June 10, 2020 Feature

The Pros and Cons of Serving In-House

Heather N. Bowen

©2020. Published in Landslide, Vol. 12, No. 5, May/June 2020, by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association or the copyright holder.

There are many ways to define a successful practice of law. After law school, new attorneys have many employment options available to them. Many choose to take on postgraduate legal fellowships, judicial clerkships, or an associate position in a private law firm. Others may go into practice at a nonprofit institution or take a position with the government or in academia. However, there are far fewer attorneys who choose to begin their legal career as in-house counsel.

Understanding the In-House Counsel Role

To understand some of the advantages and disadvantages of serving as in-house counsel, we must first define the in-house counsel role. The Rules of the Court of Appeals for the Registration of In-House Counsel in the state of New York define an in-house counsel as “an attorney who is employed full time in this State by a non-governmental corporation, partnership, association, or other legal entity, including its subsidiaries and organizational affiliates, that is not itself engaged in the practice of law or the rendering of legal services outside such organization.”1

In the past, the belief was that the in-house counsel role dealt with more administrative or more straightforward tasks while shelling the more complex work to outside counsel. But over time, the in-house counsel role has significantly expanded to include more higher-level tasks, including legal risk and compliance reporting management, strategic business development, and the developing, drafting, negotiating, and updating of transactional documents. In addition, the role requires in-house counsel to be able to work strategically alongside senior executives and respective information security, sales, finance, marketing, human resources, operations, and professional development departments. The in-house counsel role demands that the attorney be able to work cross-functionally across an organization to execute new initiatives and reach company milestones while, of course, providing competent legal counsel.

The days of in-house counsel serving in a reactive role simply overseeing corporate transactions or litigation farmed out to law firms are long gone. Increasingly, legal departments are hiring some of the best and brightest legal minds to serve as counsel and bringing legal work inside the corporate environment, simultaneously reducing costs and shifting the company’s internal power relationship. In-house counsel are practical problem solvers, serving as key members of the corporate decision-making team, facing demands and rewards that, in many instances, are unmatched compared to other areas of the legal profession. Because the breadth of responsibility is extraordinary and requires one to work at a particularly accelerated pace, in-house counsel are quick on their feet and equipped to respond immediately to preempt problems as decisions are being made. The sections that follow address some of the key advantages and disadvantages of serving as in-house counsel.

Advantages of Serving as In-House Counsel

There are many advantages to serving as in-house counsel. Understand that moving to an in-house position from another legal profession can often be a wise move for attorneys, depending on the company and the attorney’s personal life and career goals. Here are five of the many advantages to keep in mind when considering a move in-house.

First, in-house counsel has, in theory, one single client to which that counsel needs to give attention and guard against risk. In return, the company leaders trust and respect the advice and counsel provided. As in-house counsel, there is no need to “sell yourself” every day to prove value and worth. Unlike in a law firm setting, where associates must balance multiple clients or cases, an in-house counsel position allows the attorney to focus on the risks and needs of one specific company. It also offers freedom from the billable hour and the need to originate new business to proceed up the proverbial “ladder of success.”

Second, in-house counsel can prioritize tasks far easier than attorneys in other legal settings. Unlike law firm associates who have competing requests for legal work coming from several clients who all want their matter addressed immediately, in-house counsel can prioritize tasks based on the level of profitization and the company’s overall vital objectives. Simply put, it is much easier to be wholly involved in matters affecting one primary client than to have to balance half a dozen or more clients at one time. Not surprisingly, in-house counsel are more involved in the day-to-day corporate matters that move the needle forward in meeting company goals and gain a substantial amount of transferable experiences, both legal and nonlegal, in the process.

Third, in-house counsel can become the team’s key decision maker. While outside counsel can assist in providing some services to a company as more of a reactive or suggestive measure, it is only in-house counsel who can raise issues within the company from early on and assist proactively in resolving such matters.

Fourth, in-house counsel has an opportunity to manage vendor relationships by making the business decisions with individuals who are considered key “businesspeople.” These individuals value the in-house counsel’s input often more than their own constructive business and legal analysis. In-house counsel is sought after by the internal departments for such counsel because they understand that the counsel’s interests align particularly closely with that of the company for which it is serving. In-house counsel is not focused on increasing the profits of outside counsel, because in-house counsel does not have a requirement of billing as many hours as possible. Instead, in-house counsel focuses on the long-term profit maximization for the respective company both by being a valuable employee of the company and by having an equity interest.

Finally, in-house counsel may experience a greater work-life balance. By no means is the in-house counsel role a “cushy” job. However, in comparison to the day-to-day life of associates and partners in large firms in particular, there is certainly a work-life balance. This balance means there are more opportunities, depending on the company, to work a stable 40-hour workweek, work remotely up to three or four days per week, and enjoy completely uninterrupted work-free vacations. With greater control over their schedules, in-house counsel will inevitably be viewed as having a greater work-life balance and less stress overall.

Disadvantages of Serving as In-House Counsel

While there are many advantages to serving as an in-house counsel, there are also many disadvantages to which an attorney should be aware. First, in-house counsel do not have the advantage of logged hours spent working on various matters for the client when compared to individuals working in a law firm setting. In a law firm, associates’ efforts are more closely noticed and tracked on a day-in and day-out basis through billable quotas. For example, associates billing a larger number of hours for work done for particular clients are rewarded for their efforts, whether in compensation or otherwise. On the other hand, in-house counsel are sometimes viewed as substitutes for outside counsel and may not be rewarded along the same compensation lines as outside counsel regardless of the amount of time and effort needed to carry out a high-value transaction. Thus, billable time can serve as both a blessing and a curse. While it is not to say that in-house counsel are unable to demonstrate their value to a company, it is more challenging to do so where in-house counsel are not expected to track their time and efforts via the billable hour.

Second, in-house counsel may have a lower salary compensation; however, this depends on a number of factors. Globally known companies pay salaries that match or exceed what an associate would otherwise earn in a law firm. However, companies considered more of a “startup” or that have fewer resources tend to offer lower compensation packages. These companies might include year-end bonuses that help to counteract the decreased salaries. This makes up for the difference in base compensation, allowing in-house counsel to share in the profits based on corporate performance, individual performance, and other relevant factors.

Conclusion

In-house counsel are extremely productive employees and valuable additions to corporate executive teams, particularly in the context of a legal transaction or major litigation. They take on several roles that offer benefits to a company. Not only do they serve as service providers by drafting contracts and reviewing internal corporate governance processes, but they also serve as advisors in identifying legal troubles and guiding the company in minimizing risks on many operational, financial, and compliance issues. This requires that counsel thoroughly educate themselves on applicable legal standards and communicate those standards to members of various departments who are charged with carrying out the respective tasks.

Every attorney is different. Every company is different; however, every company has a need, whether known or unknown, for in-house counsel. The most forward-looking in-house counsel have found innovative ways to maximize their value in spite of fewer resources.

Endnote

1. N.Y. Comp. Codes R. & Regs. tit. 22, § 522.1(a).

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Heather N. Bowen focuses her practice on intellectual property, technology, and data privacy matters. She has experience serving as corporate counsel to global companies in both the media and entertainment and health-care technology spaces.