Tag Archives: In-House Counsel

Beginning the Biglaw Lateral Process: A Guide for Associates

The current Biglaw lateral market is overwhelming.  There are more variables influencing associates’ career planning and strategic decision-making than ever before.  A byproduct is that getting started on a lateral search can be intimidating.  My goal here is to advise you on how to take the first few steps, because the way in which you target and contact firms can hugely influence your ability to make a change.  Below is a list of factors I encourage you to consider, and a quality recruiter will view each as an opportunity to maximize the likelihood of attractive offers.

1. Timing
Take advantage of active markets like this one to at least do your diligence.  It’s frustrating when you’d like to talk to a firm and they’re simply not hiring or unable to give you the kind of attractive offer you’d need to make the jump.  Also realize that offers have expiration dates and if you receive an offer from firm X, but wish you were able to talk to firm Y, it may be too late.  Do what you can up front to minimize the risk that timing negatively influences your options.

2. Who reaches out on your behalf
The best way to maximize options and ensure a successful process is by choosing a recruiter you trust and then leveraging contacts at other firms after your recruiter connects directly with each firm.  Yes, this will take away a friend’s referral bonus, but a good recruiter can effectively manage a comprehensive and targeted search, bump your resume to the top of a pile, and negotiate terms in a way that friends simply can’t.  When evaluating recruiters, pick someone who is an expert with respect to the space in which you operate so that they appreciate your practice and what could make it better in both a micro and macro sense.

3. Which firms you target
This alone depends on a ton of factors and personal preference, but it’s worth taking the time up front to think about what elements of your current practice you want to maintain and where there is room for improvement.  Your recruiter should discuss this with you and in turn provide insight into which platforms will check certain boxes on paper (e.g., bonuses, remote flex, substantive pivot, change in location, elevation of title, etc.).  Cultural fit is crucial, but it’s impossible to get a true sense for the people and environment before starting the dialogue.

4. Whom your recruiter contacts
Most firms have generic submission emails and/or online portals.  A quality recruiter should have personal contacts at the firms you’re interested in and the ability to sidestep the normal process to make sure your materials get in front of the right people as opposed to lost in the ether. 

5. Marketing
Success in the recruiting process largely depends on your ability to package and relay a clear and authentic narrative that aligns with what other firms are looking for.  If your materials and initial outreach don’t reflect that approach, you risk squandering opportunities.  Be thoughtful about what differentiates you from other candidates even if it’s not directly related to your practice.  Things like entrepreneurship, interesting work experience, and excelling at a sport or other activity can help endear you to partners.

6. Mental state

Take the process one step at a time.  Making a move is a big deal and you can’t understate the importance of doing so thoughtfully, but it’s important to think of interviews as casual conversations that allow you to explore fit and value.  A Zoom call costs nothing and having an open mind is the only way to truly evaluate the opportunity in front of you.  At the outset of the process, be open to introductions and save the real decisionmaking for when an offer is sitting in front of you.

Don’t Let Rumors Guide Your Lateral Job Search

As you surely know by now, the lateral market has been exceptionally hot in 2021. From record signing bonuses to flexible work arrangements, law firms are offering unprecedented carrots in the battle for associate talent. It’s undoubtedly a great year to make a lateral move.

But one side effect of the rapidly shifting market has been a cascade of misleading rumors. Many candidates are entering the process with unrealistic expectations, failing to appreciate that the factors shaping the terms of a lateral offer are multifaceted and individualized. In addition, the focus on flashy inducements like signing bonuses is leading some candidates to pursue opportunities at firms that may be a poor long-term fit.

Rumor mill: signing bonuses, practice group retooling, remote work

In our experience at Lateral Link, rumors about signing bonuses, practice group retooling, and remote work opportunities are especially widespread. Let’s address those topics in turn.

When it comes to signing bonuses, everyone has a story about an eye-popping figure that some lateral associate achieved. But even assuming the number being bandied about is accurate, it’s essential to place it in a broader context. The bonus offered to a particular candidate depends on several factors, including practice area, location, and personal compatibility with interviewers. Candidates sometimes interpret a signing bonus as a judgment on their intrinsic worth, but that’s not how firms determine the number. Signing bonuses are driven primarily by the firm’s idiosyncratic needs, not the candidate’s credentials. For example, where a firm is seeking to fill slots in a particular office and needs lateral candidates willing to move from outside the region, there is greater leeway for an outsized signing bonus. The bonus that a firm offers a fourth-year M&A associate to join its Boston office is not necessarily transferable to a fourth-year lateral joining the same practice in New York.

Similarly, you should not presume that a firm’s past decision to hire a particular lateral associate to retool into a new practice area is predictive of future offers. Firms’ willingness to facilitate retooling is driven by specific practice area and location needs. The more liquid the local market in the relevant practice area, the easier it is to hire an associate who already has the skills, and the less likely the firm is to consider a candidate who needs to retool. For that reason, you are more likely to find retooling opportunities in Boston or Austin than in New York or Los Angeles.

Unfounded rumors about remote work opportunities are especially common, driven by the fact that permission to work remotely is often partner-dependent. The fact that one associate succeeded or failed in negotiating a flexible arrangement when joining a firm tells you little about the prospects for a different candidate who would be working with different partners. It’s also worth noting that a candidate’s leverage to negotiate more flexible terms may improve based on strong interview performance.

Don’t lose focus on the long term

The excitement around bonuses and other carrots can cause candidates to lose sight of what should be the primary goal of the lateral process: finding an opportunity that sets you up for long-term professional success. As great as it feels to negotiate a lucrative signing bonus, don’t let a one-time payment dictate your decision. If the firm offering the largest bonus is a poor fit for your culture preferences or career goals, you should turn it down.

At the outset of the lateral process, think carefully about why you are seeking to switch firms and how the next step fits into your broader career plans. Having that clarity of vision upfront will help you make a smarter choice when the numbers are in front of you. As you go through the process, keep an open mind. Don’t talk yourself out of opportunities before you’ve explored them properly — especially if your initial assessment has been shaped by rumors. And assuming you’re working with a good recruiter, trust the information they give you. The market changes from week to week and month to month: you can be assured that a plugged-in recruiter will have more reliable, more current information than the rumor mill.

From In-House to Law Firm: Returning to Private Practice is a Growing Trend

A common career path is to graduate from law school, spend a few years practicing at a firm, and then take a job as an in-house counsel. Biglaw associates are drawn to in-house opportunities to escape the billable hour and to benefit from a less demanding and more predictable schedule. The lawyers who make this transition traditionally have not looked back. That’s partly because they haven’t wanted to return to law firm life and partly because firms have preferred to hire lateral candidates currently working in private practice.

But in 2021 — an exceptional year for the legal industry in many respects — a novel trend is emerging. We at Lateral Link are hearing from a striking number of in-house lawyers who are interested in making a lateral move to a law firm. And firms are displaying an unprecedented openness to hiring such candidates.

The in-house grass is not looking so green

Any lawyer who accepts an in-house role understands that the transition presents certain tradeoffs. A paycut is generally required, and even for those fortunate enough to land an in-house position with similar current compensation, it’s unlikely that the rate of growth in future years will match the financial upside of private practice. Relatedly, upward mobility in the in-house context is constrained: a law firm practice group can support multiple highly compensated partners, but only one member of an in-house legal department can be General Counsel.

In the current environment, some in-house counsel are finding those tradeoffs starker than they bargained for. Most notably, sharply escalating base salaries and special bonuses for law firm associates have widened the pay disparity between firms and in-house legal departments. That disparity is especially painful for in-house counsel who find themselves working long hours. (It turns out the absence of billables doesn’t necessarily guarantee a better lifestyle!)

Another important factor is work-from-home flexibility. In many industries, employees have already been called back to the office full-time, barring a medical exemption or other special circumstance. The same is true of some law firms, but as a general matter, hybrid arrangements in Biglaw are easy to find. Firms historically have not been known as bastions of flexibility, but the pandemic has forced real change on that front. For in-house lawyers whose companies are insisting on full-time office attendance, the relative flexibility of law firms has become a selling point.

Firms are prepared to hire in-house counsel

In the past, most law firms would have been hesitant to hire lateral candidates from in-house roles — lawyers currently in private practice are considered a safer bet. But in the current war for lateral talent, firms have been forced to cast a wide net. Just as they have become more open to candidates with less prestigious educational and prior firm backgrounds, firms are increasingly willing to extend offers to in-house counsel.

Candidates returning to private practice tend to return to the same type of work that they were doing prior to their in-house transition. We are seeing candidates join practice groups such as M&A, finance, and IP. Litigation is tougher, both because firms are less desperate for lateral litigators and because firms tend to view in-house roles supervising litigation as less directly relevant to their practices.

We advise in-house counsel who may be interested in exploring a return to private practice to start the process soon. The current demand for lateral hires is exceptional, and it won’t last forever. Now is the time to test the market, before the window closes.

Who Is Better Compensated: Elite Biglaw Partners Or Top General Counsel?

If you’ve paid any attention to the ballooning compensation figures of Biglaw partners in recent years, you already know that it pays to be an equity partner at a large firm. Meanwhile, as average partner compensation escalates, top in-house lawyers are being left behind.   

In 2020, a Major Lindsey & Africa survey of partners in “Am Law 200 size firms” found average compensation of above $1 million. The ALM Intelligence 2020 Law Department Compensation Benchmarking Survey found general counsel and chief legal officers earned average total compensation of $573,000. So, as a general rule, it’s more lucrative to be a Biglaw partner than a general counsel.

But what about at the very top end of the profession? In this article, we take a look at the pay packages of the top 100 highest-paid general counsels, in comparison to partners of top Biglaw firms (as measured by profits per equity partner). We find that on a cash compensation basis, equity partnership is more lucrative than being a general counsel. But the story is more complicated when taking stock options into account.

A quick note on sources. For general counsel compensation data, we look at the top 100 highest-paid GCs as listed in the 2020 ALM Intelligence GC Compensation Survey. This data set is not comprehensive. For one thing, ALM compiles its data from proxy statements filed with the SEC, so only public companies are included. Our source for Biglaw partner compensation is the 2020 edition of the Am Law 200 ranking.

It’s hard to outearn a top Biglaw partner

The General Counsel Compensation Survey ranks general counsels based on total cash compensation. The top 100 highest-paid GCs earned total cash compensation of $2.42 million on average. We don’t know how much the 100 best-paid Biglaw partners earned in the comparable period, but we can say that the top firm in the Am Law ranking — Wachtell — had 85 equity partners and profits per partner of $6.33 million.

Just two general counsels took home cash compensation higher than $6.33 million: Alan Braverman of Disney ($8 million) and Eric Grossman of Morgan Stanley ($6.94 million). Meanwhile, 38 Am Law firms had profits per equity partner in excess of the $2.42 million average general counsel cash compensation.

How does this compare to the situation a decade earlier? Analyzing the 2010 editions of the same surveys, we find that not much has changed. Based on the 2010 General Counsel Compensation Survey, the top 100 general counsels took home average total cash compensation of $1.56 million. Wachtell’s profits per partner were $4.3 million, a figure exceeded by just one general counsel. 28 Am Law firms had higher profits per equity partner than the $1.56 million general counsel average.

What about compensation growth over that ten-year period? From a growth perspective, who did better: the top 100 general counsels or the partnership of the top Am Law firms? The table below shows the results, ranked by growth rate. The law firms in the table were the top 10 firms in the 2010 Am Law 200. We see that general counsels fall in the middle of the pack, outpacing some partnerships and trailing others.

Group (equity partnership or GCs)10-year compensation growth
Kirkland & Ellis108%
Simpson Thacher83%
Paul, Weiss75%
Cravath63%
Sullivan & Cromwell57%
Top 100 GCs55%
Cahill Gordon51%
Wachtell47%
Quinn Emanuel46%
Boies, Schiller17%
Irell & Manella8%

But stock options can make a big difference

The comparisons above obscure some important factors. On the in-house side, it is critical to note that the very highest-earning general counsels receive a substantial portion of their compensation in the form of equity. Taking stock options into account, some general counsel roles start to look considerably more attractive. For example, revisiting the 2020 surveys, when accounting for equity compensation, the number of general counsels topping Wachtell’s profits per partner rises from two to 41. And some of the general counsels have total compensation that would exceed that of even the highest-paid Biglaw rainmaker. For example, Chewy GC Susan Helfrick had total compensation of $30.3 million (of which less than $1 million was in cash). Apple GC Kate Adams had cash compensation of $3.56 million, but her total compensation was $25.2 million.

On the law firm side, profits per equity partner gives little indication of the rewards that flow to top rainmakers. Firms vary widely in their compensation ranges. At the most traditional end of the spectrum, a firm’s highest-paid partner might take home 4x the pay of the lowest-paid partner. In contrast, at a firm with a strong eat-what-you-kill culture, that ratio may be 10x or higher. A 2018 New York Times article about the lateral talent wars reported on eight-figure pay packages for star hires at firms like Kirkland & Ellis and Paul, Weiss. It’s impossible to know how many Biglaw attorneys have breached $10 million, but the lateral market for partners with a strong book of business remains red hot.

Conclusion

There are a lot of reasons why an attorney might prefer to be a general counsel than a law firm partner. But viewed strictly through the lens of compensation, high-performing lawyers are typically better off staying on the law firm track. Of course, that doesn’t necessarily mean they should stick with their current firm. With Biglaw partnerships increasingly diverging in their approaches to compensation, it’s a mistake to assume that a partner with a given book of business will be paid similarly at any comparably prestigious firm. Productive partners have a variety of options — and it pays to know about them.