New laws, cost savings behind in-house uptick
Christopher Lenhart had heard the stereotypes about working for an in-house legal department.
It was a backwater. It was where you went if you couldn’t hack it in private practice or didn’t want to work very hard and wanted to have your weekends free.
Lenhart had worked at Dorsey & Whitney since 1999. He was happy at the firm. He was a commercial bankruptcy lawyer, on the recruiting committee and made partner.
But then his life changed. His wife died in 2009, and suddenly he was the single parent to a 1-year-old son, James. Then one day he got a call from U.S. Bank, his largest client. They had an opening in the commercial lending and capital markets legal team for an attorney with his expertise. Would he be interested?
He admitted to some trepidation about the move, but now said he couldn’t be happier.
“It was the personal circumstances. I needed to find something a little less taxing from an hours perspective, something that was a more little more predictable schedule,” he said. “I would have never left [Dorsey] for another firm. There was a loyalty factor. I started there as an associate and I liked where I was.”
Since joining U.S. Bank, Lenhart said the negative stigma about in-house work is largely inaccurate. He works just as hard as his private-practice brethren. He works late and handles demanding issues. But because he knows more about his one client than an outside lawyer who could have dozens, he can be more efficient and effective with his legal counsel.
“I am paid for what I know, not for how much I do,” he said. “At a firm you are paid by the hour. I could be a great lawyer and not bill a lot of time — but I could be a terrible lawyer and bill a ton of time.”
Several area legal recruiters and head hunters say the demand for in-house lawyers is starting to pick up as the economy continues to improve locally. Some make headlines: Most notably, Marianne Short is leaving her position as managing partner at Dorsey & Whitney to become executive vice president and chief legal officer at UnitedHealth Group early next year.
Companies fill open slots
Cindy Eidnes, the division director at Beacon Hill Legal in Minneapolis, said that while the market isn’t booming for in-house lawyers, it is much better than it was even two years ago.
The positions that were kept dark or eliminated are starting to come back. She said she has gotten calls for companies looking for lawyers with litigation, patent law and mergers and acquisitions backgrounds specifically. The most popular candidate is a mid- to senior-level associate or a junior partner, she said.
“The head counts are loosening up a little bit,” she said.
Jessica Kuhl, the division director for Robert Half Legal in Minneapolis, said hiring is up both at firms and in corporate legal departments over the past six months. She predicts it will continue to be strong in to 2013.
“Some of the hires have been replacements, some have been filling open positions, but many have been growth-related,” she said.
Kristen Larson is a senior corporate council at TCF Bank and is the vice chairwoman of the state bar association’s corporate counsel section. She said several factors are contributing to the hiring in corporate legal departments.
To begin with, there are several new and existing laws and regulations. And when there are regulations like HIPAA or laws like the Affordable Care Act or Dodd-Frank, you will always need attorneys to read and interpret them.
Senior partners reach out
Secondly, many companies simply want to save money on legal costs by keeping work in-house. Businesses don’t have to worry they will be charged for six minutes of legal advice if they pick up the phone and call their internal lawyers rather than the outside firm.
“The model is for corporations right now is if it is cheaper to hire someone, rather than sending the work to outside counsel, it makes more sense to do the work internally,” she said. “A lot of in-house people are seeing that if the need is constant — it’s not just a one off litigation, but something that will continue — then you save money by bringing someone in.”
In his time at U.S. Bank, Lenhart has recruited a few private-practice lawyers to join him. Larson said senior partners at area law firms routinely reach out to her trying to get a foot in the door for a job in the legal department. The lawyers who want to move in-house have different motivations.
“For some people it’s because they want to try something new, or they want a new challenge. For other people it can be a lifestyle decision,” she said of lawyers looking to move to in-house. “The trade-off is you might not make as much money if you were on the partner track, but you can commit to certain things like picking up your kids from day care instead of having to go to after work functions to drum up business.”
Lenhart says that in-house lawyers who have a private-practice background are particularly sought after because they know how the outside counsel works.
“I know how long it takes to draft something. And I can see when a bill is being padded or ask the question of why that particular lawyer was working on something,” he said. “Having that inside knowledge helps.”