As the demands on the modern GC rise, more companies have recruited legal heads from their advisers. Caroline Hill talks to the lawyers have who switched sides

If you ask a handful of general counsel which of their external advisers they might select to take over their job and why, you are more likely to be given a lengthy diatribe on why not.

A great private practice lawyer, so it goes, is a perfectionist, obsessed about getting it right. They are uncomfortable with risk. They are often unfamiliar with balancing a budget, focusing instead on maximising their own billings. They run from internal politics. They love other people's problems. And they – reading between the lines – border on narcissistic.

In contrast, a successful GC must not only be a versatile team player – comfortable with addressing the board one minute and a disgruntled employee the next – but highly strategic, happy with high-level involvement and almost no direct hand in transactions, directly accountable and yet able to focus on the bigger picture.

Which, as the general counsel of one multinational corporate says, "can eliminate a huge body in partnership in City law firms".

It can also be highly unsettling that the deal command and exposure that elevates the star partner is, within the context a broader GC role, demoted to mere background knowledge.

Big role, big tasks

Graham Vinter, now general counsel of BG Group, was formerly Allen & Overy's (A&O) global projects, energy and infrastructure head, and one of its biggest name partners.

He says: "The higher up you go, the more strategic the role becomes and transactional experience is more just useful background experience.

"What people really want is a view – what your real view is – and that doesn't come easily to all lawyers in private practice."

There are also subtle but significant differences in dynamics. One former GC of a UK household name, who was selected as a result of being a trusted adviser, adds: "In private practice, if someone rings me up saying 'I've got a problem', I say 'Great, it's my job to solve your problem and you'll pay me and I can put my children into public school'. But at GC level, if the client has a problem, it cuts into your budget."

But while private practice may not be the natural hunting ground for a GC role, there has nonetheless been a notable increase in the number of corporates turning to their advisers for their next top-level hire.

"It was quite uncommon until recent times," observes the former GC.

Vinter (pictured) himself has just overseen the hire of King & Wood Mallesons partner James Fahey as GC of the group's Australian subsidiary QGC (formerly Queensland Gas Company).

The firm considers QGC to be one of its top 10 clients and Fahey had worked with QGC, although Vinter says: "We did know him, but what really helped is that he had been in-house before."

Fahey left legacy firm Mallesons to work for BHP Petroleum in 1993, then returned in 1996 as a partner.

Other recent GC hires include Allens corporate partner Andrew Finch, who joined Qantas in July. In the past, Finch advised the Australian airline on deals, including the failed A$11bn (£7bn) private equity-backed takeover bid led by Macquarie in 2006.

Last year, meanwhile, Clifford Chance partner James Jamison took over as Deloitte's GC in China. He had worked extensively for the professional services company during his time in Hong Kong, and told Legal Week at the time of his move: "It is a great chance for me to move to a new role as an in-house lawyer while still using my experience of the business and legal landscape in East Asia."

Also last year, Felix Ehrat, then senior partner of leading Swiss law firm Baer & Karrer, took over as general counsel of pharmaceutical giant Novartis. The firm advised Novartis on its $28bn (£17.2bn) acquisition of a majority stake in Alcon, although Ehrat himself had no direct relationship with the company.

The trend is obvious but the reason for the uptick is less clear, with much turning on individual circumstances. As one former GC comments: "Times are tough for law firms, the market is hard, winning work is more and more difficult and, for people who want to go to work to be a lawyer and not worry about where the money is coming from, being an employee is more attractive."

For the GC of a global corporate such as Novartis – with a market capitalisation of around $150bn (£94bn), 130,000 employees worldwide and a legal team of around 800 – it is not difficult to believe Ehrat when he says he took the role on for the challenge.

"I came to the conclusion that after a long career in private practice, this would be a unique opportunity in the advanced stage of the professional career to get to know something exciting and new in a great global company with a very large legal department operating in a fascinating area.

"On the basis of my first year in the position, I would say I needed all the expertise and know-how that I have acquired over my life for this job and I'm not sure whether I could have done it 15 years ago."

Vinter, who was at the time of his departure one of A&O's top-billing partners, says: "I really enjoyed all the transactional work, but there comes a time when you've sort of done that and what stretches out before you is more of the same or the challenge of something different."

Competitive advantage

Irrespective of the long list of characteristics that put private practice lawyers at a disadvantage, those who have been close to the business do have an edge.
Established external advisers know the business, its legal issues, regulatory challenges and dynamics.

They also come with somewhat of a guarantee that they are current in the law, have a good network and contacts database that can improve the efficiency with which deals are run, and may be able to build a more collegiate way of working.

Perhaps one of the biggest advantages for the corporate is that an existing external adviser will already know people within the company, and will have had an opportunity to build a solid reputation, avoiding the need to jump through hoops to prove their value to the business.

Tom Westcott joined 20:20 Mobile as general counsel from now-defunct Halliwells in 2009. The firm had a general retainer for commercial legal work as a result of advising management on 20:20 Mobile's £347m sale from Caudwell to Doughty Hanson in 2006.

As a senior associate, Westcott was seconded to 20:20 Mobile and developed a close relationship with management.

"The advantage for the corporate is that they are recruiting a known package," he says.

"It is essentially a 'try before you buy' approach. They know the personality involved and that it fits in with the organisation. This takes one of the big risks out of recruitment.

"They also know what the individual can and cannot do in terms of capability from the outset, so there are no misunderstandings as to what work will be 'insourced' and what will remain outsourced."

However, Westcott warns against a closed process: "Probably the best way to recruit would be to include the external adviser on any short list and then assess the strengths and weaknesses of all candidates. That way, you know you are not missing out on any other potential candidates in the market."

Becoming advanced

The reality is, as the GC role evolves and become more complex, the process is likely to not only be open but rigorous, and senior management will expect to see how any candidate measures against both in-house and external competition.

Vinter says: "If you have good in-house lawyers, you need a really good reason to go outside. You should try to look internally and if you can't find someone, you will usually be guided by recruitment agencies to look at GCs of smaller corporates before you look at people in private practice."

If a private practice lawyer is appointed, the fact that the process has been fair will also mean less upset internally.

"Most people are mature enough to get over it if you have a proper and transparent process," adds Vinter.

As far as any upset within the losing law firm is concerned, it will be no small consolation that they will (in theory) gain a deeper contact within a valued client and will undoubtedly hope to retain legal work going forward.

"It is therefore incredibly important for the law firm to leave on good terms with the individual to avoid burning any bridges and attempt to retain some of the external legal work," says Westcott.

This will again turn on the individual circumstances and at O'Melveny & Myers – where corporate partner Mark Easton returned in August after just more than a year as deputy GC of Warner Bros Entertainment – chair Brad Butwin says: "We believe these types of arrangements are a win-win for us and our clients. 

"Some of our firm's best lawyers have been tapped for important in-house positions, and some have returned to the firm after serving in these roles – both of which underscore the exceptional skills and leadership abilities of these attorneys."

There is nonetheless a softer argument that where the hires are at a very senior level – as they frequently are – the departure frees up space for younger upcoming talent without altogether losing a valuable resource.

Private practice hires are on the increase, and there is no reason to believe the trend should not continue. "There has been a big change in approach and attitude," says Ehrat (pictured).

"When I started out 20 years or so ago, a corporate legal department was not considered attractive for talent. Today, the fast-moving corporate environment is attractive to private practice lawyers and offers opportunities that private practice might not be able to offer to the same extent."

However, it also appears that in-house lawyers looking for promotion need lose little sleep. The GC of one global corporate says: "The higher up you get, the more you are expected to have a succession plan, and I regularly look at people in private practice, but I can't say anyone is right."

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