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In Search of That In-House Spot? Some Words of Advice.

If you are in private practice, either as an associate or a partner at a law firm, you’ve probably wondered at one time or another what it might be like to go in-house.  You may have envisioned a world without billable requirements, business development, free weekends, and possibly less stress.  Perhaps you are intrigued by the prospect of working with a single client, knowing where the work will come next, and have an interest in being viewed more a business partner, and less as a fire extinguisher.  The grass being “greener” on the other side is not necessarily a reality.  In fact, the reality often looks quite different. But when it comes to going in-house, law firm attorney seem convinced that this is a better way to practice law, and whether that’s true for most, the in-house call remains irresistible.

Since the recession, the legal market has never quite bounced back.  Talk of signs of improvements in hiring and compensation are true, but it is also relative.  We experienced one of the most massive and deepest bloodletting the legal market has ever experienced. Therefore, while the legal market may no longer be hemorrhaging, it’s not exactly thriving either.

We never completely reabsorbed the thousands of attorneys who were laid off because of the recession; not to mention scores of others who were unsatisfied with their current jobs but held off by their skin of their teeth to ward off the specter of long-term unemployment; as well as those near retirement who saw their life savings dwindle and decided to stay on in the hopes of replenishing their nest egg.  Of course, that does not account for the perfectly happy law firm attorneys with dreams of going in-house, or in-house attorneys looking for a raise, advance, or simply a change.  That’s quite a crowd!

To say that today's market for in-house jobs is extremely competitive is an understatement at best. The number of applicants for each in-house position can often run into the hundreds, if not more, and employers have the luxury of being able to wait for the perfect candidate – and sometimes the “impossible to find dream candidate.” Finding an in-house job in this legal market can be quite a challenge.

Our firm handles hundreds of in-house searches each year, ranging from general counsel positions with Fortune 100 companies to junior lawyer positions with small, privately held companies. We speak with thousands of lawyers each month, and scores of corporate legal employers.  We have a pretty good sense of the trends and general state of the in-house legal market.  If the desire to move in-house has not dampened, the success rate on the other hands has dipped.

If you are still convinced that going in-house is the right move for you, let me offer some advice and a few things to consider as you begin your search.

The Road In-House Is a Long And Tedious One

When you are starting to put a resume out there, the first question you might have is, how long is it going to take me to find an in-house job?  The obvious answer will be, it depends.  Factor that affect how long a job search will have has to do with the applicant’s specific experience, background, financial flexibility, geography and willingness to relocate, and the type of positions he/she is seeking.  If you are looking for a GC-level position with a publicly traded Fortune 500 company – the wait might as long as winning the lottery.  That said, a good rule of thumb is anywhere between six months to a year, and in many cases a lot more.

Why the long wait?  It’s a simple economic formula or supply and demand.  Very little demand and a whole lot of supply equal a long road to success.  Also, unlike law firms, which are very "flat" organizations, corporate legal departments are typically pyramidal. Therefore, the higher the level, the fewer jobs there are available. Of course, not all candidates are created equals, so the more exceptional the background and experience, and the more flexible the candidate, the shorter the road.  Then again, a road that can take anywhere between six months to a year, it not what I would necessarily call short.

Why are there so few in-house legal positions? While the state of economy provides part of the answer, the other has to do with the manner in which corporate legal departments are structured.  Unlike in the law firms that are always looking for opportunities to hire lawyers that will improve their bottom line or service their clients, corporations are not often looking to add great legal talent.  Whereas law firm lawyers are valued for bringing in business and generating income, in-house lawyers at corporations are viewed as part of the overhead.  Rather than generate profit, they tend to cost money.  Therefore, corporations have to do a cost-value analysis whenever they are considering adding a legal professional.  That analysis has certainly been a lot more stringent as corporate legal departments have to do more with less, which also means fewer people.

Fortunately, the push of companies to save money has also forced them to rely less on expensive outside counsel, and more on their in-house legal departments.  This has translated in some hiring efforts by companies; however, hiring has been very selective, and attorneys have been stretched to do more.  Therefore, while you may feel that your legal expertise is exceptional, if the corporation already has someone else handling those responsibilities in a capable manner, there is little upside to having two people handle the same tasks.  You have to be the right person, at the right place, and at the right time.

Recruiting Firms are Not Job Placement Firms

When there are so few positions advertised, it’s easy to understand why candidates decide to work with legal recruiters.  However, before you send that resume or make that phone call, you should understand the advantages and limitations of working with legal recruiters. For example, the in-house searches that our firm agrees to undertake are done on an exclusive basis, which is the case for most other legal search firms. This means that our firm is the only search firm being engaged to fill the position and that the company will not accept resume from any other search firm.  This means two things: Our client list is unique to us, and we only present candidates to our clients to fill a specific job opening.

In the in-house context, a search firm is not a placement firm.  We are hired only to fill those in-house jobs for which we have been retained. Companies generally don't want search firms to send on resume unless the company has already identified a new need and asked the search firm to assist it with the search. So although you may be an exceptional candidate, a search firm is typically constrained by the companies that have engaged it to conduct searches for them.

Finally, because our clients retain us, the positions we are working on do not represent all of the in-house opportunities that are available out. Therefore, reaching out to just one search firm isn't enough for those people looking to go in house.  Applicants instead need to find out who handles the in-house searches in their market and reach out to all of them. If the applicant is seeking a law position, my advice is the opposite.  That candidate should only pick one recruiter to represent him or her.

What’s the greatest tool for finding a new in-house job?  Your connections.  In other words, you have to network and let people know you're looking. While there might be some risk of your boss or colleagues ultimately finding out, we think that the benefits to networking far outweigh those risks. Networking is the most effective way to get leads and land an in-house job.

If I had a dollar for every applicant that sent a resume for a position they were not qualified for, I might be able to give Bill Gates a run for his money.  The problem I believe is twofold: applicants send their resumes to jobs that sounds interesting and that they would like to have, whether or not they are truly qualified for them, and/or they are so desperate to find a job that that they will throw their resumes at everything under the sun, hoping that something will “stick.”

Whatever the reasoning, do not waste your time applying for positions for which you are not a perfect fit – rather than maybe qualified to do.  Why?  Because the lack of response will soon frustrate you, despite all of your well-meaning efforts.  If the position calls for someone who has fluency in Chinese and software licensing experience, the fact that you took a Chinese course in college and drafted one licensing agreement does not make you a perfect fit.  You need to be as exacting about your skills and qualifications as a legal employer will be. What do I mean by “perfect fit?”  The test is quite simple: After having read the job description, can you honestly say you meet each and every single one of the requirements listed? If the answer isn't yes, move on.

The road to an in-house position is not an easy one.  But to help your chances of success, you need to first be ready for a long process, be honest about your qualifications, and make the effort to grow you internal network.  Anything less, and you might never get that shot at an in-house position.

Are You Ready to Go In-House?

If I had a dollar for every time I heard a law firm attorney tell me “I want to go in-house,” I would be enjoying my retirement on a tropical island in the South Pacific. The allure of taking one’s practice in-house is understandable, and in many cases, quite appropriate.

The opportunity to take an active role in a client's business decisions, to focus on the growth of one client and one industry, to part with billable hour requirements and business development responsibilities, and operate within a more predictable and sometimes less taxing schedule, are all very compelling reasons to make that transition. But how do you know whether you are ready to make the move in-house?

There is a notable difference in wanting to go in-house and being ready to go in-house. No matter how enticing the opportunity might turn out to be; unless you are truly ready for it, it might not be the successful transition you were hoping for. How do you know whether you are ready? Here are some questions to consider in determining whether you are ready to make that leap in-house:

Do You Have the Experience?

When you consider that 80% of associates leave private practice by their fifth year of practice (NALP), it is not surprising to see a number of junior associates banging on corporate doors to transition in-house. Obviously most in-house job postings will include the minimum level of experience required for the position – but is meeting the minimum requirement enough? Not necessarily.

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. Sounds like an ideal proposition? Yes, but consider the following: this also means that corporate legal departments are not good training grounds either. 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, can provide strategic advice to your company, and can oversee the legal work of potentially more experienced outside counsels.

In light of what companies expect from their attorneys, it is recommended that you stay in private practice for at least five (5) years before you consider making a transition in-house. While the level of responsibility and training tends to vary on an individual basis, and from firm to firm; this minimum threshold can at least ensure that you have had the opportunity to be exposed to the various documentation and processes of your practice area.

While law firms continue to have a dubious reputation in terms of the quality of their training, they remain the best place for junior attorneys to acquire experience and develop legal skills. Corporate legal departments for the most parts are thinly staffed, and therefore provide you with more limited access to experienced counsels (and sometimes no access whatsoever) to whom you could go for support or advice. And remember, if you are thinking about picking up the phone to call an outside counsel to get advice, it will cost you and your company. Corporate legal departments operate under strict budgets – they do not provide for this type of on-the-job training. Corporate legal departments also tend to work with fewer resources, in terms of libraries, software programs, continuing legal education programs etc. Finally, the work you will be required to handle in-house, will demand that you not only be able to draft, revise, and negotiate or explain the various documents associated with the transaction or litigation matter, but that you take it a step further and advise your client on what strategy and steps they need to take to meet their business objectives.

The longer you stay in private practice, the more valuable you will become to a company, and the more likely you will be able to succeed in-house. The best time to transition your practice in-house is generally between your fifth year and tenth year of practice, or right before partnership. Why before partnership? Because by the time you make it to partnership, you may have become either too expensive, or too dependent on your high compensation package, to be able or ready to absorb the salary cut you will need to take when moving in-house.

Are You Ready for a Salary Cut ?

When speaking with attorneys who are ready to make that in-house transition, I invariably hear the same message, “I am ready to take a salary cut for the right opportunity.” They seem candid and honest about their willingness to give up a portion of their law firm compensation to move in-house, and they generally are. However, very few tend to understand just how much of it they will have to give up to make that move. That’s understandable; where law firms make their compensation public knowledge and generally align themselves in terms of their size and geographical locations, corporate legal departments are not only more guarded about their figures, but are also much more unpredictable – as compensation can vary greatly depending on a company’s size, industry, location, and financial situation.

The only in-house figures that seem to gather the attention of the press, and therefore those that are readily available to the general public are the compensation figures of Fortune 500 general counsels. In fact, those figures are typically those of the 100 highest-paid general counsels at Fortune 500 companies, which runs into the millions.  While not everyone has the grandiose ambition or the profile to become a Fortune 500 general counsel – these figures have a tendency to skew the expectations of attorneys wanting to make the jump from law firms to corporate legal departments. Most law firm attorneys expect to take a 20-30% cut from their law firm compensation, while the reality is that most law firm attorneys transitioning in-house experience compensation reductions ranging between 50%-70%. The median base salaries for in-house attorneys with 5-10 years of experience ranges between $100,000-$150,000 per year, with bonuses averaging 20%-30% of base.  Most attorneys who hear these figures gripe, “It’s not market.” It’s easy to understand why. The salary wars waged by large law firms around the country increasing first-year associate salaries to $145,000 and $160,000, as well as incremental increases of other classes by as much as $15,000 have done little to provide law firm attorneys with a realistic understanding of their worth in the corporate legal market.

They forget one crucial distinction between the law firm and in-house environment. While associates and partners are an integral part of the law firm’s “profit centers” and help generate millions of dollars in revenues on behalf of the firm, when they transition in-house, they become “part of the overhead.” In-house counsels, with very few exceptions in the licensing area, do not generate revenues. At best, they protect a company from liability. Unlike a law firm that sees the hiring of associates and partners as a means to increase productivity and revenues, companies must determine whether hiring an attorney in-house is cost effective, in both the short and long run. The value proposition changes drastically, and therefore, so does the compensation.

The question that each attorney must resolve in his mind, is whether he or she can absorb the cost of transitioning in-house – as for most of them, there will be a significant monetary tradeoff.

Can You Handle The Limited Career Path?

By now, some of those left with the experience and the willingness to make the financial sacrifices may think that it’s just a matter of time before they make their way to a more senior-level position or take the general counsel position. Well, not so fast.  According to a Survey conducted by Corporate Counsel, nearly seventy-five percent (75%) of in-house counsels polled described overall opportunities for advancement in their departments as either "limited" or nonexistent. Although many of the 1,278 respondents reported that they had been promoted since going in-house, they said that they were unlikely to get much further. Nineteen percent (19%) said there were no opportunities for advancement whatsoever for them in their department, while fifty-six percent (56%) percent said opportunities were limited.

What does it mean for you? If you think that with time you will enjoy promotions including a better title or a significant increase in pay, you may be going in with unrealistic expectations. Most corporate legal departments are small or flat in terms of structure; therefore, title promotions or elevation to other roles tend to be rare. Unlike law firms where you move up class levels every year, and enjoy significant pay raises, when transitioning in-house you may find yourself in the same position for many years to come, with pay raises that average 3-5% a year.

Most in-house counsels bid their times and move up only when a more senior counsel decides to retire or to transition to another company. In fact, the best chance for advancement may be jumping to the legal department of another company. Companies with larger legal departments of fifty or more attorneys, usually have more avenues for advancement. They may have a more hierarchical structure to enable its attorneys to move up to more senior roles with more responsibilities and greater levels of compensation. That said, in-house attorneys don’t have the same clear and linear career path as their law firm counterparts, and opportunities for advancement for the most part are limited. Before you make any decisions, you need to ask yourself whether you are ready to bid your time and live with fewer opportunities for advancement.

Conclusion

Before you start polishing your resume and look for in-house positions, make sure you’ve gained the experience you will need to succeed in-house, that you are able to let go of your attractive law firm compensation package, and can work in an environment where your career path will not be a straight line.

The trade-offs are far from perfect; however, most lawyers who made that transition with open eyes insist that going in-house was a decision they would make again. Gripes and all, in-house lawyers are nearly unanimous in preferring the more complex path they've chosen. How do we know? Only 1 percent of in-house lawyers say they'd like to be at a law firm.