March 2018

Starting In-House: Pros and Cons

By Denise Davila

Strata Equity Group, Inc

What fascinates me the most about being a lawyer is the versatility aspect of the career. As a lawyer you can do more than just work at a law firm. While starting at a law firm is often the recommended path due to the fundamental amount of experience it offers, embarking as in-house counsel for a company can also expose you to a variety of legal areas despite having only one client — the company. Both paths have their perks and drawbacks but choosing the right course will ultimately depend on your skills and lifestyle expectations.

A common perception, which I personally believe is a misperception, is that working as in-house counsel is a vacation compared to the grinds of law firms and government practice. However, the scope of work and responsibilities of in-house counsel cannot be understated, as these are very different from those of specialized or private legal practitioners. Another misperception is that the skills earned in law firm practice can be easily translated to suit an in-house position, but only a few of the skills of an in-house position can be successfully translated to fill the shoes of a practicing attorney in a law firm.1  While the law firm experience is very valuable, it does not necessarily prepare you for a position in-house. Below is a general list of the pros and cons of in-house positions versus law firm positions, which based on my personal experience, better illustrates the principal differences among both paths. 

One Client Only

To start, in-house counsel’s only client is the corporation, which means that the usual law firm concerns, such as business development and client conflict checks, are not issues in the in-house position. While this may sound like an easy theory, it is not always so clear-cut in practice. In California, Rule 3-600 of the Rules of Professional Conduct states that in representing an organization, the client is the organization itself, acting through its highest authorized officer, employee, or constituent overseeing the particular engagement. However, the interests of corporate constituents and those of the organization may not always align, giving rise to conflicts. In all cases, in-house counsel owes a duty of loyalty to the organization as the client and must act in the best interests of the corporate entity. Consequently, in-house lawyers should avoid giving corporate constituents individual legal advice on personal matters and must make their role clear. As you can see, having the company as your only client may take away the pressures of being a rainmaker or worrying about billable hours involved in private practice, but it brings along a different type of stress, complexities, and risks to watch out for, such as inadvertently creating conflictive attorney-client relationships.

Broader Scope of Responsibilities

Another big difference between working as in-house counsel and in a law firm or government is the broader scope of responsibilities a corporate legal department requires depending on the industry. An in-house legal position exposes you to wide variety of legal challenges, such as contracts, labor/employment, intellectual property, litigation, tax, antitrust, corporate/securities, ethics, real estate, privacy matters, and many others depending on the industry of the company, while law firms may put the pressure to specialize. For instance, I work in-house for a real estate investments company and most of my experience is on transactions, acquisitions, and contracts, but I have often found myself working on litigation for civil matters that come up, renewing trademarks, researching tax issues, and working with our IT department to handle privacy matters. However, because in-house counsel handles a little bit of everything, it is often necessary to rely on outside counsel to resolve matters that may require expertise in an area that in-house counsel lacks. Whereas a law firm is a training ground that assigns you to an area of expertise, an in-house position requires knowing the limits of your time and competency in an area of law and understanding the basis on which to rely on outside counsel and develop a good relationship with them. It is not so that in-house attorneys live in isolation.

Two Hats: Legal Duties and Business Role

As opposed to the law firm environment, in-house counsel must develop a strong working relationship with the corporate client that will allow that lawyer to provide not only legal advice, but also business strategies to the client. An in-house lawyer must wear both legal and business hats but also be wary of which hat counsel is operating because certain privileges, such as the attorney-client privilege, attach to legal advice but not to business advice. Moreover, contrary to the opinion that career development is only offered in law firms, many in-house counsel have another business function in addition to their legal duties, which range from heading a business unit within the company to serving as a Chief Legal Officer or director of another department.

On an ending note, in-house counsel must learn and become familiar with all aspects of the business to serve the company well. In-house counsel is often placed under negative light because rather than generating revenue like the private practitioner, an in-house legal department is considered a cost center. Therefore, it is important to demonstrate your value every day and manage costs carefully. Taking a more proactive approach on tasks, such as risk management, is another differentiating characteristic of the in-house position from the generally reactive legal work at a law firm. While there are many pros to in-house positions, such as a greater feeling of job security, flexible work schedule and no billable hours, it is by no means an escape route for all other law firm ills and woes. Starting as in-house counsel is a very different experience but it entails equal, if not an increasingly, amount of effort and hard work as a law firm or government position, and it should not be understated.