The past few years have seen dramatic shake-ups in private practice, including mass layoffs and significant salary cuts. The recession has made a rough go of it for many attorneys practicing in law firms, but has it been any easier on in-house counsel? Certainly, the economic downturn has forced in-house lawyers to stretch progressively thinner legal budgets while still retaining quality outside counsel.

In addition, a recent study by Hildebrandt Baker Robbins found that the rate of base salary increases for in-house legal counsel continues to decrease.

Between 2004 and 2008, the survey found, the average annual base salary of in-house lawyers rose 5 to 6 percent, but 2009 saw only a 3.4 percent increase and the 2010 increase was only 2.6 percent.

On the other hand, popular belief in the legal community in recent years has been that in-house jobs are much more stable than law firm jobs.

And, according to several recruiters, demand for those positions is high.

“Our experience is that the vast majority of attorneys want to segue to an in-house role at some point in their careers,” said Deborah Z. Thompson, managing director in the in-house practice group of Major Lindsey & Africa’s Philadelphia office.

So is in-house the place to be right now?

THE PROS

Robert Nourian, managing principal of recruiting firm Coleman Nourian, said it’s true that in-house base salaries have not been increasing with the speed they had been pre-recession.

“But that’s just business in general,” he said. “Law firms haven’t been bumping salaries either.”

In fact, he said, cash compensation levels are comparable among high-level in-house lawyers and high-level law firm partners.

And while the base pay for in-house lawyers tends to fall short of the salaries of outside counsel with similar experience, there are additional forms of compensation that often make up the difference.

“Companies often have a restricted stock component that they give annually to mid- and senior-level in-house lawyers,” he said. “That’s pure value right there. As long as the company’s stock stays above zero, there’s value.”

According to Nourian, those equity grants “can really add up” over time.

Recruiter Louise Hamburg of Edge Consulting, which focuses exclusively on placing lawyers in-house at pharmaceutical, biotechnology, medical device and chemical companies, had a similar take.

“At a law firm, you’re lucky to get over $10,000 in bonuses, even if you’re making your hours,” she said.

But in-house attorneys often receive bonuses of up to 25 percent of their salaries, Hamburg said.

There are upsides beyond compensation as well.

Nourian said in-house work is a “natural fit” for attorneys who aren’t necessarily interested in or adept at being salespeople.

“At the highest level of success [in private practice], you also have to be a business generator,” he said.

“Not everybody who went to law school has that natural ability and many aren’t comfortable with it.”

Nourian said he’s also heard from many in-house lawyers that they’re more engaged in the work they do since their clients are also their employers.

“What we hear consistently is that people say they feel much more a part of the beginning, middle and end of long-term projects for their employers,” he said, adding that in-house counsel are often considered business partners and are “much more integral in terms of identification of goals and strategies for how to get there” than outside counsel.

Thompson said in-house work also offers “significant” opportunity for career growth.

“I will tell you that an overwhelming majority of folks who end up joining law departments don’t have much interest in going back to law firms,” said Nourian.

THE CONS

Both Hamburg and Nourian said the notion that job security has been significantly higher in-house than in private practice during the recession is not entirely accurate.

In fact, Nourian said, in-house positions are in some ways on thinner ice than law firm jobs regardless of outside economic factors.

“You only have one client, and that’s your employer,” he said. “If something happens to that employer, you could be out of a position quickly.”

If a company merges or goes out of business, for example, in-house lawyers can quickly lose their jobs, Nourian added.

Likewise, if a new GC or high-level executive comes on board with the company, it could lead to potential shakeups in the law department, he said.

Hamburg had a similar outlook.

“It is probably a little bit more stable than law firms right now, but not terribly more stable,” she said. “In the law firm market, you see firms going completely belly-up or severely shrinking. In the company arena, you see a lot of consolidation. When Pfizer bought Wyeth, there were a lot of duplicative positions that needed to be dealt with.”

And, according to Nourian, it can often be more challenging for an in-house lawyer to find a new job than for a law firm partner with a book of business.

“You have more eggs in one basket if something does happen to you, and you don’t have a portable practice,” he said.

And there’s certainly no shortage of competition for those positions.

“Everybody wants an in-house job now. I’ve never been so deluged by people who want in-house jobs,” Hamburg said.

But even being considered for an in-house role usually requires more than just impressive credentials, she added.

“It’s all about who you know, unfortunately,” she said.

THE VERDICT

In-house lawyering is nice work if you can get it, offering ample opportunity to handle compelling matters and be generously compensated.

That said, law departments are not necessarily the job-secure utopias some make them out to be.

In the end, the allure of in-house work seems to depend largely on the individual lawyer’s personality: those who are passionate about law but adverse to the notion of having to drum up business may find in-house work particularly rewarding.

Meanwhile, those lawyers with an innate sales sense may find more success in private practice. •