It used to be that in-house lawyers were largely spared from the chopping block when their companies engaged in widespread layoffs. But when attendees at a chief legal officer conference were asked Wednesday to raise their hands if they still found that to be true, nobody budged.
The pervading theme of the 2012 Chief Legal Officer Leadership Forum event, part of the Argyle Executive Forum at the New York Athletic Club in Manhattan, was that in-house lawyers are increasingly expected to be business-savvy, too.
More and more, top lawyers are being held accountable for the costs of running their departments. And more so than in the past, a law department’s success is being tied to the success of the business as a whole.
One aspect of that equation is that general counsel, in particular, are now expected to be not just the chief legal officer, but a strategic business partner as well.
“Twenty years ago, the general counsel would sit on a hill, separate from the C-suite,” said Deloitte Financial Advisory Services principal Tamika Tremaglio. But she said that many GCs are finding themselves at the same table with other senior executives.
“Now there is usually a well-versed lawyer handling any business issue,” she said, adding that there are very few financial decisions that don’t call for a legal opinion.
Thomas Moriarty, general counsel of Medco Health Solutions, Inc., said his department has embedded lawyers in every one of its business units—to serve as “mini GCs.” He’s found that the practice enhances and accelerates the lawyers’ knowledge and increases their efficiency in delivering service to the client.
Moving forward, panelists predicted that more general counsel will have MBAs and other business training, to complement their legal expertise.
For many in-house lawyers, this is what attracted them to law department work in the first place: “One of the reasons people come in-house is that they want to become a part of the business,” said Bart Schwartz, chief legal officer at Assurant, Inc.
Schwartz said that it’s increasingly common for top lawyers to be involved in the strategic management of a company. Like many GCs, Schwartz sits on his company’s management committee. He says it’s unsurprising to find top lawyers involved in setting corporate policy or managing a department other than the legal group.
As general counsel try to navigate the dual responsibilities of being a lawyer and a business partner, Schwartz said, the more they’re being expected to do more of each.
Schwartz said that it’s crucial for the head of the law department to be able to explain to a CFO—in financial terms—that he or she is using cost as a factor in law department decision-making.
“It’s more important than ever,” said Schwartz, that general counsel be able to effectively manage resources. He notes, “It will pay dividends in terms of the CFO’s perception that the law department is a well-run business.”
With pressure increasingly coming from both ends in law departments, will in-house lawyers return to firms?
Schwartz told CorpCounsel.com, “It is a struggle. It is stressful, but not more so than at firms.” He said his law firm counterparts are facing their own difficulties, such as fewer opportunities to make partner than in the past.
And unlike outside counsel, who may be just “parachuted in,” to handle a matter, Schwartz said in-house lawyers enjoy a sense of continuity. “They are able to really be part of the team,” he said. Although Assurant’s lawyer retention rates have been good, Schwartz said that when they do choose to leave, “they don’t leave to go back to a law firm.”
