In-house beautiful

Almost a quarter of practitioners now work in-house, and very few of them appear to have any intention of returning to private practice.

As the old days of aiming for partner and owning a stake in a law firm slowly pass away in favour of security, work-life balance, and a recognition that being managing partner might not be as much fun as it was once cracked up to be, going in-house looks increasingly attractive.

A Law Society survey of the pay and conditions of corporate counsel should give law firms ‘food for thought’ over how they treat their associates, according to the Society’s head of regulatory affairs Richard Schofield. Lawyers are clearly being tempted in-house, he says.

Inside knowledge

• Average in-house counsel earns more than private practice equivalent
• Pay gap still exists between male and female in-house solicitors
• Better work-life balance is main reason given for moving in-house

‘It is partly to do with work-life balance, partly to do with the employment experience and career opportunities but, increasingly, because the remuneration packages being offered as a whole are closing the gap with private practice.’

The profile of corporate counsel is part of a programme of research projects being carried out by the Law Society to improve its understanding of the employed sector, which makes up nearly a quarter (23%) of those holding practising certificates. The largest business sector they work in is commerce and industry, which employs about 15,000 in-house counsel. A telephone survey undertaken for the Law Society looking at in-house counsel demographics, employment settings, basic employment terms and earnings, found that the median salary for all full-time corporate counsel, irrespective of position, was £80,000 for 2007/08. Part-timers are on around £55,000.

The survey reports: ‘On the basis that corporate counsel are employees in commercial organisations rather than the owners, key strategists or fee-earners, comparable positions within large commercial law firms are, it is suggested, probably those of assistants and associates and perhaps salaried partners in the largest law firms.

‘Average earnings of corporate counsel were £10k higher than the average for associates and assistants in the largest firms (£70k).’

It was more difficult to compare salaries with salaried partners because the estimates were based on very small samples, but they at least appear to be on top. Bearing in mind the small samples, the survey found that salaried partners in firms with 26 or more partners earned more than full-time corporate counsel as a whole, and more than legal directors and heads.

This may well sway some solicitors, says Schofield: ‘The profile may give many in private practice cause to consider the benefits of working in-house, and it may give food for thought to law firms as to how they choose to interact with their associates – not just on pay, but also on working conditions.’

A snapshot of the working life of a corporate counsel showed that around half work in departments with three or fewer legal staff; a quarter work on their own. Almost all undertake some legal casework personally (94%), commission and manage the work of external legal advisers (90%), and undertake some administrative work (91%).

Just 6.5% of respondents said they had felt pressure from their employer, at some time, to pursue courses of action that they thought conflicted with their professional responsibilities as set out in the Solicitors Code of Conduct. However, almost all (91%) felt either very or fairly valued by their employers.

Putting in the hoursOverall, the survey found, ‘over three-quarters of corporate counsel had moved into the employed sector for a better work-life balance, yet seemed to be working, on average, as many hours as private practitioners.

‘However, compared to private practitioners in large firms, corporate counsel worked less on average; and, since over half of respondents began their legal careers in large firms with 26 or more partners, for many their work-life balance would have improved.’

Martyn Rodmell, national chair of the Commerce & Industry (C&I) Group, is group legal counsel at the Liverpool-based food and soft drink company Princes, and heads up a legal department of three lawyers and one legal assistant. He moved in-house more than 20 years ago from a small north-east law firm. While the pressures may be different to private practice, because in-house lawyers do not have to bring in fees, Rodmell says they are just as significant and he is frustrated at any suggestions that working in-house may somehow be an easy life.

‘People might think that if you work in-house, you work fewer hours,’ he says. ‘But you are working for a commercial organisation and you have to be prepared to do what the job requires. It shouldn’t be seen an easier option. If someone came for an interview and gave that impression, they wouldn’t get the job.’

But the attractions are ‘no time-sheets, a bigger variety of work and working as part of a multi-disciplinary team so you see deals through to signature and have a greater sense of ownership of the work’, he says.

The general policy at Princes is to do as much work in-house as possible, both on cost grounds and because they know the business. ‘To be a good in-house lawyer you have to be very versatile and react quickly, as well as commercially,’ he says. ‘Nobody is interested in six pages of advice on a legal issue – what they are interested in is the solution.’

He says the C&I Group, with its 4,500 members, has a strong regional presence and promotes training and networking. It campaigns on issues affecting members such as the level of the practising certificate fee, privilege and external fees. The group is also providing advice on implementing alternative billing methods, including fixed fees and payment by results in its upcoming C&I fee-billing toolkit, due to be released at the end of this year.

The variety of work is at least as attractive as the benefits. John Bleasdale is legal director of major transport company TNT and a national executive member of the C&I Group. He has worked in-house for eight years after moving from Blackburn firm Cunningham Turner, where he was a partner. His legal team includes two solicitors and a paralegal, though the company’s worldwide legal team is much larger. For him the attractions of working in-house are the ‘variety and quality of work and the commercial acumen of the people you are working with’.

However, he adds: ‘You don’t have the collegiate atmosphere of a partnership, so it is important that you make efforts to keep in contact with other counsel so you can benefit from sharing experiences.’

Rodmell says corporate counsel are a vital part of a company. However, he adds: ‘The role doesn’t yet have the status of the American experience, because you don’t get that many corporate counsel finding their way onto the board – although many lawyers here don’t think they should be on the board anyway.’

He has yet to see any impact from the economic downturn, so it is hard to say if this makes in-house work look more attractive to either lawyers or companies. ‘It is too early to know what effect the credit crunch will have – though it may have a knock-on effect on the in-house market in the sense that companies will be looking carefully at their external legal spend,’ he says.

Schofield says that if firms start to lay people off, ‘solicitors may consider working in-house for greater security, but no one knows how the in-house sector is going to respond to changing economic conditions either’.

Simon Welch, chair of the C&I corporate governance sub-committee, is group secretary and legal counsel for the West Bromwich Building Society and in charge of a seven-strong legal team. He agrees that in-house is not a route out of instability. ‘I don’t think there is a lot of difference in your sackability rating,’ he says.

A former property solicitor with Wragge & Co, Welch left to become a senior lecturer at Nottingham Law School before joining the building society in 2006. ‘There are two questions associates should ask themselves. First, are you interested in law per se? In which case, you are best off in private practice. If you are interested in law in the wider context of commerce and industry, then working in-house is a very viable option. The second question is: you work hard to make partner, but is your law firm truly a meritocracy? I would be wary of trusting the judgement of people who hardly know me.’

Welch says the pressures and hours can be just as intense in-house, but corporate counsel have protection as employees. ‘Lawyers sign away those rights when they go into private practice,’ he says. ‘It is not quite a Faustian pact, but it is a case of getting the money so you do the hours. You have to consider if the pact is worth it.’

His particular bugbear with private practice is when partners are very keen to win work, but then do not put the same effort into developing a relationship with the client. ‘I find it moronic that some firms’ strategies are all about winning the work, but the assumption then is you will keep giving them work,’ he says. ‘I am a great believer that you have to work as a partnership.’

Salary gapWhen it comes to gender and ethnicity, the make-up of those responding reflects that of solicitors in private practice. However, while ethnicity was found not to have a bearing on salaries, gender did – going in-house might give women a pay rise, but it does not necessarily mean they will get the same as their male counterparts. Women were found to earn nearly 8% less than men, a similar differential to that found in private practice. Taking all position titles into account, the survey found median earnings for male corporate counsel were £90k and £70k for female counsel.

Schofield says: ‘The issues around women remaining behind men in the pay stakes seem to be as big a problem in-house as they do in private practice.’ The survey also found substantial differences in salaries outside London – those working in the Midlands and Wales earned about 34% less than those in London, those in the north around 29% less, and those in the south around 18% less.

Rodmell says he found the pay differential between male and female counsel identified by the survey surprising. ‘In my department everybody is treated equally,’ he says. ‘If there is discrimination, it is terrible and I would condemn it, but I have never encountered it in my experience in industry’.

When it comes to training, nine out of ten respondents had trained in private practice – only 7% had trained in-house. Of those who had trained in private practice, nearly half had trained in large firms with 26 or more partners. Less than a third had trained in firms with ten or fewer partners.

But the in-house sector is increasingly attracting the attention of law students.

Last month the BPP Law School ran an opinion poll on its intranet for the Gazette. Of the 305 students who responded to the question ‘have you considered a career as an in-house lawyer?’, 75% said yes, 19% said no and 6% said they were not sure.

Career guidanceHead of careers at BPP Michelle Daly says students wishing to pursue a career path in-house need to be creative and open-minded, and think about their electives carefully – company law is a must, for example.

She says: ‘One of the key questions a student would be asked at an interview is why they specifically want to train in-house and not in a law firm. Working for one company means that a student will be specialising quite early on in his or her career and this is something students need to consider carefully.’

Lead times for applying for in-house positions can be shorter than applying for large City law firms, she says, while salaries are generally good, with some companies offering around £30,000 as starting salary.

Professor Nigel Savage, chief executive of the College of Law, says the role of corporate counsel has, in recent years, become ‘much more elevated and significant’ within companies and in terms of dealings with law firms.

‘We have noticed that the opportunities for working in-house fall into two categories. Some of the big legal departments are now looking to take on their own trainees and there is the potential for their training to be done completely in-house. In the past, because of the obsession with the training contract and getting round sufficient seats, they had problems.

‘Under the new Solicitors Regulation Authority (SRA) regime and with the focus on work-based learning, rather than simply the process of having a seat in a particular department, there is much more scope for this.’

He sees this as a potential growth area. ‘And, because companies will be recruiting directly to their law departments, it will give trainees a better education,’ he says. ‘They will be part of a graduate recruitment programme, so not only will they do law but they may have a seat in marketing or HR, and that will make them better recruits and better lawyers.’

Other companies, he says, are happy to let the big law firms do the training and then recruit lawyers one, two or three years post-qualification.

‘When it comes to our students, some are saying they don’t necessarily want to go into the process factory of private practice,’ he says. ‘If this develops as a trend, we can facilitate it because of the way we customise our courses.’

Sue Clarke, head of postgraduate careers at Nottingham Law School, has noticed a trend among finance houses taking on students from the LPC as paralegals or assistants and, when they have proved themselves, the companies have then created a training vacancy.

This is the route chosen by the West Bromwich Building Society, whose legal team has two trainees nearing qualification. Both were already working for the society when it obtained authorisation from the SRA to set up a training contract, with the contentious element covered by their debt-recovery team.

As Welch explains: ‘Although we are not in the market for more trainees at the moment, I am a great believer in people learning about the business from the inside first and then offering them the carrot of a training contract if they show aptitude and initiative.’

However, Clarke says, for many students it is still better to train in private practice and then go in-house. ‘Quite a lot of in-house providers struggle with the contentious element of the training contract, so the trainee may have to go to one of their external law firms to do that part of their training. Students do talk to me about going in-house – but as lawyers, rather than trainees.’

For those who have made the jump, few regret it. Just over three-quarters of the survey’s respondents said a move back to private practice was either not very or not at all likely; a vote of confidence that would surely make some City law firms’ churn look even worse than usual.

Grania Langdon-Down is a freelance journalist

Life on the inside

If someone wanted to move in-house for a better work-life balance, they would need to look very carefully at the organisation, because a lot of in-house departments are demanding, says Peter Maynard, chair of the GC100 group, which brings together the senior legal officers at more than 85 FTSE 100 companies.

Certainly, the idea that the pressures or hours are fewer than in private practice prompts a wry laugh from Maynard, group legal services director of Prudential, particularly as his interview with the Gazette started at nearly 8.30pm.

‘My experience of most lawyers is they hate not being busy,’ he says. While the pressures may be slightly different to those in private practice, ‘it’s more about living with your decisions’ In-house counsel are certainly not immune from long hours.

Maynard moved in-house 25 years ago from City firm Clifford Turner, now part of Clifford Chance, joining first HSBC and then the Prudential ten years ago. He says: ‘I had a client where I seemed to spend all my life in their in-house department and I absolutely loved it. I felt you were closer to the business. You weren’t just brought in on a transaction. You were doing the transaction and then making it work afterwards. Externals are primarily there to give advice, but in-house allows you to decide which way to jump.’