The Inside Track

From The Practice May/June 2019
Training tomorrow’s in-house teams

As even casual observers of the legal profession know, recent decades have seen a significant movement of lawyers to in-house legal departments. Whether due to the rise in power and prestige of in-house roles as a result of what has been called the in-house counsel movement or due to the in-house legal setting’s (perceived) work-life benefits, the number of lawyers—including senior lawyers—moving to internal legal departments has accelerated at staggering rates over the past two decades. And there is a wealth of empirical research that corroborates this story. For example, according to the American Bar Foundation’s After the JD (AJD) project, a longitudinal empirical study examining a nationally representative sample of lawyers, there has been steady growth in the percentage of lawyers moving into in-house legal roles as their careers progress (see table below). These trends largely mirror those found in the Harvard Law School Career Study (HLSCS), published in 2015, where there is both a steady migration out of law firms over time and a steady migration into in-house legal departments.

According to the American Bar Foundation’s After the JD (AJD) project, there has been steady growth in the percentage of lawyers moving into in-house legal roles as their careers progress. Wave 1 of the study (2002-2003) reported 4.2 percent of lawyers practicing in business while Wave 2 (2007-2008) and Wave 3 (2012-2013) saw 11 percent and 12.6 percent, respectively.
Source: After the JD III: Third Results from a National Study of Legal Careers (2014)

A more nuanced reading of this data and other research also conveys something about who is moving in-house—they are often seasoned lawyers with law firm experience. As Benjamin W. Heineman Jr. writes in his book The Inside Counsel Revolution, this is a by-product of the “old-school paradigm” of inside counsel hiring. Heineman admits that, when he was general counsel (GC) at General Electric, he in many ways represented this view. His approach to hiring lawyers straight out of law school was simple: “Don’t do it.” After all, it was traditionally the law firms that served as the unofficial-official training grounds for future in-house lawyers. “Inside lawyers don’t have enough time to provide the kind of care and training appropriate for young lawyers,” Heineman continues. “It would be a disservice to them and a drain on inside lawyers. Let the law firms train. Then hire laterally after a minimum of four or five years.” As he suggests, Heineman’s approach was far from unique. Indeed, we see this logic is reflected in the data. According to virtually all major career studies of lawyers, including AJD and HLSCS, law firms are far and away respondents’ most common first stop as law graduates beginning their legal careers, with migrations to in-house settings largely happening only after a number of years at a firm. Moreover, that migration from law firm to company is often direct, without any intervening professional stops.

Companies by and large remain reliant on the law firm pipeline to fill their ranks, preferring to outsource technical legal training while at the same time increasingly refusing to pay for young-associate hours

While this career path is well known, there are nonetheless indications that the in-house counsel movement has had paradoxical effects on the law school to law firm to in-house legal department pipeline. As power and influence has shifted in-house, and as legal departments have become increasingly sophisticated and discerning about their outside legal spend (see “A Global Age of More for Less”), clients have grown more and more reluctant to allow the youngest (and least experienced) law firm associates to bill time to their matters. As David B. Wilkins writes in a recent article in the Stanford Law Review with coauthor Scott A. Westfahl, “Unsurprisingly, paying for the training and development of associates has been one of the primary targets of this budgetary axe.” Considering that is precisely how many of today’s in-house lawyers were themselves trained, this presents a challenge for the training of tomorrow’s in-house lawyers. As Heineman notes, this is a serious problem for in-house legal departments going forward, stressing that the old paradigm needs to evolve:

Whatever the merits of that view in the past, it clearly should be questioned now—and is. When corporations complain about the high cost of associates; are unwilling to allow them to engage in meaningful work for the company; yet want them to have an enlivening, not deadening, early career experience—then they need to reconsider their approach and discharge a duty to help young lawyers have meaningful and motivating early career experiences.

Some companies have taken this clarion call to heart. As Heineman goes on to write, major companies like Cisco and HP have begun hiring newer, less-experienced lawyers and training them up within their in-house ranks. Yet, notwithstanding this new development’s first-movers, companies by and large remain reliant on the law firm pipeline to fill their ranks, preferring to outsource technical legal training while at the same time increasingly refusing to pay for young-associate hours. In the concurrent ages of more for less and the in-house counsel movement, something has to give to connect in-house lawyers of the future with the skills required to succeed on in-house legal teams, which raises a critical question: How might the traditional training of in-house lawyers evolve?

In this article, we explore this question from two angles. Before addressing the how, we consider the what—namely, what are the types of skills demanded of in-house lawyers that effective training can help provide? Then, we observe how the profession is beginning to provide that training, noting the emergence of new approaches to legal education at both the J.D. and post-J.D. professional/executive levels. In the end, we see how law schools are beginning to adjust their curricula and approach to preparing law students for careers as in-house lawyers and the types of training increasingly available to lawyers already in the profession. In both law schools and in-house legal departments, two corners of the legal profession with undeniably high stakes in the effective training of future in-house lawyers, we see signs that the potency of the in-house counsel movement has registered and that they are beginning to adjust accordingly.

Complementing core legal skills

It is important to first consider the types of skills lawyers need to sharpen to excel in the in-house legal setting. In The Inside Counsel Revolution, Heineman distinguishes between core competencies and complementary competencies of in-house lawyers. He notes that core competencies—issue spotting, textual analysis, and legal reasoning, among other basic legal skills and knowledge—have long comprised the heart of the law school curriculum. They are the types of skills typically honed as an associate at a law firm and essential for any in-house lawyer.

One of the in-house lawyer’s primary roles is to present their organization’s leadership with constructive options to confront problems, legal and otherwise.

As Heineman notes, however, thriving in-house requires more than those core competencies. Adept in-house lawyering, he argues, requires a number of complementary competencies that allow inside counsel “to operate effectively across the broad sweep of functions they have within a corporation.” While he cautions that his (nonexhaustive) complementary competencies are collectively more than any one person could hope to master, they do help point the way for inside counsel to fulfill their roles as “outstanding experts, counselors, and leaders.” Indeed, the expansive skill set that Heineman underlines would enhance these lawyer capacities in any practice setting:

Think ethically—and long term. Beyond thinking through the legal implications of any given decision, in-house lawyers must also weigh the associated ethical and reputational costs as well. As Heineman puts it, lawyers must take their analysis far enough to address the “ought” questions to complement their legal advice.

Be relentlessly empirical. When in-house lawyers advise on a decision, they should be diligent in seeking out and working from a set of facts broad enough to “reflect the complex reality of the world they would seek to influence or change—historical, cultural, and systemic—by drawing on a diverse set of empirical disciplines,” writes Heineman.

Identify and navigate the value tensions. One of the in-house lawyer’s primary roles is to present their organization’s leadership with constructive options to confront problems, legal and otherwise. When those problems pit the organization’s values against each other or when they point to an ethically gray decision, the in-house lawyer must be creative in seeking alternative paths to the same business goals and ultimately strike a fair balance.

Literacy in business and finance is key. As we reported in an earlier issue of The Practice, a 2014 study conducted by Harvard Law School’s Kathryn E. Spier, John C. Coates, and Jesse M. Fried found that lawyers at major law firms consistently listed accounting and financial skills as the most useful for associates at their firms. In addition to accounting and financial reporting, Heineman also emphasizes the importance of areas like statistics, company valuation, and supply chain economics.

Risk assessment without risk aversion. In-house lawyers must approach risk creatively and holistically. Heineman suggests in-house lawyers develop a skill of “[m]aking well-considered bets with appropriate (but not illicit or outsized) risk.”

Get things done. Heineman urges proficiency in the art of translating words into reality, whether those words come from law or leadership. “Conception without execution is worthless,” he writes. “Inside lawyers must have skill at making things happen in a complex organization with competing hierarchies and different levels of authority.” (For more, see “Checking the Balance.”)

Collaborate. In-house lawyers are all members of larger teams—teams that are often far more diverse than those of their counterparts in other settings. The ability to work as a productive member of a multidisciplinary team to achieve organizational goals is imperative, and it necessarily involves the ability to appreciate the perspectives and expertise of others to accomplish shared objectives. (For more, see Heidi K. Gardner’s “Harness the Power of Smart Collaboration for In-house Lawyers.”)

Think global. In-house lawyers need to maintain a wide-ranging, comparative, and global understanding of politics, government, and economics—what Heineman calls “global brains.” A nuanced comprehension of these various global textures enables in-house lawyers to identify and advise on business decisions affected by these divergent systems at home and abroad.

Develop the range of a CEO. Heineman repeatedly stresses the importance of developing a broad skill set to be an excellent in-house lawyer. Comprehending all sides and considerations of a business decision—and weighing them appropriately—is an invaluable skill that will make for better in-house lawyers, especially later in their careers when they are more senior and advising on those final decisions.

Teaching in-house: How have law schools responded?

Given the migration—and influence—of lawyers in-house, law schools have slowly begun to focus on training their graduates for future careers in these settings. On a macro level, we have seen recent pushes for more real-world, problem-solving course work on the legal profession that explores these and other career paths and offers interactive approaches to understanding different legal roles. Some law schools have also begun to rethink how they teach ethics and professional responsibility. Business classes are finding their way into the curriculum, and even Langdell’s case method is ceding some ground to alternative teaching tools like case studies reminiscent of the business school staple. These are all positive developments for aspiring and future in-house lawyers.

Heineman urges proficiency in the art of translating words into reality, whether those words come from law or leadership.

On a more micro level, law schools are also innovating new courses specifically around in-house roles—a prime example being Harvard Law School’s Challenges of the General Counsel: Lawyer as Leader, a seminar taught by Wilkins and Heineman. First launched in 2012 and offered nearly every year since, the course “examine[s] the challenges facing General Counsels (GCs) in the private, government, and non-profit sectors.” Unsurprisingly, it also incorporates many of the new approaches referenced above. Introducing the underlying theme and ethos of the course, the syllabus reads:

The “cases” in this course involve questions beyond “what is legal” and focus on “what is right,” using specific illustrations drawn from the contemporary business world… These cases involve a broad range of considerations: ethics, reputation, risk management, public policy, politics, communications and corporate citizenship. The course will advance for critical analysis the idea of the general counsel as lawyer-statesman who has a central role in setting the direction of the corporation, but who must navigate complex internal relationships (with business leaders, the board of directors, peer senior officers, the bureaucracy) and challenging external ones (with diverse stakeholders, governments, NGOs and media in nations and regions across the globe). The course advances a broad view of lawyers’ roles and examines the skills, beyond understanding law, required in complex problem solving by the lawyer-statesman.

The course also moves away from the typical Langdellian case method, where “cases” are most often literally cases from appeals court decisions. Instead “each class [centers] around a one- or two-page hypothetical or real problem dealing with a fundamental challenge faced by general counsels in a rich context involving institutional dynamics, personality, policy, politics, culture and history.” Reflecting students’ eagerness to explore these themes, the course has been consistently overenrolled—often with a wait list in the hundreds—in the seven-plus years that it has been running.

While Wilkins and Heineman’s GC seminar revolutionized in-house-focused course work at the J.D. level, it is no longer the only game in town. Similarly focused course offerings around the general counsel role are now available at Columbia Law School and NYU Law, among a growing number of other law schools. Other courses focus less on in-house leadership and instead take a broader view, such as those offered at Northwestern’s Pritzker School of Law (In-House Counsel: Modern Corps) and Penn Law (In-House Counsel/Corporate Generalist), as well as more-experiential offerings, such as Miami Law’s LawWithoutWalls program (LWOW), which centers programming at the intersection of business, law, and technology and stresses issues like teamwork, communication, and business skills. Some law schools are even experimenting with facilitating externship opportunities in the in-house space, such as Berkeley Law’s Summer In-House Program and American University’s formal in-house externship program. Across all these examples, it is clear that law schools are beginning to address both the increasing movement of lawyers in-house and the related importance of Heineman’s complementary competencies through curricular and extracurricular offerings.

It’s what’s on the inside that counts

In-house legal departments are also beginning to invest in new forms of training. Some of that new investment is spent exploring familiar places, as law firm clients increasingly find creative ways to develop future in-house legal talent through leveraging their law firm relationships. In their essay, “Lawyers as Professionals and as Citizens,” Wilkins, Heineman, and William F. Lee offer the example of Intel as a model for how in-house corporate legal departments can begin to foster talent in law firms more effectively—and equitably. Under the arrangement, Intel works with its law firms on each significant matter to identify three groups of lawyers to be included on the given matter’s team: top leaders and trusted advisers, up-and-coming leaders, and “promising and talented non-partner attorneys and staff working on Intel matters.” A team at Intel then works with that law firm team throughout the course of the matter to ensure that, among other priorities, those junior lawyers were well integrated in an efficient working environment and that they were receiving valuable feedback directly from their client. As the authors describe, Intel went on to run with this joint approach beyond the confines of its core legal work—partnering with firms on pro bono matters, bar association activities, and professional development opportunities for young lawyers. They say in summary, “This arrangement represents a true partnership between the client and the law firm.”

The future may be uncertain for in-house legal departments’ traditional farm system, but it has already arrived elsewhere across the profession.

At the same time, in-house legal departments are expanding their focus outside of the traditional pipeline. Through a number of emerging efforts to train in-house lawyers, many of whom continue to come from law firms, large companies are also turning to internal training and executive education to further develop the skills of their lawyers. In one clear example, Harvard Law School Executive Education offers a course tailored to senior in-house lawyers: Leadership in Corporate Counsel (LCC). Through case studies, large and small group discussions, and lectures, LCC is about building leadership skills in the context of the in-house legal department. Topics include aligning strategy, providing internal services, motivating professionals, constructing incentive systems, creating productive work environments, and leading change in the department, among others. Whether to equip their lawyers to better communicate with business units or to develop skills that will help cultivate more-effective in-house leaders, in-house legal departments are seeking training outside of the old model through executive education opportunities like LCC. (For more, see “Executive Education for Lawyers.”)

And this is just one example of the new executive programming options available to current and aspiring in-house lawyers. There are many others. The Association of Corporate Counsel now partners with Boston University’s Questrom School of Business to offer a Mini MBA for In-House Counsel, a two-and-a-half-day program focused on business skills and literacy specifically designed for lawyers in company settings. Berkeley Law hosts a General Counsel Institute, centered on leading legal entities and taught by a combination of faculty and Fortune 1000 general counsel. Others, like San Francisco-based startup In-House Focus, are integrating in-house training into CLE-satisfying formats, with online content on subjects like the intersection of diversity and technology, the role of legal operations in companies, and the creation of data privacy programs for companies. Beyond traditional forms and venues of legal training, in-house lawyers today have an ever-growing well of executive and continuing education targeted at their particular practice setting.

The future is here

New forms of training are emerging across the legal profession—much to the benefit of current and future inside counsel. The future may be uncertain for in-house legal departments’ traditional farm system that relies on law firms as training grounds, but it has already arrived elsewhere across the profession in the form of new course offerings in law schools and executive education for lawyers already in-house. Corporate legal departments may ultimately hear the call to action and reinvest in the training of law firm associates, perhaps even taking a creative but deliberate approach like Intel’s team building with its firms. One thing, however, is clear: the impact of the in-house counsel movement is beginning to manifest elsewhere in the legal profession.