Room at the top for the in-house lawyer

Company legal departments can provide attractive opportunities and high rewards, says Sharon Wallach

The tendency in some quarters to view the in-house lawyer as a poor relation has faded in recent times, and working in-house is perceived by lawyers as an increasingly attractive option.

This is particularly so for recently qualified lawyers, says June Mesrie of the recruitment consultancy Quarry Dougall. First, they recognise the benefits, such as the chance to get closer to the client. Second, she says, people are thinking more about what they want in the longer term and see opportunities in taking the in-house route. "You can only plan as far as the market allows, but having said that, I've noticed that people are thinking their careers through much earlier on."

In recent years some companies have closed their legal departments; in other companies, some of their in-house lawyers have been absorbed into solicitors' firms. Many departments that have remained viable have been wary of becoming too big and being seen as uneconomic on their company's balance sheet. Despite all this, the overall number of lawyers working in commerce and industry has remained largely stable - and since the end of last year, the recruitment market has seen an increase in in-house vacancies, mainly for junior posts - lawyers qualified for two to four years - but also at a more senior level.

Remuneration has not dramatically improved, but fringe benefits far outweigh those in private practice. "Lawyers in private practice may get good contributory or non-contributory pension schemes and private health insurance, but not the care and the other benefits offered by in-house posts," Ms Mesrie says.

Somebody who is second or third in command in a legal department of 10 or 12 people in a large UK company could expect to earn upwards of £70,000. But the new companies springing up, particularly in computers and telecommunications, may employ a sole lawyer in-house for £50,000 to £55,000, plus benefits.

The pluses and minuses of taking the in-house route must be carefully weighed. "If someone is dead set on a partnership but doesn't think he or she will achieve one, that is not a good reason to go in-house," Ms Mesrie says. "It only works if it is seen as a positive move and if the lawyer has a genuine interest in the business he or she is going into." Even candidates for the very top positions have to ask questions such as whether possibilities exist for promotion to board level.

The reverse move, from in-house to private practice, can be more difficult. "You are competing against people who have been in private practice for some time, and who have developed a client following, which firms are keen on," says Ms Mesrie. "But the other side of the coin is that you may have a particular expertise in an industry, and you may bring all or some of your client's work with you."

The most marked trend in in-house work appears to be a shift in emphasis: while many companies employ a legal team for more commercial and specialist activities, they are outsourcing routine work. Three years ago, for example, ICI outsourced all its conveyancing and litigation work. According to its deputy group solicitor, Bob Peters, what remains are the core activities of broad-based commercial work.

This may be the basis for his feeling that the demand for the in-house resource is strengthening. "In-house lawyers enjoy more esteem than was the case a few years ago," he says. "They provide a more focused service that external firms have difficulty matching." Cost, though not the sole consideration, is an important factor.

"The pressure on in-house legal departments is the same as that in other departments in a company, to perform in relation to the bottom line and offer added value to the organisation," says Jyoti Munsiff, company secretary of Shell Transport & Trading and chairwoman of the Law Society's commerce and industry group.

A resident legal team offers the advantage of being "proactive and protective, rather than providing putting-out-the-fire type of advice", she says. "It's too expensive to get it wrong. An in-house team is made up of people who know the business and are on tap, and can provide a structure that may avoid mistakes that would turn out to be more expensive than employing the legal team."

Another head of an in-house team says that a review of the rising cost of outside legal resources resulted in his company employing more lawyers in-house to achieve lower costs overall. "The result has been a team of in-house lawyers who understand the specific needs of our business, and are able to achieve the same results at much lower cost, even allowing for the additional running costs of the department," he says.

Austin Allison of Standard Chartered, the chairman of the Bar Association for Commerce Finance and Industry, speaks of the recognition on the part of in-house lawyers that whatever services they provide must be cost-effective and offer value. "If there ever was a sense that a company had to have a legal department working reactively, it has long since gone," he says.

More and more companies are realising the importance of focusing the efforts of their in-house legal resources. His own department, he says, concentrates on issues of major legal principle as they affect the company, and manages the legal aspects of major corporate events such as mergers and acquisitions. It also manages major litigation and provides the board with anticipatory legal advice on important issues.

Mr Allison adds that a big function of any in-house department is to ensure that any work outsourced is done to high standards and is cost- effective. "We have made significant savings in terms of cost control," he says. "And on the quality side, we are ensuring a better and more informed selection of external lawyers."

In-house lawyers are still highly valued, he says, "The best use of them is made when their efforts are focused and the scope of their objectives are clearly agreed with senior management. An unfocused attempt to be all things to all men in the organisation just doesn't work."