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.
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.
If you are a lawyer reading this now the chances are you have been working hard for a long time. It isn’t easy to become a lawyer, it takes time, persistence, academic intelligence and finance, what’s more in most cases you have to decide and commit to it by the time you are only 19 or 20 years old.
You can’t ever relax and check out even as a university fresher if you want to be in big law. Forget first year pass / fail, all your academics will be scrutinised and if you aren’t on top of your game someone else will be there ready to take your spot. Now we could put this down to population increase and globalisation making markets more competitive, after all this is the case in a lot of fields now at entry level. As a lawyer the treadmill of hard work, time and devotion doesn’t end at the offer of a training contract, it is only just beginning.