In house counsel

In-house legal teams : beating law firms

In the last few weeks, we had quite a few meetings with in-house lawyers for various reasons. We have been learning a lot from them about how in-house legal teams are being run and their priorities.

We 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.

We see a stark difference between what in-house legal jobs used to be and what they have become.

A decade or more back, in-house counsel jobs were not exactly the first choice. 

In fact, there was a notion that in-house jobs are easy. You can always just hire the law firms when you have something challenging! 

We 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 any 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.

We are not sure how correct the 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, 2017-2018 onwards the trends began to change. 

And since the pandemic, things are different.

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 specialised 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 2024. 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 it’s 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 a 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 allocating 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 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. 

In-house legal departments are more focussed on reducing costs and increasing efficiency

Law firms are often loath 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 began 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 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

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. 

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 organisation, 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.

We will soon discuss one more exciting opportunity for in-house counsels which holds the most monetary rewards – working for fast-growing startups. 

Stay tuned!  

There is more variety of 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 the 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 kinds of contracts. There may be new regulations or policy decisions by the government that have to be navigated. 

The company may acquire or start new businesses or get into new geographies. Accordingly, the role of the lawyer may change.

Another lawyer who moved in-house from a top law firm as a senior associate said the same. 

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.

In-house counsels experience more work satisfaction as they perform meaningful and challenging work

Let me give you some examples. 

Lately, I am seeing an explosion of “Product Legal” or “Product Counsel” – these are in-house job opportunities. 

Consumer-facing companies, whether they are new-age startups or big tech companies, love hiring in this role, and pay top dollar.

Law firm lawyers do not do this work. Litigators have no clue about it.

Even traditional in-house counsels are caught unawares.

Product counsel is a re-imagined role for a compliance lawyer. 

However, rather than looking at paperwork and filings alone, you get to experience the entire workings and functioning of a tech product, to see if it meets the applicable legal requirements.

Often, these roles can be multi-jurisdictional in nature – as companies launch apps that are international.   

This role is preventive and strategic in nature – and you need to be on top of your game as mistakes will trigger mass legal violations.

Here are some questions a product counsel would look at:

1. Is it legally permissible to levy a surge fee inside an app during times of high-demand? (Think Uber/Cleartrip/Zomato, etc.)

2. Can you charge customers different fees based on their usage of the app? Would it steer clear of competition or consumer laws?

3. Does location tracking of your sales team/customers violate data protection or privacy laws?

4. Does the method of receiving payments violate any of RBI’s regulations?

5. Are labour laws attracted to the unique business model of a company which may engage freelancers?

6. Does the business model of the company require some additional registrations in the state/country where it is accessed?

The product is conceptualised by the business teams, and they’ll fight hard for your approval.

In an MNC, a global General Counsel may have already approved this at the global level, so your research needs to be very thorough.

You will not get a detailed brief to write a memo like a law firm lawyer, or like a senior advocate from a briefing counsel – you will need to sit with the business teams.

This is part of the excitement.

They may take you through mockups of the app, explore the functionality like a consumer, before mass release.

You have to engage and apply your mind. 

Your inputs may get factored into a product which is used by millions.

You’d have contributed to the world’s most path-breaking innovations, for real, made a dent in the universe.

Sometimes, your solutions may help the company manoeuvre a legal obstacle and gain an advantage over competitors. 

Such opportunities where you get to be a part of building something big are not typically available in other roles as a lawyer, where you focus on transactional work or a specific litigation outcome.  

If you are good at being a product counsel, you could be considered for global roles as well. 

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