As the role of the in-house lawyer becomes increasingly varied from industry to industry, corporate counsel are facing new challenges in terms of their interaction with the companies they represent and the private practice firms they retain. Contributors to the research for many of our publications have spoken of the fluidity of the corporate counsel legal market, prompting questions over its effect on private practice, the relationship between the two sides and the competencies required to excel in each.
A recurring trend among the in-house lawyers we consulted for this special report is the desire of many companies to take on more legal work themselves, as they look to minimise costs in a post-global financial crisis environment where risk mitigation and cost-effectiveness are now viewed as central to the long-term success of a company. Many companies have moved to expand their own in-house teams, taking on lawyers with skill sets specific to the requirements of the business, and thus negating the need to consult lawyers with a more generalist practice. In this sense, many companies have been able to simplify their relationships with firms and use external counsel in only the most highly complex and specialised circumstances, focusing on the attributes of individual specialists and subsequently managing legal costs with greater accuracy.
Many companies have discovered that expanding their in-house teams brings another benefit in terms of accessibility, as corporate counsel are much easier to contact, resulting in quicker resolution of legal problems and greater efficiency in business operation. However, as one source observed, the trend for greater internalisation of legal services is much more prevalent at larger companies which have “exceeded a certain critical mass”. In comparison, small to medium-sized enterprises still tend to limit their internal legal support function due to the overhead costs involved; often, seeking ad hoc support is still less expensive than hiring corporate counsel. Companies also look to consider the clear benefits of consulting outside counsel when making decisions as to the balance between in-house capacity and private practice retention. Large firms have the international perspective and presence across a number of jurisdictions, which is particularly important for multinational companies seeking advice on cross-border transactions and local legal issues. Private practice firms also have an advantage of possessing greater depth in expertise, with lawyers who have attained a high level of specialisation in their role. Company clients can also benefit from the ability of major firms to offer legal services across a range of practice areas and facilitate communication between various departments in order to deliver specific, commercially-oriented advice.
The nature of an in-house lawyer’s role has changed dramatically over the last 20 years, having diverged further from private practice and grown increasingly demanding; general counsel is a position now closely assimilated with a senior executive role, and as such its day-to-day duties are shaped more than ever by corporate considerations, rather than in the context of abstract legal advice. In-house lawyers are required to perform consistently and take responsibility for a much wider range of legal areas than private practice practitioners. In addition, many respondents have noted that general counsel are now more likely to handle corporate governance, cost minimisation and budget allocation as part of their role, reflecting increased caution and risk awareness among companies in the wake of tough economic conditions over the past six years.
Contributors to our research across a range of practice areas have observed some of the most common reasons behind making the move to an in-house team from private practice. The business-oriented and varied nature of the role appears to be one of the most persuasive factors, and one prominent in-house lawyer commented, “I have relished the challenges the role brings and enjoyed considering legal issues in the context of commercial factors such as product development, sales and management.” While the gap between private practice salaries and corporate counsel pay is smaller than it was 10 years ago, leading corporate counsel are generally do not receive the same level of pay as partners in private practice, suggesting that salary is usually not central to the decision to move in-house . At several firms, the ‘career track’ from trainee to partners has slowed in recent years, prompting some to feel that they can achieve faster career progression by moving in-house, with opportunities to develop expertise across a range of practice areas.
Over the course of this special report, Who’s Who Legal takes a closer look at major trends, high-profile moves and developments in the in-house market, with contributions from leading individuals in the field as they share their experiences, identify the skills required to excel as an in-house lawyer and analyse the key differences between corporate counsel work and private practice.