The organizational structure for law firms and in-house counsels usually looks different. This review discusses the different environments you can expect with both types of employment. This should help you (the attorney) make an informed decision as to whether law firms or in-house counsel is best for you.
Law Firm Organizational Structure
There are many roles within a law firm. This is usually the case for small, mid-sized, and large law firms. Here is a detailed breakdown of some of the more common roles within a law firm, particularly as their role relates to maintaining organizational structure.
A managing partner oversees most daily operations with the law firm. In many cases, the managing partner is also a part-owner of the company as well. They are often responsible for establishing and maintaining function and organization, along with directly communicating with clients and helping them with their cases.
A partner is usually a part-owner as well and receives a total percentage of the profits the firm makes (although partners may still be paid a salary as well). A partner has a fair amount of stake in the law firm and is consequently heavily involved in all operations within the firm, including maintaining optimal structure and function.
An associate is an attorney who is appointed by the firm and represents the firm. Although they do not have any ownership of the law firm, they are typically on a pre-defined “partnership track,” with the understanding that the other partners will take a vote on whether to make them a partner at a specified period of time. Associates sometimes handle smaller cases on their own, but more often they work with a partner on a case or project. Although they will typically have interaction with clients, they are not the main client contact at a firm. An associate can be a first year attorney up to ten years or so, but if they don’t “make partner” during a certain time, they are typically either encouraged to “look for other options” or asked to remain with the firm in a permanent “Of Counsel” or “Special Counsel” role.
Of Counsel or Special Counsels
These are attorneys who either did not make partner for one reason or the other (perhaps not enough portable business, or they’re not able to bill enough hours for family reasons) but they are valuable to the firm and the firm wants them to remain with the firm in a non-partner role. These attorneys are typically more senior than associates and often handle the same types of tasks as a partner, but are on a salary-plus-bonus compensation scheme and do not own any equity in the law firm. They are often, but not always, on a reduced hour schedule as compared to most partners or associates.
Staff attorneys are salaried, non-partnership track attorneys. They are usually more junior than attorneys who have the titles Of Counsel or Special Counsel, but not always. They are typically paid a lower salary than associates and are hired most for a specialized expertise or to do work that is highly repetitive but that requires an attorney to do it. As such, they do not typically have client interaction as an associate might. A Staff Attorney is rarely moved from Staff Attorney to Associate within the same firm, although they often are able to leverage their experience as a Staff Attorney at a prestigious firm to become as Associate later at another firm.
A contract attorney is an attorney who is not a full-time, salaried employee of the law firm. Instead, they are generally hired on an hourly basis to complete work on behalf of the law firm. In many cases, they have a certain specialty that other attorneys within the law firm do not possess. Contract attorneys may be hired on a long-term basis or be hired for a short-term project.
A law clerk is usually in law school and works at a law firm either part-time or full-time during the summer. A law clerk can also be a recent law graduate who has not yet been licensed by a state bar. They are usually tasked with discrete projects for matters and cases, such as research and related research memos, drafting motions and briefs, and preparing first drafts of documents pertaining to transactions.
Paralegals or Legal Assistants
A paralegal or Legal Assistant is essentially a title that is designated for integral members of a law firm who do not have a law degree. A Paralegal may have a certification or may only have on-the-job training. The role of a paralegal varies widely depending on the area of law they specialize in, but their role most often entails filing documents with courts and governmental agencies, making sure that notices are provided to parties in accord with the local rules, keeping track of documents relating to discovery and due diligence, preparing exhibits for trial or presentations, keeping track of deadlines required in court cases, contracts, or transaction documents, and sometimes preparing the first draft of simple legal documents.
Administrative Assistant or Legal Secretaries
An administrative assistant plays a vital role in keeping attorneys and paralegals organized and operating efficiently. They schedule and calendar meetings, manage dockets and calendars, maintain client files, answer telephone calls, and are the primarily Word Processors in most law firms. They also often file documents with courts and governmental agencies and otherwise perform some of the same duties as legal assistant. Many Legal Secretaries move up to a Paralegal or Legal Assistant role once they gain a certain amount of competence and experience.
Marketing or Business Development Directors
The primary goal of a marketing director is to attract new clients to the law firm. Much of the marketing is done within the firm. However, marketing directors are often also tasked with finding and working directly with PR companies, branding agencies, etc. to help ensure the law firm has a positive image and is able to continually attract new clients.
In-House Counsel Structure
An in-house counsel is a law professional that is employed by one company who is the attorney’s only client (along with any sister companies or subsidiaries the company might own). In a large legal department, an in-house lawyer is as highly specialized as attorneys in law firms, handling one discreet area such as corporate transactions, employment law, commercial contracts, or litigation. Large companies also typically hire one or more attorneys to focus on supporting the operations of their major business lines. In small companies, however, the legal departments are also much smaller, requiring their one or more attorneys to be true “generalists” who support the sales group, procurement, human resources, the finance group, handle litigation as it arises, etc. Larger companies sometimes hire new law graduates as well as hiring more experienced lawyers in-house as needed. Most smaller companies, however hire more experienced attorneys who have law firm experience or prior in-house experience, since being a generalist requires more maturity and experience than a junior lawyer is capable of handling.
Keep in mind, the titles and hierarchy within each in-house legal department are unique and there is no “right or wrong” title or way to organize a legal department. Below are some of the more typical titles and organizational structures we see for in-house counsel positions. Type of structure
There are three types of structures you may find within an in-house counsel. These types include functional, client-focused, and a hybrid approach. Here is a close look at each structure type:
- Functional – This structure type refers to a central legal team that is divided based on expertise. Each department usually has a department head that communicates with other departments. Together, all of the departments work collaboratively on behalf of the organization.
- Client Focused – This organizational structure method divides their legal team based on the line of business they deal with. In some cases, a client-focused approach involves dividing lawyers based on the location, and certain lawyers may be assigned to dealing with concerns for a particular site or area.
- Hybrid – A hybrid approach is simply a combination of functional and client-focused organizational structures. This is generally more common for larger organizations.
There are advantages and disadvantages for all organizational structure types. For example, it may be more difficult to communicate effectively with a functional approach, but each lawyer may have more clarity as to what their role is within the in-house counsel each workday.
How do you decide? What factors to consider?
Every attorney should consider the type of organizational structure they prefer. Of course, experience helps the attorney determine which environment allows them to be the most effective and efficient. However, when evaluating your desires, you should consider the following factors:
- Nature of the business
- Size of the department
- Location of the attorneys
- Expertise of the existing team (e.g., generalists v specialists)
- Employee’s reaction to change and the significance of the structure on job satisfaction
- General service requirements of the business
- The CEO’s wishes
Local and State Rules
Additionally, it is worth mentioning that local and state rules, laws, and regulations may play a role in your decision. For example, a state with strict laws related to business may lead to a more demanding role within an in-house counsel. On the other hand, regularly changing local and state laws could lead to less predictability within a law firm.
What are the pros and cons of working in a law firm?
There are certainly advantages of working for a law firm rather than an in-house counsel. Notably, these benefits include:
- You gain valuable experience by being exposed to multiple clients in multiple industries
- You may have more earning potential, especially early in your career
- You are able to specialize in one area of the law, becoming a true expert at it
- A lawyer with business (i.e. your own clients) has job security with their current firm and options to go to other firms if desired
- A lawyer with multiple clients is not typically significantly affected if one of those clients has a business downturn; whereas if you are in-house, a downturn in that one company or industry could lead to a lay off
However, law firms often place a heavy workload upon attorneys as they are asked to successfully balance multiple clients. Consequently, a work-life balance is often harder to achieve within law firms.
What are the pros and cons of being an in-house counsel?
Many attorneys do not have plans of working with an in-house counsel while they are completing law school. However, there are numerous reasons to consider doing so. Notable benefits include:
- You only work for and on behalf of one client (your employer), which you can get to know better and therefore more effectively help it achieve its long-term goals
- You become an integral part of key business decisions
- You are likely to have a better work-life balance due to the freedom from billable hours and being able to rely on outside counsel for emergencies
- There may be exciting opportunities for advancement within the company
- Bonuses are not based on the number of hours worked
- Equity is often granted to more senior attorneys, which can become quite valuable over time
There are also potential drawbacks to working as an in-house counsel. For instance, there can be a higher risk of a layoff if the company or the industry takes a sudden downturn. And many in-house lawyers find it harder to switch from an in-house role back to a law firm, whereas the opposite is far more common.
By understanding the benefits and disadvantages of each opportunity, you will be able to make more informed decisions about your legal career moving forward.