Young lawyers head in-house

Not so long ago partnership in a law firm was seen as the pinnacle of any legal career, at least for young lawyers entering the profession. Yet in 2020 the path is not so clear cut for young lawyers and for some, going in-house sooner rather than later is the right step for them. Margaret Taylor investigates this trend and why it’s occurring.

Even when she was completing her training contract at French law firm Weissberg Gaetjens Ziegenfeuter & Associes, Narjes Naouar knew that she wanted to spend her career in-house. And so, when she qualified in 2007, she immediately took on an in-house counsel role in the mining industry. Right from the off the attraction was, she says, being able to work with people from a range of different disciplines, rather than being surrounded by a large group of lawyers who were all on the same track.

‘When I did my training I spent some time in-house and I loved that side of working with people,’ she recalls. ‘I went into the mining industry and I worked with geologists, people with a finance background, engineers. As opposed to a law firm environment, where you are surrounded by lawyers, I got the opportunity to work with people with so many different backgrounds. That was really exciting.’

Not so long ago partnership in a law firm was seen as the pinnacle of any legal career, with those that did choose to move in-house typically doing it after achieving a degree of seniority in their firm first. For those that did make the move, the route to in-house was a well-worn one, with investment banks or other financial institutions seen as a ‘safe’ alternative to private practice.

Speaking on a panel at the IBA Annual Conference in Seoul in September 2019, though, Charles Jacobs, Senior Partner and Chairman of Linklaters, noted that up-and-coming lawyers are ‘taking more risks’ than they would have done in the past, jumping ship earlier in their careers and looking beyond the traditional banking sphere.

‘If you look back to the early 1990s, lawyers would get their training in a law firm then opt for the investment banking route because of the big bonuses,’ he said. ‘Nowadays, banks are recruiting less, but lawyers are joining hedge funds and start-ups.’

Naouar, who now works as an independent legal consultant to a range of companies in the mining sector and also serves as Vice-President of the International Association of Young Lawyers’ In-House Counsel Commission, says part of the reason for the change in attitudes is that younger generations simply view their careers in a different way to how older generations did. Rather than putting career progression first and personal fulfilment second, younger people in all professions are more focused on achieving an optimal work-life balance. They are also less afraid to move on if something is not right.

Brenda Nichols, Secretary of the IBA Aviation Law Committee and Senior Vice-President of Legal at aviation business Engine Lease Finance, agrees, noting that that description applies to several members of her own legal team.

‘We have eight lawyers in total, two of whom are senior,’ she says. ‘One is in his late 30s now and he came to us after about two years [from] a large London firm because he wanted to focus on aviation law; another joined us about five years ago when he was seven years qualified. He had followed the traditional route of aiming for partnership but he wanted to make the move because he had young kids. When he told us his story it resonated with us.’

While such moves are driven by younger generations funding ways of balancing their personal and professional responsibilities, Nichols says another reason for junior lawyers being more willing to turn their backs on private practice is that partnership is not seen as the prize it once was. Many of the trappings of being a partner have been eroded in recent years.

‘In the past, if you gave your life to a firm and were a partner they would look after you,’ she says. She says that for being a partner, you still ‘get paid well but the whole lifestyle has changed.’

After the crash

Firms were already starting to behave more like corporates in the run-up to the financial crash of 2008, taking a more business-like approach to financial management and making moves to ensure partners were not habitually taking out more in drawings than they were bringing in by way of fees.

Given the impact of the financial crisis, which left numerous firms around the world either bankrupt or fighting for their survival, firms have been forced to take a far tougher stance to the way they are run in the years since. On the one hand, that means coasting plateau partners have become a thing of the past. On the other, it means achieving partnership in the first place has become even more competitive than it ever was.

Part of the reason for this is that firms are continuing to streamline their practices, with a growing use of technology and the standardisation of legal processes meaning they simply do not need as many lawyers as they did in the past. With in-house counsel demanding their advisers find ways of doing more for less, the days of huge banks of lawyers poring over vast bundles of legal documents are no longer the norm.

Understandably, that has had a knock-on effect on the way firms need to be staffed. As Alberto Mata Rodriguez, Co-Vice Chair of the IBA Young Lawyers Committee and Head of Legal for Iberia at German bank Deutsche Pfandbriefbank notes, ‘20 years ago, 20 people would be hired by a firm every year, but they don’t do that anymore’.

‘Law schools are facing [the fact that] a lot of people want to be lawyers but there’s not a demand for everyone,’ he adds.

For Naouar, this – and the fact there are now so many more in-house positions on offer due to companies adjusting their external legal spends in the post-crash years – has also had an influence on junior solicitors’ appetite for considering in-house roles.

‘If you take a place like the United Kingdom, there are so many young lawyers that qualify each year, but getting a place at a law firm has become so hard. [Going in-house] is another way to get a job and to practise,’ she says.

‘You also have companies now that will build a legal department because legal is costly and they want to have a better grasp of their budget,’ explains Naouar. ‘They build that function internally and develop the knowledge internally. Companies have to think that if they are bringing in someone who was a partner it will cost them much more than if they are bringing in someone with two or three years’ post-qualification experience.’

The result is that there are opportunities for young lawyers to go in-house much earlier in their careers.

For Rodriguez, who moved in-house in 2015 after spending eight years as an associate with Spanish firm Gómez-Acebo & Pombo, it was the opportunity to be part of that knowledge-building process that was particularly appealing. While he had intended to follow the traditional route to partnership, he says the experience of doing a Masters in the United States as well as an externship at the International Monetary Fund made him question whether a lifetime in private practice was for him.

‘I was a senior associate and I realised that it would take me another seven or eight years – or maybe even 15 years – to become a partner,’ he says. ‘I realised that I knew how to be independent and how to give advice because I had many years of experience. I thought I’d be in a better position looking for a financial institution where I could keep growing and getting wider experience. If I remained in a law firm I wouldn’t have got any extra experience, I’d just have been waiting to become a partner.’

Having made the move, he says being fully integrated in a business rather than advising it from the periphery has ultimately made him a better legal adviser.

‘When you talk to law firms they say they know your business, but they don’t know the business,’ he says. ‘They don’t know how it works, who approves what, because they just have to look at specific legal issues. It’s been fantastic being in-house; I’m a better lawyer now than I used to be.’

Like Rodriguez, Bhavisha Mistry, General Counsel and Company Secretary at pharmaceutical wholesaler Mawdsleys, had expected to spend her career in a law firm environment. She has realised just how limiting that would have been since making the move in-house. Having surprised herself by turning her back on private practice when she was just three years qualified, Mistry followed the path to a start-up business, leaving her solicitor’s role at English law firm Weightmans to join fashion brand Missguided as its general counsel.

‘At the time I joined [Missguided] it was a £50m turnover business; when I left three and a half years later it was a £300m turnover business, so it was very fast-growing,’ she says. ‘I always thought I would stay in law firms and go down the whole promotion route, but then this opportunity came up. I was 29 at the time and I was working for a fashion brand; it was so exciting.’

Navigating the path

This feeling of excitement – also mentioned by Naouar – appears key for younger lawyers. They look at the path to partnership stretching out in front of them, then look at the kind of career paths many of their peers in other industries have gone down, and see little that will fulfil them on a personal level.

Wearing her other hat as Chair of the In-House Division at the Law Society of England & Wales, Mistry speaks regularly with a broad cross-section of the in-house community. She says many younger lawyers were, like her, encouraged to make the move because the roles seemed so much more enticing than what was on offer in private practice.

‘There’s an increasing number of people going in-house and there are a number of factors for that,’ she says. ‘Being a lawyer in a business is a lot more exciting and more relatable while progression in a law firm is so arduous.’

Mistry believes that she’d still be looking for partnership if she’d stayed in private practice, as a result of how promotions processes work and how the needs of the business prevail. ‘If they need a partner in a particular department and you’re in that department you’ll be promoted, but if you’re in another department you might not be,’ she says.

‘Financially, the pay for a junior lawyer is better in-house and there are more opportunities to progress in different ways – you can be the general counsel, be on the executive board,’ thinks Mistry. ‘The process is a lot fairer and far less formal.’

Naouar adds that being freed up from timesheets and billable hours is another attraction of leaving private practice behind, but notes that the biggest professional benefit of being in-house is that the work is simply far more varied and so far more interesting.

‘You have one client and your work is to serve that client full-time,’ she says. ‘In my every day work I can do corporate, transactional, compliance. I get to visit mining projects in Africa. I get to do a variety of work that in private practice would be allocated between different lawyers in different departments.’

‘What really attracted me to in-house is that when you’re in private practice you tend to work on a lot of different projects but you don’t get to see them through to fruition in the same way you do in-house,’ adds Naouar. ‘I get to work on an exploration project, for example, and I have the pleasure of seeing the results of that work.’

Mistry agrees, noting that aside from the attraction of being able to immerse herself in the fashion industry, being able to ‘really get to know a business and put my stamp on it’ meant that for her the professional rewards of joining a high-risk start-up business and helping to build something from the bottom up far outweighed the risks.

‘I’m personally very interested in business, in learning about different industries and then applying the legal stuff to those businesses,’ she says. ‘In a law firm you’ve got a team of people around you and there’s a level of control about what you can and can’t do. I never dabbled in employment or property law and I couldn’t stray outside the template I was provided with for how to advise. In-house you have that flexibility to be a bit innovative.’

Though her move in-house had not been planned, Mistry says she is unlikely ever to make the move back to private practice because, like Rodriguez, she feels the in-house experience has made – and continues to make – her better at what she does.

‘In private practice you can give advice but you don’t really get to know the business or the people operating that business,’ she says. ‘You get more value out of working in-house because the skills you develop really help you to be a truly useful lawyer. You really get to know your colleagues and how to tailor your approach – do they want advice or do they just want to know all the detail? You have to be able to build those relationships.’

Mistry says that a lot of her work in-house and working for the Law Society is about changing perceptions of lawyers and making businesses see the value a lawyer can add for them.

Ultimately, in a world where job security is no longer taken as a given, where even large and established law firms can fail, and where young lawyers can see friends in other industries languishing on zero-hours contracts, the younger generation is no longer being sold on the idea of a job for life. With most people now expecting to change jobs – even change careers – several times during their working lives, there is far less fear among junior lawyers about taking a step into the unknown. Indeed, unlike the risk-averse generations that came before them, today’s crop of young lawyers is far more likely to take the attitude that if the business they join fails, or if the role they embark on turns out not to be for them, there will always be something else they can try.

As Naouar says: ‘The image of lawyers being risk averse is in the past. Now we have as many different profiles as we have lawyers and people want positions and roles that fit their profiles; we don’t want to change ourselves to fit those roles.’