Good New for In-House Job Seekers: Law Departments Plan on Hiring
As companies continue to slowly emerge from the recession, many are looking for ways to save money on their expensive legal bills. Corporate legal department, according to a recent Altman Weil's Chief Legal Officer Survey, are increasingly telling firms to just forget it, and taking more work in-house.
Altman Weil's Chief Legal Officer Survey, released Wednesday, showed that sixty-three percent of the officers surveyed reported that they had increased their internal budgets from 2009 to 2010, and 29% claimed that they would decrease their use of outside firms in the coming year.
That’s great news for attorneys and paralegals looking to go in-house. The survey showed that 41% of chief legal officers indicated that they plan to hire new in-house lawyers in the next 12 months, and 32% said they would increase the number of paralegals on staff over the same period.
The survey, conducted in September and October, is based on responses from 174 officers from law departments. 28% of respondents run law departments in corporations with over $10 billion in revenues.
Of course, the great majority of companies taking on more work in-house will do so with its existing legal staff, placing increasing pressure on an already overworked staff. However, this mark s a shift from companies simply trying to negotiate law firm fees, to looking at alternatives, including bolstering their own internal capabilities. That’s great news for attorneys who are already in-house, in terms of increased job security, and for those looking to break into the in-house world in terms of opportunity.
Happy CLOs Are Poised to Hire More in 2010
According to the results of the Association of Corporate Counsel's 10th Annual Chief Legal Officer Survey, CLOs are not only happy with their job, but want to share that happiness by hiring more in-house counsels in 2010. More than 90 percent of CLOs that responded to the Survey indicated that they were happy with their jobs (up 2% from last year’s Survey). Even with the recession and a heavier workload, chief legal officers said they still like their jobs. It’s still good to be in-house. And, it looks like that happiness is going to spread.While these are positive news in an otherwise still gloomy market, this does not mean that the in-house legal market has turned the corner.
In-house legal are still operating under tough budget constraints, and while a 5% increase over last year is good news, it will not serve to make much of a dent in this saturated market
Who Will They Be Hiring?
In particular, over one-fourth (28%) of respondents plan to hire lawyers to do commoditized work, and 21% of these respondents plan to hire specialists.
In addition to the increase in hiring plans, the survey found that the number of law department attorneys based outside the U.S grew this year. This increase can be seen in Western Europe and Canada, where the number of in-house attorneys rose from 1% in 2008 to 7% in 2009; and also in Asia/Pacific, where there was an increase from 1% in 2008 to 2% in 2009.
Why Are CLOs Looking to Hire More?
The recession has forced companies to take a critical view of how they operate. While CLOs will be increasing in-house hiring, they will also be decreasing spending on outside counsel. More than a third (34 percent) said they've cut spending on outside counsel. At the end of the day, they have figured out that they can operate more efficiently by bringing more work in-house, spending less on outside counsel, and boosting spending on alternative fee arrangements, the survey shows.
Could This Be a Long-Term Trend?
That remains to be seen. While this is not a significant increase in hiring, this may be a sign of more positive news to come. Moreover, the recession has forced companies to try on a new model, and they may like what they see.
2010 Predictions for In-House Legal Departments
It’s safe to say that few in the legal profession were sorry to see 2009 end. This was a year that was marked by one of the worst recessions in recent history, also dubbed the “Great Recession.” According to the blog LawShucks, 12,196 people were laid off at 138 large law firms tracked last year. In all, 4,633 lawyers and 7,563 staffers lost their jobs.While there is always a certain level of enthusiasm along with bringing in a new year, that excitement is not simply seasonal, but based on a historically busier quarter for hiring. The first quarter of the year tends to set the tone. While some recruiters seem to be optimistic about the lateral partner market at law firms picking up, and the thawing of salary freezes, that effervescence may be cooled by some harsh realities.
The dip in unemployment numbers may be a sign that the hemorrhaging has stopped, but if 2010 is slated to be a “better” year than 2009, better is relative. Many predict that we won't get back to full employment – or to about a 5% unemployment rate prior to the recession – until 2013 or 2014. This really speaks to the severity of the job losses that have been absorbed by the economy. They are massive. The economy lost over 7.2 million jobs since the recession began in December 2007.
Law firm partners with a book of business have always been considered a hot commodity, no matter what the state of the economy. So now that more of them may be willing to make a move does not indicate an improved market. Only the creation of new positions and an uptick in associate hiring would signify a real improvement of the market, and no one is seeing or predicting anything like it in the coming months.
We expect to see a slow return to hiring over the next six months. How slow? It will be highly conservative, with departments looking to hire replacement positions first, followed by critical needs second.
We predict that about 15-20% of corporate legal departments will be selectively hiring over the next six months of 2010. If the economy is to stall again, we will start seeing sign of a slow down in the 3rd quarter.
What might this look like over the course of the year?
• Quarter 1> 5-10%
• Quarter 2> 15-20%
• Quarter 3> 20%
• Quarter 4> 20-25+%
Companies this quarter (Q1) are re-evaluating their needs and considering staffing requirements. Many legal departments have affected cost-cutting measures, and most are now working at or above capacity. As a result, some replacement positions will become available, a small number of companies will hire to re-balance their legal departments, and some companies will look to hire their first in-house counsel. That said, unless we see a determinative change in the economy, the hiring market for in-house counsels will not be markedly different from the market we experienced in 2009. While there will be fewer layoffs, positions will continue to be few and highly competitive.
Who Will Be Hiring in 2010?
We expect few changes in the types of companies that will likely hire in-house counsels in 2010. Companies who will be hiring at a greater rate than others will most likely be in the following industry sectors:
• Health care
• Education
• Government
• Energy (alternative)
• Manufacturing (possible)
• Services (possible)
If the economy does show some signs of a recovery, we could see companies in manufacturing and service enter the hiring circle, albeit conservatively.
• Regulatory/Compliance
• Litigation
• M&A
We can also expect smaller companies to take advantage of the market and hire their first in-house counsels. We have seen an uptick in hiring in the areas of regulation/compliance, litigation, and employment, although the boost in the number of hires was not necessarily significant. We are looking for a re-emergence of deals for 2010, with a conservative uptick in mergers and acquisitions.
What Will Salaries Look Like?
In-house attorney compensation always depends on several factors, including:
• Industry
• Geography
• Size of the Company
• Size of the Legal Department
• Position Level/Responsibilities
• Position Requirements
• Company Finances
• Economic Market
We expect compensation to remain flat for 2010. Salary freezes for current staff, small bonuses, and a reduction in base pay for new hires. Of those companies not cutting lawyer compensation, we can expect the majority of salaries to remain at status quo, and a minority to increase by a lower margin (expected 3%-5% increase in 2010, over 8% in 2008, and 10% in 2007).
Large Company In-House Lawyers (2010): Average of $200,000 in pay and bonuses.
Large Company In-House Lawyers (2009): Average of $206,000 in pay and bonuses.
Large Company In-House Lawyers (2008): Average of $236,000 in pay and bonuses.
Large Company In-House Lawyers (2007): Average of $226,000 in pay and bonuses.
What Should Lawyers Expect In-House?
For most attorneys practicing with law firms, 2010 will not be the year for them to transition in-house. Why? Because they will see few open positions, together with a plethora of highly qualified in-house counsels fighting for every available job.
For counsels practicing in-house, most will end up having to work more for less money. They will also work with less support – both in terms of outside counsels and internal administrative assistants and paralegals. Resources will be stretched thin. However, legal departments may be more open to selective hiring to handle the increased workload. 75% of the General Counsels we polled said they wanted to bring more legal work in-house for 2010, and 45% said they were actively planning to hire additional staff to handle the increased workload.
What’s “hot” for 2010? Compliance/regulatory is the new in-demand practice area for in-house counsels. Companies will be hiring selectively to fill in the gaps. Those looking for job security should look to develop skills in these areas to demonstrate their value and cost-saving effectiveness.
What are your predictions for 2010? Share your thoughts with us.
What Does It Take To Become An In-House Counsel?
Why Companies Should Hire Attorneys During a Recession
There’s a lot of talk about needing to stay competitive during this recession, and companies that will set themselves apart are the ones who continue to invest in marketing their product, and who will reap the rewards later on. So then doesn’t it hold that companies should increase their investment in their talent during this time, too?
A recession is an opportunity for companies to hire the kind of outstanding legal talent they would be hard pressed to recruit during a normal economy. In the midst of layoff reports and high unemployment figures, is there any hiring going on? The answer is ‘yes’, and they primarily fall into the following categories:
- The replacement of retiring or departing key legal counsels at small to mid-sized companies.
- The replacement of legal counsel by management looking to “upgrade” their legal department.
- 3. The augmentation of legal staff to handle increased work and minimize outside counsel fees.
Some larger companies with new management, or CEO’s taking a critical look at operations, are also looking at the current legal market as an opportunity to upgrade their in-house legal counsels, including their general counsels. These companies recognize this period of time as an opportunity to hire top-quality job candidates. Companies who may have fallen behind the talent rush in the past, should take heart from the global economic slowdown as it presents a golden opportunity for them to recruit qualified and experienced legal professionals from around the world. Today, they are seeing the market downturn as an opportunity to find top talent, and often hiring directly from their competitors. *
While corporate legal departments are “doing more with less,” companies are still considering the impact of bringing more work in-house to save money. According to a recent survey from legal market research firm Altman Weil Inc., about 65 percent of general counsel said that they would bring more work in-house to save money this year. Nationally, about 75 percent of general counsels plan to reduce legal budgets by about 11 percent in 2009 according to Altman Weil Inc. Does this mean that companies are not hiring? Not really.
While companies are dealing with tighter budgets and not hiring as aggressively as they would like, they are still able to carefully add headcounts where the work outweighs the cost of outsourcing, especially in areas like employment, licensing, and contract. It’s all about making the financial numbers add up.
* We personally know of 2 active general counsel searches at Fortune 500 companies that fall within this “upgrade and opportunity” category.
Black Friday For Law Firm Staff and Attorneys….What About in-House?
By the end of Friday the 13th, more than 1,100 lawyers and staff in the U.S. had been fired or asked to consider buyouts.In total, in one dismal day in the US, more than 350 lawyers stood to lose their jobs...and more is likely on the way (See "Law Firm Layoffs: February 2009" for a full list).
Are law firms making good choices with these massive layoffs? They are certainly saving money in the short run, by as much as $200K per attorney and $100K per staff members according to the Legal Times. Layoffs offer a fast solution with immediate bottom-line results.
However, in the long term they could ultimately work against these law firms' interest by costing the more. Layoffs increase pressures on remaining employees that affect productivity, create an atmosphere of uncertainty and low morale leading to more defections than intended, and leave companies vulnerable and ill equipped to take full advantage of opportunities when the economy picks up again.
Only two years ago, law firms were scrambling to hire top legal talent, and were raising base salaries to $160K to fight off hedge funds. Think things will be any different two years from now? Think again...
Of course, law firms are thinking about the here and now...not a year from now, and even less two years from now. Perhaps laid off attorneys or prospective law school students will have a better memory and look at those few firms that hired carefully, and refrained from mass layoffs during tough economic times. They will not be the ones offering the most attractive starting salary, or the biggest profit-per partner ratios.
What about corporate legal departments? They are hurting just as much, but the bleeding there is more akin to a small cut vein, rather than a fully severed artery. Why? Because corporate legal departments, despite massive company layoffs, are typically thinly staffed, and because for all the talk and chatter about law firm fees and the decline in demand for legal services...it's still cheaper to do the work in-house, and there is still plenty of it to be done.
Why have we not seen a reported Friday the 13th for corporate legal departments? You probably have seen it, but not in so many words. As we reported in our November 2008 blog post titled "Corporate Legal Department Layoffs: The Market in 2008," what affects the market as a whole also affects legal departments. In other words, the big company layoffs typically translate into sizeable layoffs for in-house attorneys. While some companies have received specific publicity for their in-house attorney layoffs, the majority of corporate legal department layoffs are folded into overall company layoffs. They are not hurting any less; the wounds are just less noticeable.
Is Changing One’s Practice Area During a Downturn a Good Idea?
"I have been practicing as a litigator for the last eight years with a law firm and I am ready to make a change. I am not interested in becoming a partner. Ideally I’d like to go in-house. I did a short internship with a company and I really enjoyed it. However, when I look around there are very few in-house litigation positions available. The one’s I have applied for have been so competitive that I’ve never come close to an offer. I am an accomplished litigator working for a big law firm, but I am not a Harvard law school partner with twenty years of trial experience. I am trying to transfer to a transactional practice to improve my chances of moving in-house. It’s nearly impossible to do at my firm as our own transactional attorneys have just enough work to sustain their practice, and I do not want to jeopardize my position there. I’ve tried to apply to more junior-level and temporary transactional positions with both law firms and companies, but I am being told either that I don't have sufficient experience, or that I am too qualified to take a junior role. I know the economy is not good, but what can I do to change practice areas?” Desperately Seeking New Practice.- Are you sure you want to set aside eight years of litigation, just to improve your chances of going in-house?
- Are you sure that a practice switch will help you secure an in-house position?
- Has your short in-house exposure been sufficient for you to give up the law firm practice altogether?
- How do you know that you will enjoy or be successful as a transactional attorney when you have not had any experience in this area?
Assuming you’ve considered some of these questions, and you are still ready to start over as a transactional attorney, there are a few other things to consider. Yes, the economy is not good, but even in the best of times “practice switchers” have a hard time making that transition.
Consider this: Why would anyone hire you in your chosen new practice area when they have hundreds of applicants with extensive practical experience in that field? Law firms are not known for being risk takers or for thinking outside the box when it comes to hiring. They are a business trying to maximize their profits, and when you consider the investment it takes to hire and train an associate, the return on this investment has to make sense. Given the choice, they will hire an experienced transactional attorney, or a junior attorney with some transactional experience, rather than an experienced litigator without any transactional experience.
What if I am willing to take a pay cut and take a junior-level position?
Your rationale makes sense - both the law firm and the clients would benefit from your years of experience as lawyer, even if practice-wise you were still a bit green. Unfortunately, the issue is not quite that simple.
There is the issue of training which can be expensive, and rocking the class boat which law firms are steering clear of. In other words, if you joined a firm as a junior associate, you would be given assignments to help you train as a transactional attorney. These would be relatively simple projects, or pieces of larger, more sophisticated deals.
But after a while, if you are as good as you should be at your level, you will not very challenged with these assignments. You will find yourself asking for more sophisticated work, more client contact, and more responsibility. Suddenly those loyal senior associates who have given their blood, sweat and tears to their firm for the past 8-10 years will see that there is yet one more person being pushed ahead of them. Their loyalty and perseverance will have been diminished by a comparatively newcomer to the firm. Morale is a fragile, an intangible element that law firms don’t like to tinker with, especially when they don't have to.
What about companies giving me a shot?
Corporate legal departments are not good training grounds. Companies that hire in-house counsels are looking for attorneys who are self-sufficient, who can work independently, with little support, and almost no supervision. This is not a place where you will be taught skills, or have much of an opportunity to learn from more senior counsel. It will be assumed that you are already skilled in your practice area, can handle all of the documentation and processes that come with it, and can now provide strategic advice to your company, and oversee the legal work of potentially more experienced outside counsels.
The economy makes a difference. During a downturn, it’s better to stay put.
Firms and corporate legal departments are shedding staff. Nobody likes to have to do that. Why would they take on someone from the outside to retrain when they could have one of their own to retrain, or get 100 resumes tomorrow of candidates who already have the practice experience they need? If you can think of an answer, that is your way in; if not, I fear your prospects are bleak.
In a competitive job market, attorneys who are looking to switch practice areas will have very few opportunities to do so, unless they are switching to a practice area where candidates are in short supply and demand is high. A transactional attorney looking to transition into bankruptcy, or a litigator looking to specialize in bankruptcy litigation may have better prospects. However, in a down economy like ours, there are very few practice areas where candidates are in short supply. And demand has never been lower.
If you are still doing well at your current firm, I would encourage you to wait for the market to turn before switching practice areas. If you are still convinced that changing discipline is the answer, then I would suggest taking training courses, and acquiring practical experience by getting involved in pro bono projects, or by volunteering your services to non-profits and legal aid organizations.
At least, by exploring ways to acquire practical experience, you will be able to determine whether this is something you enjoy and want to commit to when the market turns around. Moreover, you will have acquired some technical and practical skills, and hopefully be more competitive when opportunities present themselves. Good luck!
Corporate Legal Department Layoffs: The Market in 2009 (February)
As we had predicted earlier, the nation's unemployment rate rose to a higher-than-expected 7.6 percent in January as businesses shed 598,000 jobs, the government says.
The economy has lost a staggering 3.6 million jobs since the start of the recession in December 2007. And, to underscore the accelerating nature of the problem, more than half of those job losses occurred in the in the past three months. As of the end of January 2009, a total 11.6 million were unemployed.
The official government estimates of the current unemployment problem are staggering.
- 791,000 manufacturing jobs were lost in 2008, hitting the auto sector hardest.
- 260,110 people lost jobs in the financial sector, part of the overall service sector that accounts for some 80% of all employment.
- The construction sector shed 899,000 since peaking in September 2006.
- The retail sector shed 522,000 jobs for all of 2008.
Those are the “official” government numbers. But, as a closer look demonstrates, the unemployment figures can be understated – and misleading. The government actually compiles unemployment figures in six different categories; as you might expect, the numbers tend to minimize the bad news.
Job hunters also are facing longer searches for work.
The average time it took for an unemployed person to find any job — full or part time — rose to 19.8 weeks in January, compared with 17.5 weeks a year ago, underscoring the increasing difficulty the out-of-work are having in finding a new job.
- Caterpillar (20,000)
- Pfizer (8,000)
- Sprint Nextel (8,000)
- Home Depot (7,000)
- General Motors (2,000)
- Microsoft/Intel (10,000)
General Electric has also been quietly doing some bloodletting since the third quarter of 2008; and while the figures we have gathered are not official - as they have been culled from laidoff GE attorneys - we estimate that at least 20% of its legal department has been affected. Following its purchase by Wells Fargo, Wachovia has also suffered deep cuts in its legal department, somewhere in the 30-50% range.
The list of corporate legal department is most likely a long one, yet details of these layoffs are usually not publicized, and often difficult to obtain. While companies for the most part do not provide separate figures for their corporate legal department layoffs, company-wide layoffs usually affect in-house legal department as well.
As reported by Above the Law, Incisive Media also eliminated 42 positions last week. These layoffs were distributed across positions in both business and news departments in the entire company's North American units, which includes 31 legal and real estate publications. Legal media, and the media industry in general, have not been spared.
Merrill Slashes Senior Legal Jobs, Including the General Counsel
Senior legal roles at Merrill Lynch have been axed as part of the investment bank's global restructuring, including the investment bank's vice chairman and general counsel Rosemary Berkery, and general counsel of litigation and employment Barry Mandel.
New York associate general counsel Carlos Morales, co-head of global litigation John Eisenberg, and director and senior counsel Chris Haas remain with the bank's the legal department.
The move comes after Bank of America's $50bn acquisition of Merrill Lynch last September (22 September ).
A Bank of America spokesperson said: "Bank of America expects to eliminate 30,000 to 35,000 positions over the next three years, reflecting the merger with Merrill Lynch and the weak economic environment, which is affecting the level of business activity. The reductions are coming from both companies and affect all lines of business and staff units."
It is thought the majority of the combined bank's cuts will be made in New York with the capital markets headcount expected to be reduced by approximately 30-40 per cent.
[Source: The Lawyer, by Julia Berris, published Jan. 27, 2009; Corrected on Jan. 31, 2009]
The Future of Wyeth’s In-House Legal Department in Pfizer Merger
The Pfizer/Wyeth proposed deal could be bringing a glimmer of hope to law firms and investment banks that have seen mergers and acquisitions activity on the decline since 2007.
But one lawyer's hope may be another's misery. What's to become of Wyeth's 300+ legal department?
According to an article by The Legal Intelligencer, Pfizer Inc. has made no secret of its intentions to slash thousands of jobs once a planned merger with pharmaceutical competitor Wyeth goes through.
How Wyeth's 300-person worldwide legal department will be affected is still a question mark.
"The good thing," the source said, is that for a merger of this size, there is "remarkably little overlap." Wyeth, for example, has vaccine and biopharmaceutical departments that Pfizer doesn't have. It also still has a consumer health care division. Pfizer sold off a similar division in its company not too long ago. All three of those Wyeth divisions have attorneys dedicated to them, the source said.
One can hope that current Pfizer CEO, Jeff Kindler, a 53-year-old Harvard Law School graduate and former legal clerk to U.S. Supreme Court Justice William J. Brennan Jr., will look kindly to Wyeth's legal department. However, in light of the recent history of mergers and the fate of in-house legal department, the future of Wyeth's legal staff is precarious.
Mergers typically result in legal departments layoffs. Here are a few examples of big company mergers and ensuing legal departments layoffs:
- Akzo Nobel - International Chemicals: resulted in a 25% reduction in legal staff (Dec. 2008)
- Linde-BOC: reduced lawyer count by 40% (August 4, 2008)
- BellSouth - AT&T: resulted in a 30% reduction in legal staff (May 5, 2008)
- Nextel-Sprint: resulted in a 30% reduction in legal staff (Sept.13, 2005)
- Oracle - PeopleSoft: resulted in a near 100% reduction of its lawyers (Dec 13, 2004)
- El Paso - Coastal: resulted in a 30% reduction in legal staff (January 29, 2001
- Honeywell - Allied Signal Inc.: reduced lawyer count by 50% (December 1, 1999)
If you do the math, as a member of the legal department's merged company, you have a 30-50% chance of losing your job post-merger.
Some of the post-merger consolidation issues faced by legal departments include duplication of positions, attorney attrition from those unwilling to stay or relocate, replacement of top legal positions by new management, the sale of business units supported by attorneys etc.
In the majority of case, layoffs and a reduction on staff will ensue in the short-term. However, over time, law departments tend to maintain about the same number of lawyers per unit of revenue. How well the newly merged company is doing financially-speaking will have a significant impact of the size of its legal department.
This may be a small consolation to members of the Wyeth legal team facing cuts. We can only hope for the best.
Awards
Affiliates
Links
In-House Jobs
Categories
- In-House Careers
- In-House Compensation
- In-House Diversity
- In-House Ethics
- In-House Headhunters
- In-House Human Resources
- In-House International
- In-House Job Hunt
- In-House Jobs
- In-House Legal Costs
- In-House Legal Market
- In-House Life
- In-House Litigation
- In-House Management
- In-House Outsourcing
- In-House Survey
- In-House Transitions
- In-House Vendors
- In-House Women
- Layoffs
- Uncategorized
Archive
- April 2012
- February 2012
- January 2012
- December 2011
- November 2011
- October 2011
- September 2011
- August 2011
- July 2011
- June 2011
- May 2011
- April 2011
- March 2011
- February 2011
- January 2011
- December 2010
- October 2010
- July 2010
- June 2010
- May 2010
- April 2010
- March 2010
- February 2010
- January 2010
- December 2009
- November 2009
- October 2009
- July 2009
- March 2009
- February 2009
- January 2009
- December 2008
- November 2008
- October 2008
- September 2008
- August 2008
- July 2008
- June 2008
- May 2008
- April 2008
- March 2008