Volume 18, Number 1
January/February 2001

Corporate Counsel :The Practice Setting for You?

By Janet B. Wright

America’s corporate legal departments are growing. In 1991, the top ten companies on the Fortune 500 list employed, on average, 287 in-house attorneys.1 In 2000, that average was 407.2 Much like a law firm practice setting, a corporate legal department can range from a one-lawyer unit to a 1,200-lawyer department, with an accompanying range of practice areas and expertise to meet client demands.

An American Corporate Counsel Association 1998 survey (the ACCA survey) showed that 21.5 percent of in-house counsel are their clients’ sole in-house practitioner, 38 percent practice in departments of three to five lawyers, 25 percent practice in departments of six to 20 lawyers, and 15 percent practice in departments with more than 20 lawyers.3 An in-house solo might handle everything from contracting to litigation to acquisitions, while in-house attorneys in a larger department might be highly specialized in a particular subset of the law. If your perception is that in-house lawyers are lesser attorneys who function as managers and farm out all but the most minor or mundane projects to outside counsel, it’s time to update your viewpoint.

In-house counsel generally functions as a member of the management team of the company or, in large companies, of a line of business or segment of the company. So, an in-house attorney wears two hats—one as a lawyer and one as a businessperson. This can be a tremendous source of job satisfaction if you enjoy those times when, after explaining the law and the available courses of action to your clients, they ask, "Yes, but what should we do?" But if those moments make you uncomfortable, in-house practice may not be for you. Not only will you be called on to provide your business judgment, but when a member of the management team develops a course of action that is risky from a legal standpoint, you must also speak up against it and protect the corporate interests.

Most Interesting Work

Corporate legal departments are staffed by highly skilled lawyers with sophisticated expertise in a variety of legal matters. Because the trend is toward efficiency and limited outside counsel budgets, in-house attorneys handle much of the interesting and complex work that once went to outside counsel, including mergers and acquisitions, regulatory matters, litigation, securities, and international trade matters. The ACCA survey reports that the in-house attorney’s most significant challenge is balancing an ever-increasing workload against tight budget restrictions.

While this balancing act can be challenging and can sometimes lead to long hours, it does have a distinct advantage. In-house attorneys can choose what they work on, keeping the projects that interest them most or give them experience they seek, and sending the less interesting or more mundane projects to outside counsel. Most in-house counsel report that the work they get on the inside is more interesting and challenging than the work they did in private practice.

Younger lawyers may also find that they are able to reach higher levels of responsibility faster in a corporation. While training is important, where the competition for clients is eliminated and work is plentiful, more senior lawyers are quick to put young lawyers in direct contact with internal clients and give them responsibility for many aspects of the legal work done for those clients. There is neither the time nor the budget for younger lawyers to spend years in the (online) library. Working on the inside of a corporation can also create new career paths for lawyers. Many lawyers leave a corporate legal department to take a management position with the same corporation.

Almost Like Business Partners

Another aspect of working in-house is that a lawyer will inevitably become involved in more detail than in private practice, and that detail will often involve the business aspects of a project or transaction. Over the course of a long project or a difficult negotiation, outside counsel may be consulted on points of law but is often not involved in the day-to-day work. In-house counsel is involved at a detailed level over a long period of time and must see the project through to its conclusion. Then, the corporate attorney will be involved in the implementation of the new contract, the integration of the newly acquired subsidiary, or the organization of the new line of business.

The corporate attorney frequently works closely with other professionals in the corporation on these projects, including accountants, engineers, scientists, and lawyers in international jurisdictions, using a team approach to achieve corporate objectives while accommodating the restrictions imposed by each specialty. The corporate attorney is both the lawyer involved in the transaction and a business partner to the internal client.

As a partner to the business in which they work, corporate attorneys must develop some familiarity with accounting and with financial statements. They should be prepared to understand a balance sheet and income statement and a statement of profit and loss. Revenue recognition is a frequent topic of discussion in-house. In order to provide complete and useful advice to the client, lawyers have to explain how their legal advice will affect the company’s financial statements.

Relief from Private Practice Headaches

If you ask in-house attorneys what they like best about the practice setting, many will say "no billable hours." In fact, many corporate attorneys do not work fewer hours than they did in private practice, but relief from the stress of the billable hour requirement weighs heavily in favor of a good quality of life. In private practice, lawyers are always aware that they are being evaluated on the basis of the quality of their work and the number of hours billed, and many feel that the number of hours is the most important factor.

But in-house attorneys are evaluated on the quality of their work, often as reflected in the evaluations made by internal clients who are not lawyers. While most in-house attorneys have multiple clients with competing demands, the absence of the billable hour requirement is a subtle difference that leads to a more predictable and self-controlled schedule. Late nights more often result from a choice to get the job done, not from a need to increase this month’s billable hours.

An in-house practice also gives relief from the relentless pursuit of clients. Power breakfasts, lunches, dinners, and golf games are not required, and the absence of a business development requirement on top of getting the work done can do much to improve quality of life. That being said, in-house attorneys should develop personal relationships with clients and potential clients inside the company. While an internal client may be a captive audience, you must develop a relationship with him or her and earn your place as a partner in the business. Like your clients in private practice, if an internal client does not trust you or your skills, or if you do not provide valuable, useful, and practical advice when asked, that client will not involve you in projects early or often enough for you to do your job. Your performance and evaluations will suffer.

External networking continues to be important to in-house attorneys, but thankfully doesn’t carry the pressure of business development. Many in-house attorneys are active in the ABA, local bar associations, other professional organizations, and in their communities. These activities can bring personal and professional satisfaction and foster professional development. In addition, today’s business environment requires all of us, whatever our practice setting, to manage our own careers and be prepared to make a job change when the situation requires it. Whether you must, or just want to, find a new job, your personal network is your strongest tool.

Attorney-Client Privilege

An in-house counsel’s role as a lawyer and as a management team member increases the risk that the assertion of the attorney-client privilege may be questioned by opposing counsel who will argue that the in-house attorney was acting in a business or management role rather than as a lawyer in a particular situation.

The activities of in-house counsel—closing deals, litigating cases, and attending management meetings—involve rendering communications that include both legal and business advice and can lead to privilege challenges. In-house attorneys also communicate with employees at all levels in the company and the issue whether all employees constitute the client for communication purposes is not settled. Given the state of the law, in-house counsel must be especially aware of protecting the privilege.

Giving Up Compensation?

Do lawyers earn less in-house? It appears that the range of salaries in private practice and in-house are so diverse that compensation can only be discussed in general terms; individual lawyers must discover answers for themselves. Many lawyers report that they earn less base salary in-house but that benefits, including stock options, are better.

PricewaterhouseCoopers undertakes an annual survey of performance and compensation measurement for law departments.4 In 1999, lawyers in law departments with more than 100 lawyers received median compensation of $149,000, while lawyers in departments of six to ten earned a median of $130,000. Bonus constituted a portion of total cash compensation ranging from, on average, 15 to 25 percent. Long-term incentive compensation is also important in-house, and in 1999 general counsel positions received a median of $214,000 in stock options while non-general counsel positions received a median of $49,000 in stock options. As in private practice, the range of compensation available is broad. If you seek an in-house position, you should become as educated as possible on that corporation’s compensation and benefit packages so that you can negotiate the package that best fits your desires and needs.

In-house practice can be at least as financially rewarding as private practice, if not more so. While compensation for some in-house counsel positions may fall short of that for some lawyers in private practice, for many lawyers the rewards of a satisfying job and an attractive career path outweigh any temporary or ultimate difference in compensation.

A Satisfying Environment

Whether you want to be an in-house "solo" doing a wide variety of work for the client of your choice or an in-house specialist who focuses on a narrow area of interest within a large legal department, an in-house practice setting can provide a high quality work environment and a good quality of life. The work is detail-oriented and challenging, and you will have a great deal of responsibility.

Whatever size department you choose, you will find that you are part of a management team and you will be called on for business advice. You will gain a deeper understanding of and appreciation for your client than is possible from an outside counsel position. With the right client, an in-house relationship can be a long and satisfying one.

Notes

1. Who Represents Corporate America?, Nat’l Law J., July 8, 1991, at S5.

2. Who Represents Corporate America?, Nat’l Law J., June 21, 2000 (www.nlj.com).

3. American Corporate Counsel Association, In-House Attorneys: A Profile of the Profession (1998) (www.acca.com).

4. PricewaterhouseCoopers, 1999 Compen-sation and Long-Term Incentives Report.

 

Janet B. Wright is an attorney at Dell Computer Corporation. She specializes in federal and international tax and spent ten years practicing in a large law firm setting before going in-house.

 

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