As I sat in a plush west end hotel finishing the last remnants of a pot of green tea an interesting topic arose with the general counsel I was meeting; is the buy side all it’s cracked up to be? I work with GC’s from many sectors but am most ubiquitously in contact with those in the Hedge Fund, Private Equity, Asset Management, Family Office and Sovereign Wealth space. The contact I met had worked exceptionally hard over the last year and as a senior lawyer in house the assumption is typically that those types of days should disappear as you move from your 20s/30s into your 40s and beyond up the food chain, with the bulk of the transactional work remaining with your junior counterpart(s). It led me to unfamiliar conversational territory, why a lawyer might want to avoid working for a fund completely.
A cost centre is broadly defined as a department to which costs are allocated but that does not produce revenue for the business.
When a lawyer works in private practice as a fee earner they are revered as the money-making engine driving the machine forward, a definite profit centre. Lawyers here can point to their tangible contributions to the firm in the form of billable hours and attributable business wins/relationships. Congruently fee earning associates and more notably partners are held in high esteem and remunerated upon their evidenced contribution to the firm.
The phrases both profit and cost centre have questionable conceptual efficacy. Peter Drucker who originally coined the term profit centre later recanted, calling it "One of the biggest mistakes I have made". Asserting that there are only cost centres within a business, and “the only profit centre is a customer whose cheque hasn’t bounced”. Nonetheless the fear that hiring an in-house lawyer will cost your business money rather than saving it or even producing it is one which has stymied the growth of in-house legal teams for years.
As a newly qualified lawyer in London at a top city or US firm the amount you are earning is significantly higher than it would have been only a few short years ago. The US firm’s entry into the London market and their willingness to offer pay parity with New York coupled with the frankly terrible GBP to USD exchange rate in recent years has led to bumper pay days for those associates at the top US firms and started a war for top talent.
The magic circle, keen not to be left out decided this year that they were tired of losing some of the best of the Oxbridge crop to US firms over money and decided to close the gap, starting lawyers on £100,000 or more as soon as they qualify. When Bingham McCutchen first broke through the £100K barrier for NQs in around 2012/13 they were trailblazers, how was it economically viable for them?! many laughed at the prospect of junior lawyers being paid so handsomely. Things didn’t turn out so well for Bingham but no one is laughing anymore as the pay packet is now the standard for associates at top tier firms.
No matter whether you are remain or leave the vast majority of lawyers benefit from a growing, strong economy with plentiful opportunities. What is actually happening in the legal market and can largely be attributed to the Brexit phenomenon is tough to decipher through mixed jobs data and scaremongering headlines.
In 2016 when the referendum result was announced there were predictions that this would be a disaster for the economy at large but a boon time for lawyers who would be busy drafting and arguing about legislative changes, neither prediction was quite accurate (at least not yet). There are lawyers employed and finding work in house and within private practice helping particular businesses address the potential impact of Brexit, but these roles have in reality been far fewer in number than roles created to address GDPR or MiFID2.
It is best to begin by looking at the results you want to achieve. The two most desirable outcomes for all in house legal functions are to effectively serve their customer, ‘the business’ and reduce the total expenditure on legal while still providing that great service. Maximising the resources you have in place and developing a talent roadmap is essential to delivering on both the first and second objective.
Substantial in house legal functions usually take on a layered pyramid structure with the Group General Counsel at the top. Then one or more Deputy General Counsel below some may be based at headquarters, others leading regions of importance; EMEA or APAC or perhaps overseeing functional areas such as corporate or IP. Below these divisional heads you will find a series of further layered mini-pyramids, extending down and out to define the foundation of the department.
Lawyers are accustomed to planning their careers years in advance from an early age. You go to law school and apply for summer schemes or training contracts when you are still early on in your academic career, in the UK you might be as young as 18 years old when applying for your first taste of summer at a law firm. Along the way though all the planning: which firm? what practice area? Is replaced by a myriad of requests on your time and you find work and life takes you in directions you won’t have necessarily planned for. As a head hunter with a breadth of experience placing qualified lawyers from 1st year associate through to General Counsel (GC) across EMEA I am often asked by my network “how do I make GC?”.
The textbook says you need: good academics, solid law firm training and a good chunk of experience (time served) in your desired field. This is largely true, if you took a cross section of GC’s from various industries this pattern holds. What the above doesn’t tell you is how to put these raw ingredients together to achieve your desired result or what to do when you are thrown off course.
How do you extract the most value from an executive search partner?
The cost of a retained search service adds up; typically coming in at 1/3 of hired candidates total first year compensation paid over three instalments. Given this fact it is essential hiring managers maximise their search providers utility to deliver the hire they want at the appropriate time and on budget.
Having worked in both the recruitment and executive search space over the past 14 years for leading providers I understand the challenges clients face in getting the best ROI. Outlined below is an insider’s view on some of the best proactive actions for you to take and common mistakes to be avoided to maximise value from the search service.
General Counsel and business leaders alike universally have a view on what makes a good lawyer, however many struggle to find the right one for their company when the need arises.
The main mistake businesses make when looking to fill a vacancy can be encapsulated in the apples and oranges approach; “we never use recruiters, we advertise all open roles ourselves”. Leaving aside the veracity of the statement it neatly illustrates the misconception that a one-size fits all approach to hiring works, it doesn’t. What works for hiring IT professionals probably won’t work for lawyers, yes, they are both metaphorical fruit but no they are not the same.
Private equity, hedge funds, boutique banks and other alternative asset managers all want the very best people. If you scan the profiles of individuals employed by the majority of these organisations you will find a pattern in those they hire. Most went to elite universities before attending exclusive institutions in their respective sector before winding up where they are today. These professionals are the highest paid, the brightest and the most compelling, the top 1% of the market.
How does a fund successfully attract a candidate with that profile? In the legal world it isn’t particularly difficult to find well credentialed candidates interested in a move in house. What is hard is finding not just someone who went to a great law school and worked at the most prestigious firm but finding someone who has the right mix of experience, seniority, personality, who comes in on budget and is interested in your fund at the moment you have an opening. If you do find someone like this the chances are they are going to have other options open to them, how do you differentiate your offering to them?
Finding an in house legal role at a reputable hedge or private equity fund has not been this hard since 2009. Legal roles within funds are some of the most sought after across industry, they are the most lucrative and selective institutions that hire in house counsel. Certain asset managers and boutique banks straddle the marketplace in terms of how they operate (often taking a multi-strategy approach) and can also provide fantastic opportunities for fledgling in house lawyers.
It has never been easy to find work as a lawyer in the funds space, however a confluence of factors have materialised over the past 10 years that have made securing a coveted position more challenging than ever before.
Supply and demand; this is the broadest and most all-encompassing explanation as to why it is now more difficult to find a legal role at a top alternative asset manager.