Oregon State Bar Bulletin — NOVEMBER 2010



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Should I Go In-House?

Corporate law may not inspire creation of television dramas such as “Perry Mason,” “Matlock” and countless others, but that portion of the bar that works either as in-house attorneys or in a firm while advising companies plays an important role in the legal aspects of making businesses succeed and prosper.

According to those who practice in the field, it is a challenging one and requires thorough knowledge of a particular industry or company. The in-house lawyer also must uphold the legal duties all attorneys follow, and yet steer the company in a direction that adheres to proper ethics while at the same time allows the enterprise to make a profit.

Moving from a firm to a company, or vice versa, requires many adjustments, some of which lawyers discover unexpectedly once they make the leap to a different setting. And general counsels, now especially, have a keen responsibility to the corporate shareholders of a public company.

Oregon lawyers who practice corporate law in different types of settings offered the Bulletin their perspectives on what is involved, how and why they chose the career path they did, and how what they do is perceived by the rest of the profession.

Jay Zollinger’s current law practice, Outside General Counsel Services, aims to serve as a solution to this paradox: Startup, growth-stage companies need top quality legal services but often can’t afford to hire outside legal representation.

One of the things that bugged him when he worked in a firm was that his clients felt that it was too expensive to talk with him; they were “worried about the clock running in the background.” Having worked in both large-firm and in-house settings, he sought ways to get around that problem by providing what he calls “creative billing structures.”

Zollinger is a former partner at Perkins Coie. There, he handled complex business litigation, and one of his clients was Saber Software Inc., Oregon’s fastest-growing company in 2007. He began doing general consulting advice work for the company, then left Perkins to become Saber’s in-house general counsel. During the two and a half years he was at Saber, Zollinger built a legal department and helped run the company as part of Saber’s management team.

After EDS purchased Saber, Zollinger eventually negotiated his exit from the company. He expected to find a general counsel position in another company, but the economy didn’t cooperate, especially in Portland.

“After spending time traveling and figuring out what I wanted to do, I decided to go into practice providing general counsel services to companies not quite ready for a full-time general counsel,” he says.

Having worked on both sides of the fence, he prefers in-house. “I really enjoyed the time I spent at the law firm, but I enjoyed my time at Saber even more,” he says.

He learned that, by working in-house, he was able to gain “deeper, more in-depth knowledge of a company’s culture: how they do business, how they make decisions, what their risk-tolerance levels are. Getting that complete picture really helps a lawyer provide the best services he or she can that a company needs to guarantee survival.”

Zollinger expected to stay at Perkins until he retired, but when the Saber opportunity fell into his lap, he saw a different course. “There’s a lot of security to being at a firm. I think a lot of people overvalue that security.” One of the attractions he found with in-house work is the potential for some type of equity arrangement, where the lawyer benefits along with the company if it is sold or goes public.

At Perkins, Zollinger had a few clients for whom he acted as general counsel or on-going legal adviser, but “it’s hard in a firm to maintain that kind of relationship, because of the billing structure,” he says. “For example, I think a lawyer needs to attend general management meetings.” Both parties benefit from this, because businesses often don’t recognize legal issues as they evolve, but a lawyer does. But if he’s working in a firm, “the clients have to pay me to show up every time.”

The times are past when everyone assumed that the best and brightest lawyers went to firms, says Christopher P. Moore, senior counsel at UTC Fire & Security in Tualatin.

“The lawyer for the company I report to was recruited by GE,” he says. “It’s more common for companies to get very high-quality lawyers in-house. Ten to 20 years ago, a lot less of that was happening.”

Right now, the trend is to keep as much legal work as possible in-house, to avoid large hourly fees, he notes. “They can pay someone well for a lot less.” Over time, he sees the role of an in-house lawyer increasingly evolving to encompass more of being a team leader, with the “opportunity to empower people and foster teamwork.”

When Moore finished law school, he took a job with a big firm in California, handling mergers and acquisitions. After two years he left for an in-house post with a small technology company, and for the past five years has been with UTC, formerly GE Security.

“I was initially drawn to going in-house because I liked the idea of being a team player rather than a hired gun — part of a team that succeeds or fails,” he says. “Deep down, I knew in-house was best for me.”

Some of the partners at his former firm thought of themselves as general counsel for a company, but “if you’re general counsel for 20 clients, you’re going to have a different perspective. You sink or swim with one client when you’re in-house general counsel. You really are a stakeholder. If the company sinks, you have to get another job.”

He entered in-house work thinking the hours would be more steady and fewer than in a firm, but he was quickly disabused of that notion. “You work just as hard, and your compensation doesn’t necessarily reflect that. In-house, you might get a pat on the back from the CEO. The financial rewards are not as much.”

Instead, he is drawn to the excitement of being not just a lawyer, but also a valuable member of a senior leadership team. In Moore’s opinion, “The best in-house law departments of the future will be staffed not just with superb lawyers that know how to control costs, but with organizational leaders that use their unique position in the company to champion company values, foster teamwork and bring the company success.”

Arden J. Olson, a shareholder with Harrang Long Gary Rudnick in Eugene, has worked as an in-house counsel, a government lawyer and an attorney in private firms. His experience gives him uncommon insight into the advantages and drawbacks to each setting.

He started out practicing in firms: first in Seattle, working in commercial litigation, and then in Philadelphia, also handling antitrust, securities and ERISA law. He then served as assistant attorney general in the special litigation unit and attorney-in-charge of the industrial accident section of the Oregon Department of Justice. He was handling complex litigation for the Department of Justice when, in 1989, he became general counsel and legal division director to SAIF Corp.

Olson later served as general counsel to a regional health plan. In that job, which he performed for five years, one of the conditions he set was that he would serve as general counsel but would remain with Harrang Long while doing it. One reason for this was that he has long-standing ethical concerns that an in-house lawyer employed by a company can’t be completely independent in judgment.

“When you are in-house for an organization, whether it be the state or SAIF or XYZ Corp., you owe your job to whomever ends up being the CEO or attorney general,” he says. “When a company proposes doing something close to the line, or over the line, how many people have the character to object, if their job depends on getting along?”

Although Olson is grateful he never faced a situation where any client pressed up against ethical boundaries, such events “happen all the time,” he says, as evidenced by the collapse of huge accounting firms several years back, related to problems Congress sought to address with business-reform legislation.

“If you’re representing an entity, and the board of directors or president of the company wants to do something to enhance earnings, and you’re asked your legal opinion of whether (the move) meets the regulatory requirements of a publicly held company, your duty is to give straight-ahead advice to the corporation. If something is questionable, you have to push back. Your duty is to the entity, not to the person who hired you.”

Olson admired a mentor of his in Seattle who “routinely” pushed back against major clients, and told Olson that if they don’t accept his advice, they should find another lawyer to represent them.

Despite the potential pitfalls of working in-house, Olson says the work can be “very satisfying if you’ve got a good organization, because you get to know the people you deal with on a routine basis.”

In April, the Portland office of K&L Gates hired energy lawyer Carl M. Fink, who previously served as associate general counsel and chief compliance officer for TransCanada Pipelines Limited’s west region pipelines. Fink has worked in law firms for 10 years and as an in-house attorney for 15 years.

At K&L Gates, he represents a broad range of energy clients in complex commercial transactions, litigation and negotiations, as well as regulatory matters before the Federal Energy Regulatory Commission, state public service commissions and appellate courts.

Depending on which setting he was in at the time, his role and relationship with clients varied. An in-house attorney has the “opportunity to get a broad perspective. You get to follow a project from start to completion, and you’re involved with every aspect and regulatory matters,” he says. “There are a wide variety of topics with which you must be familiar.” In-house, you gain a breadth of experience, but you must turn to experts for specialty services.”

“At a firm, you need to have an area of expertise that benefits numerous clients and offices, and make the firm and the clients feel comfortable that you have a deep knowledge of that given area,” Fink says.

If you’ve worked in both arenas, as he has, you have the benefit of being able to understand what the other faces, he observes: the politics and budget constraints of in-house and the drivers and constraints outside counsel are under. In-house counsel who understand “billing metrics” are able to negotiate a better deal, such as saying, “I’m going to pay only this much for these services.”

“You gain insights into the economic models for each side,” Fink explains. “That allows you to be in the best position to provide great service.”

His decision to return to a firm was an easy one, for two reasons: The company he worked for before wanted him to relocate to Houston, something he was reluctant to do; and he had the opportunity to join a global firm that has a strong energy and utility presence, which caters to his specialty.

During the down economy, more companies have been cutting back and trying to do as much of their legal work as possible in house, Fink says. But as the economy improves, we will see a significant increase in using outside counsel, he predicts.

That shift from specialist to generalist has so far proved a dramatic but enjoyable one for David Wang, who left a large law firm in August to join Vestas-American Wind Technology in Portland as corporate counsel.

“I was a securities specialist for over 10 years,” he says. “I enjoyed practicing securities law, and I especially enjoyed practicing it at Holland & Knight. However, I don’t practice securities here at Vestas. I’m definitely more of a generalist.”

Formerly a partner at Holland & Knight, Wang previously worked as a patent litigator and venture capital attorney at Wilson, Sonsini, Goodrich & Rosati in Palo Alto, Calif. He also spent time working with a startup company in San Francisco doing business development, and took time off to earn a master’s degree in risk management from the London School of Economics. He worked at Holland & Knight from 2003 until this year.

As a member of the legal department with Vestas, he is part of a team of a half-dozen attorneys in Portland who support Vestas’ sales and service teams in the United States and Canada.

He says that compared with a firm, his work days are anything but predictable. “Vestas is a large, but a still-growing, company. It is very fast-paced. A variety of things come up each day,” he says. “The only thing that’s predictable is that it’s unpredictable, but in a good way.

You know you’re going to field new questions and new issues every day, but you’re not precisely sure when or how they’re going to come to you.”

He was willing to accept the tradeoff in compensation. But that was not a priority for Wang. “You only need so much (money) to live comfortably. It’s not a drawback, as far as I’m concerned. For me, it was primarily about pursuing an interesting opportunity for professional development and personal satisfaction.”

Ambyr O’Donnell has been in-house from the get-go, and never really considered any other route in her law career. She took her early interest in technology and international issues to Lewis & Clark Law School, where she participated in a third-year internship that placed her in-house at Mentor Graphics. Working for a multinational software company gave her experience in her two main areas of interest and exposed her to corporate law.

“At that point, I was hooked,” she admits. “I love being in-house. It’s great to be part of the team.”

Besides feeding her involvement in technology and international issues, “the other thing that really attracted me to in-house is, you’re so close to the business. That’s unique to in-house lawyers.”

She has seen a big shift in companies such as Mentor Graphics and their willingness to train in-house attorneys.

“I got really lucky and had great mentors in the legal department. The company was willing to invest in my career development.”

This year she joined Tripwire Inc., where she is director of legal affairs and corporate secretary. “In-house, you have to be comfortable being a generalist,” she says. “You have to know when to bring in specialists.”

O’Donnell doesn’t mind refuting “widely held notions” about corporate in-house law. “There is the perception that the work has very manageable hours, and you get paid less.” Although shareholders in a law firm might make more money, it’s not a given that in-house counsel always make less, she insists.

As for fewer hours, she has averaged 70 a week, and “I’m not going to get a bonus at the end of the year for working extra hours. In some companies, it’s easier to have a more manageable schedule.” But that’s harder in fast-paced high-tech companies, she says.

“We don’t have time sheets or develop a book of business,” but in-house attorneys nonetheless have to take charge of their career development and “make sure the company appreciates” the contributions the legal department makes. “We are cost centers versus a revenue generator,” so it’s important to convey to the executive team the value in-house lawyers bring to the company. “This requires a marketing approach, to a degree,” she says.

As for the supposed golf-course perks that come with an in-house post, O’Donnell responds, “I don’t have a golf membership.” Some companies such as Nike might offer sports facilities for their employees, including employed lawyers, but she says that is not typical. “It’s not necessarily the lifestyle position that some people think.”

 

ABOUT THE AUTHOR
Cliff Collins is a Portland-area freelance writer and a frequent contributor to the Bulletin.

© 2010 Cliff Collins


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