In-House Still a Popular Choice
Remember the dot-com craze, when lawyers fled law firms for fledgling start-ups, with visions of stock options and IPO cash-outs dancing in their heads? Then came the bust, and many former fast-track attorneys in in-house positions found themselves jobless.
But despite lessons of the dot-com days, in-house positions haven't lost their appeal, as described in this story from The New York Times, The Lure of the In-House Job (6/16/06). The article reports on several legal profession luminaries -- including Beth Wilkinson, who prosecuted Oklahoma City bomber Tim McVeigh; former 4th Circuit judge Michael Luttig; and Eric Dinallo, who investigated conflicts of interest on Wall Street under Elliott Spitzer -- who have opted for in-house positions with big-name corporations like Fannie Mae (Wilkinson), Boeing (Luttig) and the Willis Group (Dinallo).
Several factors explain the trend, according to the article. First:
Companies are more interested than ever in looking outside the company for prominent lawyers, particularly those in high positions in government, to navigate the regulatory waters. "The emphasis on compliance is enormous, and the regulatory scrutiny is like never before," said Julie Goldberg, who recruits in-house lawyers for the executive search firm Korn/Ferry International. "Those drivers are behind C.E.O.'s and boards of directors looking for very sophisticated, well-respected, well-networked lawyers who have a very broad understanding of the landscape."
Moreover, companies don't particularly care whether a candidate knows about the company's substantive business. Wilkinson knew nothing about Fannie Mae's mortgage securities business, but believes that she was a desireable choice because of her good relationship with regulators.
Though moving in-house offers a huge salary increase for someone like Judge Luttig, the article states that "partnership at a law firm still beats the general counsel job" in terms of cash compensation. Here are the numbers:
The American Lawyer's most recent survey, published in May, states that partners at 44 of the nation's top 100 law firms drew $1 million or more in compensation in 2005. And 10 firms, nine of them in New York, boasted more than $2 million average "profits per partner." Catherine R. Nathan of the executive search firm Spencer Stuart said cash compensation for a general counsel -- excluding the financial services sector -- starts at about $750,000 and can rise to about $1.8 million.
Most of the attorneys interviewed, however, insisted that they do not expect any reduction in pay and, in fact, believe they may exceed their partnership salaries depending upon how their company performs. My own guess is that "worker bee" partners who aren't really rainmakers benefit most from a move in-house: Not only are they freed from the task of bringing in business but, presumably, they earned less than their breadwinning colleagues at the law firm.
Finally, Mike Cernovich reminds us that in-house isn't just for more experience attorneys. He writes that his 27-year-old wife is going in-house at a Fortune 500 company after only two years of practice at a firm. Apparently, the lure of in-house persists, irrespective of age or experience.
Posted by Carolyn Elefant on June 19, 2006 at 01:29 PM | Permalink
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