This article is written by Ramanuj Mukherjee, CEO, LawSikho.
In the last few weeks, I had quite a few meetings with in-house lawyers for various reasons. I have been learning a lot from them about how in-house legal teams are being run and their priorities.
I anyway meet in-house lawyers a lot these days because many are either doing various courses with us or considering our training programs for their teams, but the last few interactions have been eye opening.
I see a stark difference between what in-house legal jobs used to be and what they have become.
When I went to law school, in house counsel jobs were not exactly the first choice. In fact, there was a notion in our mind that in house jobs are easy. You can always just hire the law firms when you have something complicated, was the feeling.
Some of us even heard more derogatory things about in house counsels – such as when you are burnt out in a law firm or fail to make a partner and it’s too embarrassing to stay on, you go to a company and become in house counsel instead.
None of the toppers from my batch or even the top 30% of the batch joined any in-house legal jobs. They all opted for law firms. 2 tier law firms if not big law. But in-house? That was an option to consider if you couldn’t manage to get a law firm job at all.
I am not sure how correct our choice was. Anyway at least half of the people who joined law firms back then eventually ended up working as in-house counsels within 4-5 years.
Even if in 2011 law firms used to be the superior choice, in 2019 things are quite different.
India’s largest companies have changed their attitude towards in-house lawyers somewhere in between.
From a relatively unimportant appendage that interfaced with outside law firms, in-house legal departments have grown in status, budget, depth and variety of expertise, and complexity of the work assigned to them.
In the larger companies, the in-house legal departments have become the primary service providers, and only in highly specialized matters that arise once in a while, or in far flung places where they do not have enough reach, law firms are still being roped in.
The regular high volume work is being dealt with in-house. Low volume, ultra-specialised work goes to outside lawyers. This is very much in contrast with how things were a decade back.
Let’s say Company X wants to acquire 2 companies in 2009. Chances are that they are going to go to a law firm for this work, though some of the work may still be done in-house to reduce the billable hours.
However, if Company X is planning to acquire 10 different companies next year, it will probably hire a partner from Law Firm Y and a small team under him in-house to do those deals instead of going to Law Firm Y!
Similarly, the GC may decide to go to a competition lawyer if there is a one-off thing to handle. But if its a regular headache for the company, he will hire a competition lawyer in-house.
If there is a consumer case in some district in Assam, it will obviously be outsourced to a local lawyer on case to case basis. But let’s say the company regularly gets sued by consumers in consumer courts in Delhi. The company is then likely to hire a dedicated lawyer to do this work in all the Delhi-NCR consumer courts.
This is more efficient. It reduces cost. Increases reliability of services. And when there is not enough consumer protection work the lawyer may be asked to help with some compliances or something else.
It’s a superior business model. Far more efficient. And therefore India Inc has been allocation more of its legal budget to in house law departments rather than throwing money at law firms.
This doesn’t mean law firms are going hungry. Evidently, large law firms have been growing larger, though there has been pressure on margins across the board thanks to burgeoning in-house culture.
However, this trend has put a very different kind of pressure on law firms. Now they have to not only compete with other law firms but the in-house legal teams too. Very often, the top legal talent is being lured away from law firms to in-house legal departments. Law firms have been steadily losing work, talent and market share to in-house lawyers.
But you subscribe to iPleaders’ email list, and we can’t let you remain oblivious.
Please remember that we are not saying it is not worth working at law firms any more. Working for law firms remain lucrative and a very promising and viable career option.
It’s just that you need to weigh your options for in-house as well.
Also, there are a few things at which in-house legal teams are steadily beating law firms. I want you to understand these factors before you decide your long term career options.
In-house legal departments are more focussed on reducing costs and increasing efficiency
Law firms are often loathe to increase efficiency and reduce costs. And it’s natural because they usually calculate their fees by the number of hours spent on a matter. If the hours are reduced then billing shrinks! It’s a big problem.
In-house legal teams are continuously trying to increase efficiency and reduce costs. Cutting costs is one of their focus areas. This means they develop better processes, better systems and standard operating practices.
This also means that you have to be more efficient at work if you are looking for a job, whether in a law firm or in a company.
Some law firms have also recognized this trend and have begun to optimise efficiency, but they are only a tiny minority.
In-house is leading in adapting new technology and innovation
Law firms are incredibly resistant to new technology. And I think it’s natural. They are not led by technopreneurs. Leaders of law firms see their value in legal expertise, and not in technological disruptions! They are the establishment as far as the legal industry is concerned, and the general perception is that disruptions are not good for business.
GCs, on the other hand, are far more open to new and disruptive technologies. They can see new technology being implemented in every department of the company, from customer service, production, marketing, sales, HR, performance management and everything else. Why should the legal department not do it too?
The outlook to technology driven disruption, therefore, is completely different. And it is making a huge difference already.
Law firms will soon be forced to play catch up.
We face the same issue when we pitch our training to law firms and in-house legal departments. Companies approach us enthusiastically for training their lawyers or other executives.
Law firms are super reluctant and very sceptical even though they can gain far more. Things move much slower in law firms as far as new, unconventional proposals are concerned, while in in-house legal departments they are warmly welcomed and studied with great interest.
Big law firms, in my experience, are far less likely to experiment as opposed to big companies. This can be a huge disadvantage in the times that we are doing business in.
It is not that no law firms are using new technology, it is just that they are behind the curve in most cases.
In-house is paying more, offering more perks and giving better work-life balance at several levels of seniority
Entry level jobs in in-house law departments would usually be lower paying compared to law firms, with some notable exceptions. This can change as one goes up the chain and assume more senior roles.
As in-house teams have begun to lure in successful law firm lawyers, they have begun to increase the pay packages. And they can usually pay more, hour for hour, compared to law firms because it is simply a more cost efficient model. There is no share of your fees to be given to the partners or cover massive law firm overheads if you are in-house.
And since usually in-house teams are run quite efficiently, better perks can be offered.
An unfortunately large number of law firms have toxic work culture, no work-life balance, unhealthy work hours and very hostile work environments. Since in-house legal teams usually have to follow the work culture of the larger organization, they are far better in these matters.
In most law firms, HR managers are toothless tigers and partners take all HR decisions. Large companies are very different in these aspects. Even the GC has to submit to HR policies and cannot run his team like his fiefdom, as many law firm partners tend to do.
Perks, holidays, work timings of in-house lawyers and all other executives are exactly the same, and hence often far better than what one gets in law firms. Google lawyers get the same perks as all Google employees, and it’s quite something. The scene is quite similar in other major tech and media companies.
Also, many lawyers love to work at in-house legal departments simply because they can go home to their family by 6 or 7 pm, which is impossible in most big law firms.
There is more variety in work in in-house legal departments
Law firm jobs are often very super specialised. Repeatedly doing the exact same work over the years can become very boring.
I was recently talking to a lawyer who worked on fund formation for 4 years. She said by end of the 3rd year she realised that she would keep doing the exact same things for the rest of her life unless she makes a switch. Now she is an in-house counsel, and she cannot really predict what work will come across her table 6 months down the line.
It will vastly be influenced by new business decisions made by the company. They may change the business model, launch new products, new campaigns, or get into new kind of contracts. There may be new regulations or policy decisions by the government that has to be navigated. The company may acquire or start new businesses or get into new geographies. Accordingly, the role of the lawyer may change.
Some people like this super speciality and predictability part about a law firm job, but some don’t.
Remember that all in-house lawyer jobs are not like this. I have also met lawyers who did the exact same work in companies for 4 or 5 years and then left out of frustration. So watch where you are going, and be careful about what you wish for.
Another thing about working in a MNC can be that you can get international exposure as you go up the ranks, which is impossible in Indian law firms because hardly any of them have any significant international exposure.
More jobs are being created by in-house legal departments than law firms
Law firms are great, and create a lot of high paying jobs every year. Especially at the entry level. In-house jobs are fewer at entry level (for freshers) but aplenty as you gather some experience. In fact, as companies are spending more of their budgets on internal lawyers, the number of jobs shifting in-house is quite high.
This is a trend we foresee to continue in the next decade at least.
How should you prepare yourself for an in-house job?
In-house lawyers do not necessarily do the same work as law firm lawyers. Like I said, law firms lawyers need super specialization these days but in-house lawyers need a more general understanding in most cases. However, in-house departments are now hiring both specialists and generalists.
However, being a generalist in a legal department may be a better idea because otherwise you run the risk of getting pigeonholed and may not progress to be the GC one day!
We have at least one course that we say is just perfect for young lawyers looking to work in-house. It consists of 16 modules that cover various legal issues, challenges and tasks businesses face in different stage of their lifecycle. It is a general business law course that would be immensely beneficial even for those already working as in-house lawyers.
A course in contract drafting is often an excellent choice for in-house lawyers because they often end up working on drafting contracts for upto 50-80% of their working hours, although this depends on the kind of role they are engaged in.
We also recommend more specialised courses like the labour law course, course on company law, corporate governance and SEBI regulations, arbitration law course, course on insolvency and bankruptcy code, media law course, technology law course, real estate law course, tax law course, electricity law course etc depending on their industry and area of function.
Would you consider working for an in-house lawyer role? What are your thoughts? Let me know by commenting.