Legal Hiring: Half-and-Half
April 30, 2007 | Filed Under Law Firm Trends, Legal Resources, In the News
Robert Half Legal reports that nearly 50% of “law offices” will add staff; and the other half will “stay the same.” The survey came from 300 attorneys among the 1,000 largest law firms and corporations. Only 2% reported staff reductions.
The leading areas of hiring gains according to the survey:
- Litigation 30%
- Ethics and corporate governance 22%
- Intellectual property 18%
- Real estate 11%
Since litigation is the biggest growth area, it tells me that the survey is skewed towards a law firm sample. Most corporations don’t staff litigation in-house. The executive director of Robert Half Legal, Charles Volkert, seems to acknowledge this:
“Litigation occurs in every industry and is a practice area that continually produces a significant volume of work. Because case demands vary, however, law firms often supplement their full-time staff with project professionals to meet peak workloads.”
This is why combining law firms and corporate legal departments in the same survey sample renders the results less informative for me. In many law firms, for example, the better question is whether you will see a net gain in staff (we know a high percentage of associates eventully leave).
Adding to ethics and corporate governance resources are more a bit more plausible, especially in financial companies with public reporting obligations.
One good bit of news for law firms with a global footprint from Mr. Volkert:
“As companies expand into overseas markets and enter into partnerships on a global scale, they’ll look to outside counsel for advice on operating within a foreign locale’s regulatory framework as well as for guidance on how to minimize risk while making the most of new business opportunities.”
Recent examples of this include Tyco/Eversheds and DLA Piper/Linde. These arrangements are examples of law firms and corporate legal departments working together to deliver services for companies that want to remain competitive globally.
From this perspective, “adding staff” is an attribute of the old economy; “partnering” and “risk-sharing” are tactics of the new economy.
Those are issues a bit harder to survey; this one’s not half bad…
Apple and its Options
April 23, 2007 | Filed Under Investigations, Governance
One of the clearest explanations yet of the Apple options backdating inquiry comes from the San Jose Mercury News. In a story that concludes that Apple CEO Steve Jobs is unlikely to face charges, writers Howard Mintz and Troy Wolverton explain the involvement of Apple’s legal department.
Apparently negotiations over a revised options grant to Mr. Jobs had gone on for a number of months in 2001. Although technically approved in August, other aspects of the deal were reviewed by the compensation committee in October. The legal department was notified in December that the grant was approved with an October effective date. By December the price of Apple stock had increased:
The board sent out an e-mail to the company’s legal department saying the deal was done and that Jobs’ options should carry the October grant date. At the time, Apple backdated options as a matter of course, the company revealed last December in SEC filings. Backdating Jobs’ grant wouldn’t have been seen as extraordinary, the lawyers say.
That’s where the fictitious meeting minutes come in. There is no evidence the board, or Jobs, knew that the grant would be documented through false minutes of a board meeting that didn’t occur. But that is what happened.
Wendy Howell, an in-house lawyer at Apple who typically wrote up meeting minutes related to options grants, drafted the minutes for Jobs’ grant. General Counsel Nancy Heinen signed them. Whether Howell was acting on her own or at the behest of Heinen when she falsified the minutes is a point in dispute between the former Apple employees.
But nothing points to Jobs ordering the October date, or knowing about the false meeting minutes, lawyers familiar with the matter say. A CEO would not typically review board minutes.
It is an unfortunate situation; there are ways of accurately documenting board action (such as by consent) that should not be construed later to involve a “fictitious meeting.”
We are in an era where observing corporate formality is more than just good housekeeping. It is about how things look, often many years after the fact.
Update: Bloomberg reports (as does the Mercury News) that Apple’s former GC may face SEC charges as early as this week. The New York Times notes that the former CFO may have settled with the SEC.
Hedge Funds and In-House Counsel
April 20, 2007 | Filed Under Private Equity, Law Firm Trends
The New York Times profiles an increase in deal flow for law firms related to private equity.
Also noted is the need for GCs and corporate counsel with these new and growing companies:
The “demand for general counsel is multiples higher than it was only three or four years ago,” said Alan D. Hilliker, a partner with the executive search firm Egon Zander in New York. Brian Davis, a recruiter with Major, Lindsey & Africa in New York, said, “Until three years ago, we never did a hedge fund search, and now we have had dozens and dozens.”
The draw is both the work and the compensation, which, for senior associates, typically ranges from $400,000 to $600,000 at hedge funds with $2 billion to $3 billion under management, according to Laurie Becker, the president of E. P. Dine, an executive search firm in New York. Partners, she added, can command even more.
Mr. Davis said: “The hedge fund business is diversifying, and they feel like they need lawyers for all the businesses they’re getting into. Funds are looking for transactional lawyers to help to do the deals, and there’s also a big demand for compliance lawyers.”
The liquidity in these markets is touching a lot of people right now. It is one thing to buy businesses; it is another to build them and run them right.
GE Legal Takes the Lead
April 18, 2007 | Filed Under Technology, Managing
Corporate Counsel magazine has announced the winner in its second annual selection of the best US legal department. Out of 500 legal departments who were invited to participate, 30 responded, with self-nomination materials.
The winner: GE. As the full report notes, GC Brackett Denniston leads an in-house team of 1,225 lawyers (with a budget near $1 billion), who make particularly good use of technology. One example is the Early Case Assessment (ECA) program:
The matter gets logged into the legal department’s tracking system. Within 60 days to 90 days, lawyers assigned to the case identify and interview witnesses; collect, review, and report on relevant documents; and assess the risks. The attorneys can also tap into a system designed by the legal department’s technology team and pull up any legislation or case law that could affect the dispute. Ultimately, the litigation team can decide, early on, whether it’s best to settle or take the case to trial.
ECA and other initiatives allowed GE to reduce litigation costs from $120.5 million in 2002 to $69.3 million in 2005. It’s an interesting and important statistic when a growing company lowers legal costs. Something for law firms scrambling for more business to ponder.
GC Legal also uses a robust IT department to make it work, including:
… ten full-time staff and one attorney. They custom-tailor systems to meet the company’s legal needs, such as virtual deal rooms, work-flow tools, and tracking systems. The group spends $2 million a year developing and supporting those systems — but they estimate the up-front costs save millions in lawyer productivity each year. “I’d love to buy more [software] off the shelf,” says John Brudz, senior counsel of legal tech, “but we get more added value [developing it ourselves] because off the shelf just doesn’t work for our size.”
You can hear a collective sigh from the legal tech community, who would love to get some of that spend allocated to their products.
Like its core businesses, GE Legal leads from a combination of top-shelf talent and a concentration of financial and capital resources. It almost seems like they have reached critical mass, and are generating improvements that come from the network that is GE Legal.
Also recognized by Corporate Counsel are the legal departments of J.C. Penney, Allstate, and Accenture.
Who gets the work?
April 13, 2007 | Filed Under Law Firm Trends, Managing
The Connecticut Law Tribune provides an interesting glimpse into the world of how GCs select law firms.
A good summary of the process:
Farming out legal work, a survey of 41 companies based in New England and subsequent interviews with their general counsel revealed, is a delicate balance of personal and professional relationships, budget management and hunting for first-class legal expertise. Though legal work often flows to the largest law firms, the survey found there’s room for solo practitioners to carve a niche, even with some big-name businesses.
I have had some very good results with solos who have big-firm experience and a focused area of expertise. It can really be the best of both worlds for a GC, and a good counterpoint to the large firms that are part of the outside counsel roster.
A concise summary of the process comes from Clayton Holdings GC Steven Cohen:
“You get a lot more out of developing relationships rather than parsing out work or creating competition for work, and pitting one firm against another,” Cohen said. “We build up a few very good relationships with firms interested in supporting our growth. We want the firm to get familiar with our business and grow with us. We want the firm to be excited to take our [telephone] calls.”
Any firm that’s not excited to take a client’s telephone calls may find an eerie quiet developing over time.
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