Thinking of the relationship as “qui pro quo” can go a long way towards establishing a relationship that can be fruitful for both parties.
Not every candidate will find success working with a legal recruiter. However, if you are accomplished in your field and committed to staying in it, building relationships with legal recruiters who specialize in your skill set and industry can be your greatest asset in your job search.
Legal hiring remains sluggish and there are not signs of improvements on the horizon through the fourth quarter of 2012. According to a report released by Robert Half, a little over 30% of lawyers interviewed in law firms and corporate legal departments were planning to hire. That means that the greater majority, nearly 70% don’t.
What’s driving the hiring? Since the recession, we have yet to see hiring driven by growth. In other words, hiring is limited to instances where adding a headcount will reduce cost or improve productivity. In other words, corporate legal departments are only selectively hiring if the legal hires are capable of handling legal work in-house more cheaply than outsourcing it to a law firm. Law firms are seeking attorneys with solid business development skills and client portfolios to expand practice groups in high-demand specialties such as health care and corporate law.
In short, this is still leaving a lot of lawyers in the cold. The only “pick-up” in hiring activity seems to be centered on full-time legal staff including paralegals, legal secretaries, and contract administrators. Why? Because they are more economical to hire than full-fledged lawyers. The practice areas that are generating the most interest in-house remain corporate, compliance, and privacy.
Innovations in technology have made it easier to track, collect, and process personal information about individuals. As a result, companies of all kinds are challenged to manage the way that they use data to both comply with U.S. and non-U.S. laws and to protect such data from unauthorized access.
What makes it even more challenging, is that in addition to maintaining compliance in a continuously evolving legal landscape, companies must also contend with industry standards promulgated by a wide array of diverse and sometimes overlapping industry groups. Regulations and court decisions have opened the door to increased liability for companies. Companies also have to contend with cyber hacking, data breaches, and other privacy concerns that are exposing them to further liability and costing them a great deal of money.
Why Are Companies Increasingly Hiring CPOs and Privacy Counsels?
Companies are increasingly suffering from data breaches, as hackers are getting more sophisticated and finding new ways to steal sensitive data from seemingly secure enterprises. This is a growing concern that is costing companies a great deal of money.
One study reported on 1,700 instances of computer hacking, cyber terrorism, and other data breaches in the past seven years, resulting in some 900 million compromised records. Another study of 49 breaches in 2011 reported that the average cost of a data breach (including detection, internal response, notification, post-notification cost and lost customers) was $5.5 million.
To handle the growing promulgation of ever-changing privacy laws and protect themselves from liability and exposure to computer hacking, cyber terrorism, and other data breaches, companies have been steadily adding key chief privacy officers and privacy counsels to their ranks.
Today, companies that maintain consumer or employee information have to address data protection issues and take measures to mitigate the risk of loss of the sensitive data it stores. Failing to do so can result in serious legal ramifications, not to mention public relations and business problems. As a result, more chief privacy officers and privacy counsels are joining companies of all sizes, and this is a trend that is certain to continue. In terms of industries, financial services, technology and software and healthcare lead industries with privacy hiring efforts.
In addition, not only are companies increasingly hiring chief privacy officers and privacy counsel, but they are also requiring general counsels, as a part of their skill set, have some expertise in privacy and data protection law. This is a new and increasing trend.
What Are the Salaries for CPOs and Privacy Counsels?
When it comes to hiring chief privacy officers and privacy counsels, it is a classic case of supply and demand. This is relatively new practice area; therefore, the number of chief privacy officers and privacy counsels is small compared to the demands. The pharmaceutical and professional services industries offer the greatest compensation and salaries, and depending on geography, industry, and company size, CPO’s salaries can range from the high 200K to the mid $400K. In terms of salaries for privacy counsels, they are akin to those offered for intellectual property counsels. Again, depending on geography, industry, and company size, privacy counsels salaries generally average $145K.
Are companies hiring paralegals over lawyers? It looks like that might be a trend gaining some traction. The economy is not necessarily on the rebound, and signs of improvements are nothing if not unpredictable and unsteady. After gaining jobs for two straight months, the legal sector lost 1,300 positions in March, according to preliminary data released Friday by the U.S. Bureau of Labor Statistics. Most worrisome are predictions that lawyer jobs may be on the decline.
The Bureau of Labor Statistics predicted, "Growth in demand for lawyers will be constrained as businesses increasingly use large accounting firms and paralegals to do some of the same tasks that lawyers do." The report estimated that overall legal sector employment will increase 11 percent by 2020, and that paralegal and legal assistant jobs will surge 18 percent.
The good news is that companies are hiring, the bad news is that they are only doing so very selectively. With law departments on the brink of having operated by “doing more with less” for several years, some are looking to hire help. But experts caution that companies aren’t necessarily hiring lawyers. The bulk of the hiring seems to be dedicated to paralegals and contract managers. When it comes to hiring lawyers, the numbers are still very low, and the competition very stiff. That competition will grow even stiffer in the years to come as the Bureau of Labor Statistics predicted that the number of lawyers practicing in the country would grow 10 percent between 2010 and 2020—from 728,000 to 801,800.
While most of the commoditized work may be increasingly relegated to paralegals and legal assistants, companies will still need lawyers. Although many paralegals are skilled in certain legal areas and procedures, they are not necessarily experts regarding complex legal questions. Just because a nurse can take provide a great procedure, it does not mean that a nurse can take over a patient’s care. Companies trying to save money by relying primarily on paralegals to handle matters from beginning to end, and to respond to all client questions, without attorney supervision would be a recipe for disaster. This is not rocket science. If you check into a hospital for heart surgery, you want to be operated on by a skilled heart surgeon, not by a registered nurse or a therapist.
Lawyers will still be required to oversee matters, especially those with strategic implications, and will be able to do so more cost effectively in-house rather than as outside counsel. However, in-house lawyers will need to do more to demonstrate their value and contribute the bottom line. In addition to providing excellent legal services, they will need to be increasingly more strategic by identifying growth and revenue opportunities, while minimizing costs.
Also law degree and law firm experience are no longer enough to make the cut. The lawyer that has spent five to ten years with a big law firm doing sophisticated work may find it challenging to land an in-house job. Many of today’s in-house lawyers have a broad multi-area practice, industry-specific experience, an M.B.A.’s, tested management and budgetary skills, and broad international experience. In other words, versatility is key. While many companies will turn to less expensive alternatives by hiring more paralegals and contract managers, lawyers will still be in demand. However, they will to be more accomplished and well-rounded than before, for in addition to facing increasing peer competition, they will now face less expensive alternatives that will look very tempting to many organizations focusing on short term solutions and easy ways to cut cost.
InsideCounsel has released its hugely popular “2012 in-house compensation report,” discussing compensation, the hiring forecast, hot trends, and what it takes to land an in-house position, and how to succeed as in-house attorney.
Companies Are Hiring, But Selectively
The good news is that companies are hiring, the bad news is that they are only doing so very selectively. With the economy finally on the upswing, law departments are looking to hire new help. But experts caution that companies aren’t necessarily hiring attorneys.
The bulk of the hiring seems to be dedicated to paralegals and contract managers. When it comes to hiring attorneys, the numbers are still very low, and the competition very stiff.
Who’s Getting Hired: Standout Experienced Business Lawyers
Companies are most interested in mid-level and senior lawyers with four to nine years of experience. Additionally, they’re seeking jack-of-all-trades attorneys who can work independently.
Being a lawyer that delivers high quality services is no longer enough to land an in-house job. Today, lawyers hoping to get hired by a company need to show that they understand the company’s business and can contribute to its bottom line.
A law degree might no longer be enough. Today’s, in-house lawyers have to understand financials, business strategies, and need to be able to wisely manage projects and budgets. Many are now armed with M.B.A.’s to deliver just that.
One thing is clear: As companies emerge from the recession and slowly increase their legal hiring, attorneys searching for new careers must stand out among the competition. That often means being armed with more than legal excellence to do so.
Advice to Young Law Grads: Start with a Firm and Network.
The vast majority of corporate legal departments are still steering clear of recent law graduated. What can a recent law graduate do to improve his or her chances at landing in-house? The solution: try your hand at a law firm position first, focus on transactional work, stay there for at least five years, and network aggressively.
Base Salaries Slightly Up by 3.3%
2011 has brought moderate increase in in-house base salaries. According to the 2011 HBR Law Department Survey, the average base salary increase among all legal department staff levels in 2011 was 3.3 percent, up from an average increase of 2.6 percent in 2010.
The Bonus Is the New Gravy
The 2011 HBR Law Department Survey found that the average bonus increase among attorneys was an astounding 25.7 percent. The average cash bonus for all attorney levels was $67,000? What does it take to earn those bonuses? Today’s in-house lawyers are held accountable for the level of performance and their contribution to the bottom line. By the same token, they’re asked to share the risk of their companies’ performance. So, in-house lawyers have to meet their objectives, and contribute to the company’s bottom line to expect to get some gravy on top of base.
What’s Hot: Management Skills, IP, M&A and Compliance
The most in-demand practice areas: transactional (M&A), IP, labor and employment, and compliance. In terms of industries, health care and pharmaceutical are generally offering higher salaries.
The hottest skills required from in-house lawyers aside for outstanding legal and business skills, are management skills. Knowing how to manage projects, people, and budgets is key to increasing one’s value in-house.
Trends of the Future: International Expansion and E-Discovery
As companies are pushing for international expansion as a competitive strategy to expand their core business and increase their market share, so are corporate legal departments. Today, many clients are looking to hire in-house attorneys for their international operations, with a focus on Asia, South America, and India.
E-discovery is also very much in-demand. Companies are looking for lawyers who can effectively manage e-discovery and document review with a smart process that saves money.
What can we take away from this report? Lawyers with any hopes to succeed in-house need to be able to bring value beyond outstanding legal skills and experience. Contribution to the bottom line is what it’s all about.
The lateral job market between law firms and corporate in-house legal departments is a tale of two cities. What law firms are finding attractive in a potential candidate can sometimes be quite the opposite from what corporate legal departments are seeking. One of the best examples is experience. While attorneys with three to five years of experience are considered “hot” commodities by law firms, the great majority of corporate legal departments give them the cold shoulder.
The sweet spot for law firms that are hiring is three to five years of experience. There are several reasons for that. First, law firm associates with three to five years of experience have the highest level of attrition. According to statistics released by The National Association for Law Placement, almost 80 percent of attorneys at large law firms no longer work there five years later. The reasons for this high rate of attrition are varied. They include disillusionment with law firm life, not “cutting it,” being in a practice area that is drying up, or simply realizing making partnership is an unlikely goal. Whatever the reason might be, large firms hire significantly more associates than they plan on keeping for the long-term. Therefore, law firms are always on the lookout for talent to replenish these classes.
The other reason law firms have a strong appetite for attorneys with three to five years of experience has to do with their profitability. At this level of experience, associates can tackle more complex work with little supervision at a relatively affordable hourly rate. Whereas law firms claim to lose money on associates during their first three years of practice, they have plenty to gain once these same associates have been trained and can handle the bulk of the work partners are bringing in. They are instrumental to a law firm’s profitability.
When it comes to in-house legal departments, the story is quite different. Corporate legal departments are generally not interested in attorneys with three to five years of experience. Of course, there are always exceptions that prove the rule, but what we are discussing here is the rule, not the exception. Traditionally, corporate legal department are seeking experienced attorneys, with at least ten years of experience to join their ranks. The most sought-after candidates are transactional attorneys with strong business acumen, who can get up to speed quickly, understand operations, and deliver results in a fast, practical, and efficient manner.
Corporate legal departments are not good training grounds for junior and inexperienced attorneys. Corporate legal departments expect their attorneys to have a strong depth and breadth of knowledge, work independently, and with few resources. Generally, they are seeking attorneys who have developed a solid understanding of their industry, which also comes with practice experience. Sometimes, companies advertise for less-experienced lawyers who have been practicing for five to seven years. This is typically driven by a need to hire experienced candidates, but at a reduced cost. Attorneys with five to seven years can usually deliver the type of work handled by in-house legal departments, but they are generally less expensive than their more experienced counterparts. That said, more often than not, attorneys who are more experienced than the position requires fill these same positions.
What does this mean for junior-level attorneys with three to five years of experience? It’s typically best for them to hold off on their in-house search for a while. There are several reasons why they should wait. The most obvious one is demand. There simply isn’t much of a demand for junior attorneys in-house. Junior attorneys need to be patient and wait before trying to make a lateral move in-house. We are not likely to see an increase in demand for junior-level attorneys in-house, even if the economy picks back up. Attorneys thinking about going in-house should focus on developing their practice skills, business sense, and industry-specific knowledge. Attorneys typically start being marketable in their fifth year, and have more available options starting in their tenth year in practice. In the meantime, cultivating skills, until the optimum time has come to begin an in-house job search, is the best way to prepare for that type of lateral move.
The good news for in-house lawyers in 2011 was that there were raises for base salaries and a slight uptick in hiring. The bad news is that those improvements were relative. Base salary raises were very slight compared to the rate of inflation,. They also came after several years of salary freezes. Bonuses did offset some of these lackluster base salary numbers, but being tied to company performance, not everyone enjoyed them.
The uptick in employment did not stem from the creation of new positions per se, but rather as an effort to replace departing attorneys and rebalance overworked corporate legal departments that had suffered heavy layoffs during the Great Recession. In other words, the number of available in-house attorney positions remained quite low. On the other hands, there was some positive movement out there, which we expect to continue in 2012.
What Will In-House Legal Hiring Look Like in 2012?
The hiring trend that we identified in 2011 by corporate legal departments is likely to continue in 2012. The good news is that corporate legal departments are planning to hire in 2012 – about 40%. The bad news is that the majority of the hires will not be full-time attorneys.
Corporate legal departments are dealing with a heavier workload in part by using more paralegals and contract lawyers. About 67 per cent of corporate legal departments are comprised of lawyers with the rest made up of paralegals and other support staff. Legal departments are still operating with flat or decreasing budgets, and therefore, they are seeking the highest level of competency at the lowest cost. Compliance and contract review has been increasingly delegated to paralegals and contract managers. In other words, corporate legal departments are hiring more "staff" rather than "lawyers" in an effort to improve efficiency rather than “bulk up.”
What Are Corporate Legal Departments Looking for?
Corporate legal departments that are hiring full-time lawyers are doing so primarily to replace departing lawyers or add a specialty to handle work in a growing area. While corporate legal departments may be conducting some hiring, they are definitely looking for “more bang for their buck.” What exactly are they looking for?
Corporate legal departments are looking for experienced (5-10years) all-around corporate lawyers with a broad legal background, strong business acumen, and proven management skills. And that’s just the tip of the iceberg. Factors that are also taken into consideration includes national law firm background, few transitions, specific industry experience, and proven in-house track record of success.
The ideal candidate is a businessman who happens to be a lawyer, not the other way around. This is in response by corporate legal departments to want to demonstrate to the C-suite that they have what it takes to handle legal matters in a manner that contributes to the bottom line. Today's in-house attorney has to be packed with achievements that show how he/she can contribute to the company's bottom line; being an excellent lawyer is simply not enough.
What Are In-Demand Practice Areas?
General Business/Corporate Law (M&A a Plus) – Attorneys that can handle a company’s various transactions, regulatory and compliance matters, while understanding the business, and managing internal and external counsels, are the most in-demand. Attorneys with all of the above, and a strong M&A background are also prized.
IP/Licensing – The wave of protection for innovation that was driven by the Great Recession continues. As a result, licensing is a very hot in-house practic. An increase in patent prosecution has also heightened the need for attorneys with experience in trademarks and patents.
Contracts & Compliance – Corporate legal departments have an ongoing need for support to handle contracts and licensing. They are increasingly hiring contract administrators to manage procurement issues, and paralegals for compliance issues. There are some attorney-level hires, but these tend to be contract attorneys or contract administrators with a law degree.
International – As companies look to focus on expanding their core businesses and increase their market share, they are likely to look outside of the U.S. as part of their competitive strategy. This will drive the international law practice. U.S. companies will continue to look opportunities in the three most popular emerging markets—Brazil, India and China. Some other markets that may generate some new and renewed interest may include Mexico, Vietnam, Korea and the Middle East, with Turkey, Saudi Arabia, and the United Arab Emirates as attracting most of the attention. This boost in international transactions will come primarily from companies in the consumer and infrastructure sector seeking to expand into new markets.
What Will Compensation Look Like in 2012?
Total compensation for in-house counsel will most likely continue to rise, albeit modestly in 2012.
Base salaries will see moderate increases (around 3%). Raises will be primarily reserved for in-house attorneys that bring something unique and/or can save money by managing projects, people, and budgets. In other words, senior lawyers (10+ years) with management responsibilities at publicly trade companies, and specialty area lawyers (healthcare, patent, IP, etc.), will enjoy higher compensation levels.
Average In-House Attorney Compensation:
4-9 years = $100K-$180K
10+ years= $130K-$220K
Bonuses are where the difference will be made up.
Gone are the days of earning a bonus at your boss’ discretion. Today’s in-house counsel bonus is driven by: individual performance and company performance. In-house lawyers are held accountable for their contributions to the bottom-line, and are asked to share the risk of their company’s performance. If the economy continues to improve in 2012, and companies perform well enough to be able to share the rewards, then bonuses will continue to rise.
What Else Could You See in Your Stocking for 2012?
Companies are reticent about reaching into their pockets to offer more cash up front in the form of salaries. They want to see a return on their investment. That said, for hard-to-find candidates and performers – there are making efforts, if not with cash, by offering other incentives that include:
• Flexible Hours
• More Vacation Time
The Bottom Line
Hiring will still be very tight for 2012, but we will continue to see some improvements. Performance-based compensation is also here to stay. This is still driven by the economy, and while we have been through the worst since 2007, we have not quite gotten back on track yet. Our economy is still very unpredictable and fragile. Companies are hoping for the best, but still preparing for the worst. Most organizations are remaining conservative regarding their fixed costs, including their salary expense. Therefore, this will continue to make for a sluggish hiring market. We may see some small increases in base salary if the economy continues to slowly gather momentum. At the end of the day, much of the growth will be in bonuses. Hiring will focus on staff that can handle more commoditized work, and experienced management-level corporate attorney and specialists.
The legal job market has never picked back up since the recession, and talks of market improvements have been rather more wishful thinking than reality. In short, the legal job market has been grim. Yet, there might be a glimmer of light on the horizon coming from in-house legal department: hiring may be on the rise.
A recent survey from HBR Consulting, a consultant to law firms and law departments, shows that in-house hiring may be on the rise. This is a trend that we have been noticing at ESQ Recruiting as well.
What’s prompting a rise in hiring at corporate legal departments? A concerted effort by companies to reduce their legal expenditures and reliance on outside law firms. Legal work has not lessened, if anything, it has increased as a result of recent regulatory changes. As a result, companies are seeking to bring more of the work in-house, which could mean more in-house jobs.
Companies also seem to be on the rebound. According to the annual Association of Corporate Counsel survey, only 54 percent said that their department has been affected this year by the economic downturn—a significant drop from the 74 percent reported in 2009. In addition, the survey also indicate that CLOs were planning to add staff in the coming year, 37% more than reported in 2009, 2008, or 2007.
It also looks like corporate legal departments are willing to spend a little, to save a lot more. The Altman Weil and LexisNexis Martindale-Hubbell survey found an overall increase in law department spending of 7.9 percent to an average spending of $914,000 per lawyer for fiscal year 2005. Outside legal costs rose by 5.5 percent to an average of about $602,000 per lawyer. The survey also found a 19 percent increase in internal hiring with lawyers per billion of revenue rising from 2.93 lawyers per billion in revenue to 3.49 lawyers per billion in revenue."
The results of the 2011 HBR Law Department Survey compiled information from 219 companies in 20 industries. Seventy percent of the participating companies had revenues at or above the Fortune 500 level. Key findings from the survey include the following:
- More than 50 percent of companies reported an increase in worldwide legal staff between 2009 and 2010.
- More than 80 percent of companies said their legal needs are increasing.
- More than 40 percent of companies plan to increase the number of internal lawyers by an average of 10 percent in the next year.
- About 60 percent of survey participants cut outside legal spend by an average of 3 percent between 2009 and 2010.
What does this mean? Corporate legal departments are opening their doors, which is a good sign, but that does not mean that the market is necessarily looking very rosy. Those positions are still few, very competitive, and companies are setting the bar very high for new hires. The good news is that the trend is looking to continue, which may lead to more opportunities for lawyers seeking in-house positions.
While we may be experiencing a sizzling hot summer this year, the same can’t be said about the job market. What’s it like out there? Clearly, we are not out of the woods, and may even be scaling back. With the headline unemployment rate ticking back up to 9.1 percent in May, the sense of alarm over the state of the economy is once again growing. And it's not helped by a slew of recent reports on everything from the continued high rate of foreclosures to the precarious position of the Greek debt crisis. Things are still incredibly tough in the job market with layoffs outnumber hiring announcements by a sizeable margin.
Where does legal stack up in this declining employment market?
The legal sector lost 2,600 jobs in June 2011 according to the U.S. Bureau of Labor Statistics report; making it the fourth consecutive month this year the industry has seen declining job prospects. Who is affected? Pretty much everyone in the legal sector: lawyers, paralegals, notaries, and the support staff needed to run law firms, such as secretaries and accountants according to the Wall Street Journal Blog. The fall in legal jobs this past month – the biggest decline so far this year – came on the heels of a hint of recovery in May, during which 200 jobs were added, according to the BLS report.
How is this decline impacting unemployed lawyers?
The Great Recession eliminated thousand of lawyer jobs, which never quite returned. This has left a huge hole in the marketplace, with thousands of well-qualified attorney still looking for employment – many hitting the 2-year mark. And there is no visible change on the horizon.
The long line of the unemployed is not comprised of lawyers that are unqualified or not well credentialed. This candidate pool, for the most part, is made up of experienced attorneys with more than 10 year of experience, who have had a solid record of employment, until the Great Recession. The majority never bounced back simply because the jobs never returned.
The change was profound in the legal industry, as both law firms and corporate legal departments have adjusted to doing “more with less.” How does this work? Those that survived layoffs are working more, and firms and corporate legal departments are spending less by not hiring. If firms and corporate legal departments are hiring, it’s most often for part-time and contract positions – and the competition for these jobs remains fierce.
What about the in-house legal market?
Companies, for the most part, are not hiring. Companies that are hiring lawyers are generally looking for general counsel-level candidates to take the legal work in-house and reduce outside counsel spending. They are looking for a "one man shop" to take on as much as possible in-house and curb legal spending. They are also hiring part-time and contract lawyers to fill in the gaps, and increasing their outsourcing whenever possible. In other words, they are hiring as a cost-saving measure.