ParentCo has three business units: Gadgets, Widgets, and Muppets.
ParentCo will have a general counsel. Beyond that, however, ParentCo’s Law Department could be set up in one of two ways: (1) there may be three lawyers, one of whom is the chief counsel for Gadgets, one for Widgets, and one for Muppets, or (2) ParentCo may have a litigation counsel, an M&A counsel, and a contracts counsel, each of whom support all three business units.
In the first situation, the lawyers for the business units are generalists, helping their specific business units with whatever legal matters arise. In the second situation, the lawyers are substantive experts, helping all three business units with matters that fall into the lawyers’ areas of expertise. An in-house lawyer’s work environment turns in part on which structure the corporation’s law department uses, and outside counsel can better serve clients if counsel know how a law department is organized….
First, the law department’s organizational structure affects the nature of an in-house lawyer’s job. If you’re the chief counsel for Gadgets, then you’re a generalist. The CEO of Gadgets will rely on you to draft contracts, negotiate acquisitions, deal with employment issues, oversee litigation, and do all the rest. You’ll also develop an on-going relationship with the CEO of Gadgets, because you’ll be working with her (and her management team) regularly. You’re imbedded in the business.
If you’re the chief counsel for M&A at ParentCo, then your life is quite different. You’re a specialist: You do all M&A deals for Gadgets, Widgets, and Muppets. You’ll work with whatever business person (in any of the three businesses) happens to be at the helm of the corporate deal. You will not necessarily be working with the CEO (or the senior management team) of a business unit and, if you happen to work with one of those folks, you’ll do so only episodically. You’re a subject-matter expert, not imbedded in the business.
Which structure is better for a corporation? It depends — on the size of ParentCo, the legal needs of the business units, and personal preferences, among other things. Different companies do things differently.
Which structure is better for the in-house lawyers? Again, it depends — on which type of job the lawyer prefers.
But the two structures are quite different, and different lawyers would surely prefer one type of job to the other.
How does this affect outside counsel?
If you’re working on a class action with the chief counsel of Gadgets, remember that the in-house lawyer is a generalist (and probably not a generalist with a litigation background). If you start talking about mandatory classes and opt-out rights, the chief counsel of Gadgets will either stare at you blankly or spit in your eye.
On the other hand, if outside counsel is working with ParentCo’s chief litigation counsel, that person specializes in litigation (and may have more years of litigation experience than you do). If you start explaining to that in-house lawyer that there’s a process known as discovery that involves producing documents and taking and defending depositions, the chief litigation counsel will either spit in your eye or pick up a blunt object and come after you.
Candidates for in-house jobs: Ask how your potential employer has set up its law department. This will affect the nature of your job.
Outside counsel: Determine the nature of the job that your in-house contact holds. This will permit you to communicate with that person more effectively.
Mark Herrmann is the Chief Counsel – Litigation and Global Chief Compliance Officer at Aon, the world’s leading provider of risk management services, insurance and reinsurance brokerage, and human capital and management consulting. He is the author of The Curmudgeon’s Guide to Practicing Law (affiliate link) and Inside Straight: Advice About Lawyering, In-House And Out, That Only The Internet Could Provide. You can reach him by email at email@example.com.