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Too often, lawyers with little or no corporation experience are plucked from firm partnerships and plunked into general counsel spots. Few of these newly minted general counsel have realistic ideas about what their roles will be within the corporate structure, much less how to run a legal department. Not surprisingly, the transition can be difficult. The reality is that firms and corporate legal departments are two different animals. What works in running a firm doesn’t always translate into effective management in a corporate environment. While strong leadership is vital to any organization, there are big economic and cultural differences between firms and corporations. Understanding the subtle and not-so-subtle differences can be critical to the success of your operation. Myth: Lawyers are revenue producers. Reality: The company attributes cost to its in-house lawyers. When lawyers are asked what would motivate them to move in-house, they often laugh and say, “No more time sheets.” But no more time sheets means good and bad news. Sure, the pressure to bring in clients and to bill every minute goes away, usually. But shedding the burden of generating revenue often also means losing the accompanying clout and independence. Legal departments usually are viewed as cost centers, the service personnel to those who generate the organization’s wealth. Some legal departments do require time sheets. But those records are used to charge other divisions or business units for legal services, not to track revenue flowing into the organization. The mission of a legal department is to minimize costs. That means decreasing the volume of legal work performed by outside lawyers and minimizing a company’s exposure to risk. Employment lawyers, for example, might look at the pattern of suits against the company and determine that increased sexual harassment training is warranted in certain divisions or regional offices. But some of the best and most innovative in-house lawyers today are seeking ways to produce additional income for corporations. Licensing attorneys, for example, frequently try to turn infringers into new licensees. Myth: The legal department is an autonomous unit. Reality: The legal department is an integral part of the corporate structure — and becoming more so every day. While some firms are moving to a teamwork approach in client development, autonomous behavior is still tolerated and even encouraged. Too many associates have tales of difficult, demanding, socially awkward partners who’ve made their lives pure misery. In-house advancement, on the other hand, depends on how well lawyers work with each other and with the company’s internal business clients. Lawyers are expected to behave as employees and abide by company rules. Noncompliance with corporate policies, such as making sexist or racist comments, can result in termination. Myth: Resources are better in a corporation. Reality: In-house departments have fewer resources than the megafirms. Firms support their lawyers with administrative resources in accounting, human resources, technology, word processing and facilities management. Firm management allocates these resources to support the lawyers because they’re revenue producers. Few legal departments have such dedicated resources. Many legal departments are treated as stepchildren of the companies’ revenue-producing divisions, and the legal departments’ requests for support often are denied. This is a shock for recent firm alumni who are used to getting instantaneous service and find the concept of shared resources odd. For instance, a managing partner in a firm usually can expect immediate turnaround for a special report by accounting. Not so in-house; the GC must wait patiently in line. BE SLOW TO RETOOL Myth: The GC needs to cozy up to the CEO only. Reality: The GC answers to management at large. Several years ago, the chief executive officer of a Fortune 500 company tapped a young, hotshot mergers and acquisitions lawyer to be the GC. The CEO and the lawyer already had a close relationship. The lawyer saw the GC position as an opportunity to make a splash in the legal community. Instead of developing relationships with the corporate executives and the in-house staff, the new GC was busy building a high profile in the conference circuit. The deputy general counsel was left to run the day-to-day operations. When a major crisis hit the company, the general counsel found he lacked support at the executive level and in the legal department. Ultimately, he was sacrificed in the name of corporate accountability; the deputy general counsel was elevated to the position of general counsel. Myth: A newly installed general counsel should establish a new world order as soon as possible. Reality: It’s a mistake to make wholesale personnel and policy changes quickly — critical institutional knowledge could be lost, and even the lowest-ranking member of the legal team has important relationships that may help make your department effective. A prominent litigation partner was hired to revamp the legal group of a Fortune 500 company. Shortly after arriving, the new GC determined that many of the company’s lawyers had outdated expertise. The general counsel decided to retool the department, terminating a large portion of the lawyers to make room for firm stars. Unfortunately, the GC failed to see that some of the terminated lawyers had formed loyal relationships with members of management and possessed valuable institutional knowledge. Worse, the two-tier system of new stars and “leftovers” created emotional havoc among the rank and file. Departmental unhappiness, coupled with reduced client service, caused the GC to lose favor with the CEO. The GC resigned two years later. Myth: Management will create career tracks for in-house lawyers. Reality: Corporate executives and human resource personnel are not thinking about an in-house lawyer’s professional goals. Career paths for those in in-house legal departments are unclear. Law departments often are subjected to corporationwide head count restrictions. Even in large legal departments, the so-called management track may not exist. So it falls on the general counsel to network within the company to create potential nonlegal career paths for its stars. This is especially true in today’s job market, when outside counsel generally earn so much more than company attorneys. Some GCs are letting their lawyers know that they eventually can move to the business side or to other support functions, such as tax or human resources. Many lawyers take these positions for a year or so, then return to the legal group; others leave permanently. In either case, the legal department typically benefits from the good will created by having lawyers move into business. Myth: An in-house lawyer’s compensation depends on individual performance. Reality: In-house lawyers are part of the company’s overall compensation system. In a firm, partners typically are compensated based on their personal productivity and rainmaking abilities. Lawyers are compared with other lawyers in the firm, and the shareholders determine the compensation system. In-house lawyers, however, are compensated as employees, and the at-risk portion (such as the short- and long-term bonus and stock options) usually relates to the performance of the company or business unit. Lawyers often are slotted into the corporation’s compensation system in levels or bands in which they are compared with other (nonlawyer) managers in the corporation. Almost all companies use performance evaluations and client feedback in setting compensation. Before taking that plum in-house job, park your firm ego at the door. It can be a big mistake to use a firm model to run a legal department. Often, this leads to alienating the people you need most to succeed –management and the legal team. So learn to recognize your allies, identify the back roads to influence and spot potential hazards before trying to put your personal stamp on the department. Patience and humility can go a long way.

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