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No other area of legal practice is as popular today as going in-house, particularly with a dynamic and growth-oriented company. The legal and business press is replete with stories of lawyers who have achieved remarkable financial gains through stock options offered by early-stage companies. In addition to economic incentives, many lawyers perceive going in-house as allowing them to be an integral part of a management team, an opportunity to “get closer to the business,” and to act proactively for a client as opposed to continually being in an after-the-fact position. The debate on whether in-house lawyers work fewer hours than those in private practice continues. The truth is sometimes yes, sometimes no, but going in-house probably allows more control over one’s schedule. In the general counsel area, our six national offices have seen most activity in fast-growth companies seeking their first general counsel. This makes sense: More mature companies often have a succession plan in place, whereby an internal candidate has already been designated to succeed an outgoing general counsel. Of course, some established companies do opt to “go outside” for a general counsel, but this is the exception rather than the rule. Given the fact that the greatest activity in the general counsel area lies with emerging growth companies, the geographical areas of the country where those companies are headquartered tend to dominate the market for general counsel: the Silicon Valley of Northern California, New York’s Silicon Alley, San Diego (especially for biotechnology), Seattle, Denver and Boulder (telecommunications), Austin (software), Boston (Route 128), the Dulles Corridor of Northern Virginia, and the Research Triangle of North Carolina. Our firm’s experience is that the Silicon Valley is the most active of these areas, reflecting the growth and maturity of the corporate community there. For example, three or four years ago, our California offices (San Francisco and Palo Alto) would place perhaps 10 general counsel a year. In 1998, we placed 15. In 1999, we placed 25, a startling increase that corresponds with the development of Silicon Valley, as well as that of the financial services, health care, consumer products, insurance, and energy industries. Other areas of the country, including Northern Virginia, have not developed their technology community as fast as Silicon Valley. Nonetheless, we predict an acceleration in the number of companies in these areas needing general counsel. THE RIGHT TIME TO HIRE Many people inquire about the typical profile of a fast-growth company needing its first general counsel. They wonder if there is some point in the company’s life when the first general counsel is justified. The answer is no. There are many factors affecting whether a company should hire its first general counsel. One criterion that has been used for years is the level of revenue (for example, $75 million to $100 million in sales). The advent of many companies in the New Economy that have no revenue but still can justify a general counsel has shattered the notion that revenue — in and of itself — is a benchmark. We routinely consult with companies about whether they are at a stage of their growth where they need a general counsel. Considerations include the degree of sensitivity that the company has regarding its intellectual property, whether the company is pre-IPO, the current responsiveness of their outside counsel (this is presently a major source of tension in many companies), whether the company has moved from a pure R&D stage to a sales-distribution-marketing stage, the need for SEC advice and litigation management, and so forth. This is a complex issue. WHAT DO CLIENTS WANT? Once a company has decided that it needs a general counsel, what is the typical profile of this individual? Clients are increasingly savvy about the profile that best suits their needs; they are often guided in this regard by their outside counsel. In terms of experience and practice area, lawyers who have practiced for fewer than seven or eight years are less likely to be considered, since they are viewed as not having the breadth and depth of experience. Corporate lawyers are vastly preferred over any other practice area. Our clients rarely specify a litigation background, or even a “best athlete.” This preference is frustrating to litigator candidates, who argue that they are used to quickly learning new areas of the law, as well as knowing what often goes wrong in a deal. The fact is that the day-to-day business of most companies is contracts; joint ventures and strategic alliances; licensing, securities; mergers and acquisitions; and support of the manufacturing, marketing, sales, and distribution functions of the company. Lawyers who already handle these types of matters have a clear advantage over those who litigate them. How important is previous in-house experience? We increasingly see clients stating a preference for lawyers who have been in-house. Some believe, correctly or not, that such lawyers better understand the corporate culture, have more developed team-building skills, and are better able get things accomplished in a responsive manner to their business clients. Because the supply of general counsel candidates far exceeds the number of positions, clients can also specify industry-specific experience: Software companies want someone from their industry, not from the semiconductor industry; semiconductor types prefer their colleagues over software lawyers. Obviously, there are many exceptions to this rule, but it is a preference that we often see. LOCAL CANDIDATES PREFERRED We receive dozens of inquiries daily from lawyers in different parts of the country about general counsel positions. These lawyers state their willingness, indeed their eagerness, to relocate. The problem for out-of-towners is that general counsel positions are so highly sought-after that clients need not “reach” very far. In most cases, there are many qualified people locally who want these jobs. Furthermore, local candidates have other advantages: They may be practicing in law firms or companies that are “household names.” The client (usually the CEO or CFO) is likely to know someone in that law firm or company, and therefore references are more easily and reliably checked. As companies increasingly rely on strategic alliances, joint ventures, and licensing arrangements, a local candidate’s circle of professional acquaintances (“the Rolodex factor”) may be a useful advantage, especially to a company whose management team is quite small. Accreditation by the local bar is a requirement of some clients. Relocation costs are usually not a significant factor, but housing costs definitely are. Horror stories abound of CEOs spending months recruiting a candidate, only to have the move vetoed by a spouse who cannot accept the change in their standard of living. This year, we are beginning to see a shrinking of the pool of first-rate candidates for general counsel jobs. The principal reason is that many candidates with the “perfect profile” are tied to their present employer through stock options — the proverbial golden handcuffs. As stock valuations have soared, interest in exploring opportunities outside the successful companies has plummeted. And it is the successful companies (Sun Microsystems, Cisco Systems, Microsoft, etc.) that tend to lend “marquee value” to resumes. Although the shrinking pool does not mean companies are having trouble finding good candidates, it does mean that, unlike prior years when we would submit a slate of 12 to 15 viable candidates, this year that slate might contain only seven or eight names. Robert A. Major Jr. is the founder of the international legal search firm Major, Hagen & Africa. Located in the San Francisco office, he can be reached at [email protected]

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