Author Topic: Practice Change - Considering Going In-House  (Read 6408 times)

specialkayme

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Practice Change - Considering Going In-House
« on: February 05, 2018, 08:26:17 AM »
I'm contemplating a career change, and was hoping to get a little advice from some of the other attorneys in the audience.

I graduated in 2011 from a mid to low level law school and immediately took a position with a 10 attorney firm I was interning for, practicing in bankruptcy law. I progressed up the associate ladder fairly quickly and in January of 2016 I made income partner. With the change from a W2 to a K1, between the raise I negotiated and self employment taxes, I was getting paid about the same as a partner as when I was an associate, but I have an opportunity to share in 10% of the firm's profits (I have to hit a collections number and the firm has to hit an overall profit number before I can share).

Bankruptcy is a cyclical practice area, and we're at a 60 year low in bankruptcy filings. To make ends meet, I do some tax (which I do NOT enjoy), some general business representation, and a little civil litigation (which I despise) to round out the lows of the bankruptcy practice. About a year ago the bankruptcy "spigot" got shut off. I have very little bankruptcy cases now. The low filings have shoved out alot of the competition in the area out of business, which is good when bankruptcy comes back. But until then I'm stuck doing cases I do not enjoy, which doesn't pay very well.

I wasn't aware of it at the time I made the deal, but the firm isn't throwing off excess cash, although it has in years past. In 2015 the firm had to miss some tax draws. In 2016 there was a small distribution. In 2017 there was a missed tax draw. 2018 is too soon to tell, but it looks like it will be about the same as 2017. There are years in the past that each partner walked away with $150k+, on top of their draw, but that was when bankruptcy was more prolific.

Half the firm will be retiring in either 1 year or 5 years. The transition plan is not great, as income will go down but expenses are likely to stay the same (although fewer partner draws will happen, it will likely end up being a neg negative to the firm). The "exiting" partners are trying to maximize their return by calling alot of cases "legacy" cases that entitle them to distributions even when they leave. The issue is still in the air.

I was approached by a recruiter for an in house council job for a promising company located about 25 min away. I had a phone interview a week ago and I go in tomorrow for an in person interview. Who knows what will happen, but I'd like to get a feeling for what my gut is telling me to do.

Pros of Current Position
- Flexibility - I can come and go as I please (although I rarely do, and usually take about a week of vacation a year)
- Large Upside Potential - if the firm has a really good year (which historically happened every 5 years or so) I could share financially. Plus, I have the opportunity to inherit a well established firm.
- All but guaranteed to become equity partner in January
- Niche practice area with little competition - should bankruptcy come back (which it will, it's just a question of when) I may be able to corner the market locally.
- I enjoy doing bankruptcy work.

Cons of Current Position
- Uncertain firm transition plan for retiring partners.
- Large Downside Potential - if the firm does poorly, as an equity partner I could be required to come out of pocket to keep it afloat.
- Uncertain future income - with bankruptcy being down and the "legacy" issue, its a crap shoot.
- Dissatisfying current cases - being forced to do practice areas I do not enjoy until Bankruptcy comes back.
- Increasing admin jobs (managing retirement, payroll, website, advertising, bills/taxes, staff issues).

Pros of In House Position
- ~30% raise (based on current discussions, 18% raise to salary, I won't be responsible for SE Tax of ~8%, 1% better retirement plan, 3% savings on insurance).
- Could make myself more marketable as an employee if this position doesn't work out - as I now have in house experience.
- Fairly progressive work environment - mostly younger employees with long term growth potential.
- More predictable hours (few nights and weekend assignments). 3 weeks of vacation.
- Bonus (still to be negotiated).
- Good practice area - I enjoy doing general business representation (contract drafting, negotiations, settlements, risk mitigation).
- Still managing outside council - so I'll likely stay out of civil litigation areas.

Cons of In House Position
- I lose the upside potential of a large distribution.
- Less flexibility, more structured work environment.
- "The Devil you know is sometimes better than the Devil you don't know" - I'm sure that position has it's quirks, as all jobs do, but I know the quirks of my current job and can deal with them. Not sure of the new job.
- New practice area - uncertain if I'll succeed.
- Longer commute (increases commute by ~25 min each way, at least initially until we move)
- Likely relocation involved (to cut down on the commute) which involves relocation expenses (sell house).
- "Throwing away" almost 7 years of bankruptcy practice (awaiting the specialization exam results), it will be difficult to return to the practice area if the in house position doesn't work out (will likely involve burning a bridge at the current firm).

Dollar wise, I'm trading large upside potential and large downside potential for a 30% salary increase, which in 2018 may benefit me but long term might be more profitable to take the gamble with the current firm (or not, who knows). Practice area wise it would involve stepping away from admin jobs and dissatisfying cases, but would involve a "leap of faith" to a new company and a new practice area.

The next round of interviews may go either way. Who knows. I intend on getting a better feel of office culture, which may give me an indication of a direction I should take.

Any thoughts or advice?

BuildingmyFIRE

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Re: Practice Change - Considering Going In-House
« Reply #1 on: February 05, 2018, 08:53:47 AM »
Hi -- it sounds like you have a lot to think about.  One option you haven't mentioned is trying to jump to another firm.  Do you have any portables?  Do you have any opportunities at this point, or are you stuck where you are in terms of private practice?

A couple of thoughts on going in-house:  do not mistake the consistency of drawing a salary for job security.  I am still in private practice myself after 10+ years, but I know several friends of mine who have gone in house and who deal with the recurrent fear of layoffs whenever business or the economy isn't good.  Remember -- right now you are an income generator.  Once you go inhouse, you end up on the other side of the ledger as an expense.  You become disposable when the company needs to keep costs down, and that's not a great position to be in.

I'm not sure how it is in bankruptcy, but in some specialties, once you go inhouse, you really can't go back to private practice (like litigation, for example).  Would you definitely lose the chance to capitalize when the market for bankruptcy related services returns?  That opportunity seems like a really tough one to give up now over a 30% pay increase.

The other thing that worries me about your story is it doesn't sound like the retiring partners are working on transition planning.  It used to be that partners would groom younger attorneys to take over their practices when they left. Nowadays, it seems like many of them don't make any effort, work until they are in their late 70s, and then just up and retire, and the end result is that the firm loses that business when the relationship partner(s) retires.  If you are not being actively groomed to take over client relationships, I would be very, very worried about the long term health of the firm, and your place in it.

If you have any oportunities to go to another firm, that would be my instinct, but I don't know if that's an option for you.  I don't know if this was helpful but I wish you the best of luck!   

ReadySetMillionaire

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Re: Practice Change - Considering Going In-House
« Reply #2 on: February 05, 2018, 09:15:00 AM »
Fellow attorney here.  I had a similar thread a while ago and I encourage you to read it:

https://forum.mrmoneymustache.com/ask-a-mustachian/employment-dilemma-take-new-job/

Mine was obviously different circumstances, and perhaps more importantly, I had developed a little bit of a negative history with my firm. Long story short, there were a couple partners that didn't like me for whatever reasons, and the idea of having a fresh start was great. 

As to your situation, some thoughts:

1. The idea of partners retiring is something that will get hung over your head forever.  I was told the same thing in nearly every meeting I had about future development--"Steve, Scott, Joe, Tim, Ed, and Bob will retire in the next 1-3 years.  Partnership distributions will be great."  After 3+ years there, only one of those guys retired, and I'd say only one of the other guys there is close.  The rest continue to negotiate one-year contracts and continue to bring in more and more legacy cases until the end of time.

2. As you indicated, bankruptcy is in a huge rut right now.  I have no idea when it will rebound, but you will always maintain those skills.  If and when bankruptcy does come back, firms that have leaned out will be looking, and you can get right back into that business if you want. I would not at all think you won't be able to do bankruptcy if it does come back.

3. I wholeheartedly understand the "devil you know" and "leap of faith" arguments.  Despite my history at my firm, I was largely on track to make partner, earn about $80k in a couple years, and just sail away for 12-15 years there. I had the same concerns, though -- large upside, large downside--what if the partners didn't retire? What if they continued negotiating one year contracts (which will keep happening until they damn near die)? What if a big client leaves? What if a rainmaker leaves?

Honestly, I just don't think the business model for these size firms is that great.  The costs are too high and there's too many guys grabbing a slice for you to really reach exponential heights.  Maybe your firm is run differently than mine was, but I certainly made the determination that my ceiling was higher elsewhere.

If I were you, I would look at your cons and negotiate that into your new job. Want more flexibility? Negotiate it.  Don't like the long commute? See if you can work from home two days a week. Want to be able to do bankruptcy on the side? Negotiate it.

I honestly found myself in a somewhat similar position, made a pro-con list, and then negotiated all of the supposed cons into my new job.  I negotiated higher percentage of my receipts, contingency fee receipts, and total receipts (see that thread for the negotiating history) to make up for losing partnership eligibility in two years.  I negotiated a higher salary to offset losing some benefits.  I negotiated her opening a SIMPLE IRA or some other retirement vehicle within one year to offset losing my 401k. 

Dead serious, I also negotiated a lot of minor stuff.  I negotiated being able to wear what I wanted when clients weren't coming into the office and I had no court appearances.  I negotiated working from home whenever I wanted.  I negotiated being able to engage in separate business opportunities if they arose.  On and on, we spent hours negotiating every last detail.

Your decision admittedly sounds harder than mine, but I think you can have the best of both worlds if you do a good job negotiating.  Good luck.

specialkayme

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Re: Practice Change - Considering Going In-House
« Reply #3 on: February 05, 2018, 09:39:38 AM »
One option you haven't mentioned is trying to jump to another firm.  Do you have any portables?  Do you have any opportunities at this point, or are you stuck where you are in terms of private practice?

I actually considered, and tried that a few years back. Unsuccessfully. The bankruptcy world is fairly small. Everyone knows everyone else. Some of the older partners are very well known in the industry, and no other firm that does bankruptcy will consider me out of respect for those partners. Plus, with filings down as they are, no one is looking to expand further in the area.

I also don't have a transportable book of business. Bankruptcy doesn't hold a repeat business possibility, instead it all works on reputation and word of mouth (mostly). Some future clients would likely come with me, but there is no way to measure that, and they aren't large cases. Perhaps another reason some of the other firms won't consider me, but don't want to mention it.

If I went with another firm, it would either be one that is looking to get into bankruptcy (which no one currently is trying to do), or I'd be taking a position practicing in another area. Which carries its own set of risks. Plus, it will come down to a whole new round of 70+ hour work weeks for at least the first year or two as I prove myself.

A couple of thoughts on going in-house:  do not mistake the consistency of drawing a salary for job security. 

I appreciate the thought, but I don't consider either position as secure or stable. In fact, I consider the in house position, all things being equal, as less secure than my current position.

I'm not sure how it is in bankruptcy, but in some specialties, once you go inhouse, you really can't go back to private practice (like litigation, for example).  Would you definitely lose the chance to capitalize when the market for bankruptcy related services returns?  That opportunity seems like a really tough one to give up now over a 30% pay increase.

I would. If I step away, its likely gone forever. The practice is constantly evolving, and it isn't the same now as it was five years ago. In five more years it would likely be entirely different as well. I anticipate jumping back in to be impossible.

The other thing that worries me about your story is it doesn't sound like the retiring partners are working on transition planning.  . . .  If you are not being actively groomed to take over client relationships, I would be very, very worried about the long term health of the firm, and your place in it.   

That's the entire reason why I was willing to go on the interview in the first place. Money is great, and I don't have my "FU" money yet, but I'm more concerned about quality of living and stability at this point. I've tried to get the firm to do more transition planning, bringing in younger talent with more income potential, expanding referral bases, but most of that involves costs today, or more insecurities for the older partners (as they lose control of long time contacts and/or bargaining ability to get higher distributions from the firm as a result of the business it generated). They have fought it.

Although I'm sure my opinion is just one side of it.

Trade offs of security and opportunity in both directions, which is why I'm torn.

specialkayme

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Re: Practice Change - Considering Going In-House
« Reply #4 on: February 05, 2018, 09:48:34 AM »
Fellow attorney here.  I had a similar thread a while ago and I encourage you to read it:

https://forum.mrmoneymustache.com/ask-a-mustachian/employment-dilemma-take-new-job/

Thank you for the information. I'll read it as soon as I can.

Honestly, I just don't think the business model for these size firms is that great.  The costs are too high and there's too many guys grabbing a slice for you to really reach exponential heights.  Maybe your firm is run differently than mine was

I think the firms are probably fairly similar.

The concept sounded great 7 years ago, as I'd have a firm to "inherit." But 7 years later there is nearly no planning for that to occur, and at every stage there are more attempts by some of the older partners to "get what's theirs" at all cost. I have a strong suspicion it will drastically reduce cash flows, and I've ran projections that show it. But who knows.

If I were you, I would look at your cons and negotiate that into your new job. Want more flexibility? Negotiate it.  Don't like the long commute? See if you can work from home two days a week. Want to be able to do bankruptcy on the side? Negotiate it.

Good advice.

But I think the largest potential con has to do with the questionable stability. I could stay at this firm forever. If things financially don't work out, I'll still make a living and pay my bills, but probably won't FIRE. In the grand scheme of things, not too bad of a worst case scenario. But if I switch jobs, I may be there for 3 months and find out it isn't a good fit. And then I'm screwed. 3 months of in house experience doesn't transfer well, and I've burned a bridge at the old firm. Bankruptcies are likely to be still down so no one else wants to pick up an associate/partner in the area, and I start looking for doc review jobs. What are the odds that will happen? Who has a clue.

I'm not certain how I can negotiate more stability of a job. Maybe agree to a 1 year contract? Something to think about.

Thank you for your input.

BuildingmyFIRE

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Re: Practice Change - Considering Going In-House
« Reply #5 on: February 05, 2018, 09:59:40 AM »
This is a tough nut.  I'm sorry about your situation.

 I'm voting to you to stay put for the time being.  Other inhouse jobs will come along.  The more senior you get, and the more experience you get, the better positioned you'll be if and when bankruptcy makes a comeback.  Do you do extra-curriculars to build your external profile in your market?  Put on CLE's or client presentations  or write articles?

I don't do bankruptcy, but generally speaking, law is a relationship game.  As more and more of my contemporaries go inhouse, or off into the world otherwise, I am getting referrals from them.  You're still pretty junior if you're a 2011 grad -- your contemporaries haven't been out long enough to throw business at you.  Stay the course a few more years and get some name recognition.  Practice practice isn't easy, but it sounds like you're already thinking like an owner, which means this is a good fit for you.  Those are my two cents. 

ReadySetMillionaire

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Re: Practice Change - Considering Going In-House
« Reply #6 on: February 05, 2018, 10:02:38 AM »
I think the firms are probably fairly similar.

The concept sounded great 7 years ago, as I'd have a firm to "inherit." But 7 years later there is nearly no planning for that to occur, and at every stage there are more attempts by some of the older partners to "get what's theirs" at all cost. I have a strong suspicion it will drastically reduce cash flows, and I've ran projections that show it. But who knows.

I was told the same thing over and over. My former colleague and now friend has been there for 7-8 years and was constantly told this as well.  He's just now starting to turn a corner 8 years into his practice.  I'm probably going to make as much as him this year because I took the "leap of faith" as you called it.

But I think the largest potential con has to do with the questionable stability. I could stay at this firm forever. If things financially don't work out, I'll still make a living and pay my bills, but probably won't FIRE. In the grand scheme of things, not too bad of a worst case scenario. But if I switch jobs, I may be there for 3 months and find out it isn't a good fit. And then I'm screwed. 3 months of in house experience doesn't transfer well, and I've burned a bridge at the old firm. Bankruptcies are likely to be still down so no one else wants to pick up an associate/partner in the area, and I start looking for doc review jobs. What are the odds that will happen? Who has a clue.

I'm not certain how I can negotiate more stability of a job. Maybe agree to a 1 year contract? Something to think about.

Thank you for your input.

As lawyers we are naturally conservative. We make a living contemplating worst case scenarios and make a living advising clients to stay out of those worst case scenarios.

I think you really need to think about what is the worst case scenario if you change jobs.  Seriously, what is it?  For me, when I really thought about it, it was that this new job wouldn't work out, and then I'd open a new practice perhaps a year or two before I planned.

In your mind, you think it wouldn't work out after three months. That's way worse than what is likely to occur.  Your more likely scenario is that the fit isn't right, you tough it out, and after 18 months, you use your new experience to negotiate an even better opportunity.

Just going to say that the worst case scenario likely won't occur, and further, will not be as bad as you think. Sure, stability is great, but big increases in salary won't happen from you waiting.  You have to take the opportunities by the scruff of the neck and run with them.

specialkayme

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Re: Practice Change - Considering Going In-House
« Reply #7 on: February 05, 2018, 01:42:31 PM »
I'm voting to you to stay put for the time being.  Other inhouse jobs will come along.

I've kept my eyes open for a little over a year now. The transition plan was always an issue, but I assumed the cash flow would justify me taking the risk and sticking it out. At the end of 2016 the distribution wasn't as much as I thought it would be, so I got my hands on tax returns for the two years prior. That's when I found out things weren't going as well as I was led on to believe. Not terrible, but I decided the cash flow isn't enough to justify the transition plan issue. That's when I started keeping my eyes open, but knowing I didn't need to go anywhere immediately.

Most in house positions either want previous in house experience or big law experience, neither of which I have, or suggest a pay cut to move to a very metro area (with significantly higher cost of living). This was the first one that didn't require any of those three.

Do you do extra-curriculars to build your external profile in your market?  Put on CLE's or client presentations  or write articles?

Every chance I get :) I'm on our Bankruptcy Section Council, I serve on a few local boards, I'm members of a few clubs (Inn of Court, Masons, ect.) for networking purposes, I've given 4 CLEs in the past 5 years, and I gave a Chapter 11 presentation to the local paralegal program. All attempts to get my name out there.

But as you know, its a very slow process. I get referrals now, but I wouldn't say many. Most of the referrals I get are smaller cases that I get conflicted out because someone else in the firm has a part of the larger case. Occasionally I've gotten mid size cases referred to me, but a partner claims it as "his" as it came from a "mutual referral source." Or a referral source I've made contact with is somehow connected with a referral source another partner had a long time relationship with, so I have it snaked away from me.

We're a traditional firm though, so the bottom line doesn't matter too much. Yeah, I should probably be more aggressive about getting some of those referrals, but I take the position that if I have to fight with my partners over who's case it is, we have bigger problems on our hands. Plus I receive WAY more work coming to me from other partners than what I lose in "referrals."
« Last Edit: February 05, 2018, 01:53:21 PM by specialkayme »

specialkayme

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Re: Practice Change - Considering Going In-House
« Reply #8 on: February 05, 2018, 01:52:35 PM »
I think you really need to think about what is the worst case scenario if you change jobs.  Seriously, what is it?

So here's how I see it. If I stay in the position I'm at, there's risk, both upside and downside, but probably more upside than downside. Worst case scenario, some partners get greedy and the firm blows up. When it blows up, it'll either turn from a 10 attorney firm into three 3 attorney firms and I land in one of those pools, or everything disappears and I'm the only business bankruptcy attorney in a 25 mile radius. Not too bad.

If I change jobs, worst case scenario I move (and incur probably $10k in expenses between realtor commissions and closing costs) to get closer to the job, and 3 months later it doesn't work out. I've burned a bridge and bankruptcy isn't back, and I'm not marketable. I don't have enough in house experience to get another in house job, and there aren't any other bankruptcy positions to take. So I open my own firm, live off savings for six months, and take on court appointed cases in an attempt to feed myself.

Are both "worst case scenarios" pretty remote? Yup. But the absolute worst case of one looks much worse than the other.

If the worst case of the in house transfer position involved minimum employment of 3 years, I wouldn't be concerned about it. But its a tough guess to make.

ReadySetMillionaire

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Re: Practice Change - Considering Going In-House
« Reply #9 on: February 05, 2018, 02:19:09 PM »
If I change jobs, worst case scenario I move (and incur probably $10k in expenses between realtor commissions and closing costs) to get closer to the job, and 3 months later it doesn't work out. I've burned a bridge and bankruptcy isn't back, and I'm not marketable. I don't have enough in house experience to get another in house job, and there aren't any other bankruptcy positions to take. So I open my own firm, live off savings for six months, and take on court appointed cases in an attempt to feed myself.

If you're really going to talk yourself this much into the stability corner, then obviously there's no point in analyzing the new opportunity.

specialkayme

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Re: Practice Change - Considering Going In-House
« Reply #10 on: February 05, 2018, 02:21:39 PM »

If you're really going to talk yourself this much into the stability corner, then obviously there's no point in analyzing the new opportunity.

Fair point.

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Re: Practice Change - Considering Going In-House
« Reply #11 on: February 05, 2018, 02:37:11 PM »
I just went through this same situation, and came down on the side of moving to in-house counsel.  I have not regretted it one bit.  I do more legal work now than before, but don't have to do any of the administrative tasks required for private practice.  I hadn't made it to partner in my former firm, and it really wasn't on the horizon, so that wasn't part of my analysis.

It must be disappointing to make that jump but not receive higher net compensation in return for increased management responsibilities.  You seem to be in a good position with the firm, especially if (really, when) bankruptcy comes back.  The bankruptcy attorney in my former firm was also biding time until the economy turns.  He was also doing work for the bankruptcy trustee and for creditors, which seemed to provide more stability.  I don't know the mix of your practice, but is it possible for you to get work from those sources?

Most of the referrals I get are smaller cases that I get conflicted out because someone else in the firm has a part of the larger case. Occasionally I've gotten mid size cases referred to me, but a partner claims it as "his" as it came from a "mutual referral source." Or a referral source I've made contact with is somehow connected with a referral source another partner had a long time relationship with, so I have it snaked away from me.

This is horseshit.  My former firm's originations policy stated that the client was considered a new client, and free of any legacy origination, after one year of no new matters, even if the referral source was "mutual" or a long-time client of another attorney in the firm.  All that really mattered was who the client contacted within the firm and when.  The firm tracked referral sources, but only to better direct marketing and business development efforts.

specialkayme

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Re: Practice Change - Considering Going In-House
« Reply #12 on: February 05, 2018, 04:37:12 PM »
I just went through this same situation, and came down on the side of moving to in-house counsel.  I have not regretted it one bit.  I do more legal work now than before, but don't have to do any of the administrative tasks required for private practice.

Do you mind explaining a little more what you enjoy about it, what some of the drawbacks are? Do you have any advice for someone looking to move into that area?

The bankruptcy attorney in my former firm was also biding time until the economy turns.  He was also doing work for the bankruptcy trustee and for creditors, which seemed to provide more stability.  I don't know the mix of your practice, but is it possible for you to get work from those sources?

Perhaps validation for what I've done so far, but yeah, I've done both of those things.

One of the older partners at the firm is a Chapter 7 trustee. I've done a good amount of avoidance litigation for him, and helped him administer some of his larger cases. But about a year and a half ago he told one of the other partners that since work was down, he was going to do it all himself now. Don't know if I completely blame him, as its his work to delegate.

One of the allures of the firm was that the trusteeship would stay within the firm, and I was a prime age for him to groom me to take it over when he retires. 7 years later, and he won't include me in much of the day to day activities (quarterly reports, bank account monitoring, routine 341's, asset sales). Come to find out, he has plans to use it as his retirement (give up the rest of the practice but keep the trusteeship), and intends to keep it till the day he dies. Which puts me in an awkward position, as I can't get a different trusteeship if he stays in the firm, but it also isn't likely I'll get the one he has.

Creditor work is a little harder of a nut to crack. If you represent a regional bank, you conflict yourself out of a ton of future debtor work. So you generally choose debtor or creditor. I've picked up creditor work when I can, but usually small, non-repeatable cases. When you get bigger than that you quickly get conflicts (either Trusteeship, debtor work [past or future], or I get another partner harassing me not to take the case). Long term it makes sense, as we've cornered the debtor work in the area. Short term it hurts and makes it difficult to pay the bills.

Most of the referrals I get are smaller cases that I get conflicted out because someone else in the firm has a part of the larger case. Occasionally I've gotten mid size cases referred to me, but a partner claims it as "his" as it came from a "mutual referral source." Or a referral source I've made contact with is somehow connected with a referral source another partner had a long time relationship with, so I have it snaked away from me.

This is horseshit. 

Agreed, but I'm not sure it really matters. With a traditional firm, we don't get any financial gain for originating any work. I'm the only partner that their collections actually matters at all (for their own financial gain), and even then it only matters what I collect, not what I originate. Everyone else shares in overall profits, regardless of source or who did the work.

About once every two years or so two partners will get into a fight over this issue, but in reality its just egos at play. Every time, both sides come to the conclusion that it doesn't matter, all the money goes to the same place.

That may change in the future though, as more and more cases are labeled as "legacy" collections. But that currently remains unresolved (and a ticking time bomb in my opinion).

ReadySetMillionaire

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Re: Practice Change - Considering Going In-House
« Reply #13 on: February 06, 2018, 06:41:25 AM »

If you're really going to talk yourself this much into the stability corner, then obviously there's no point in analyzing the new opportunity.

Fair point.

So I'll ask a second time -- what is the realistic worst case scenario?  Again, it's nowhere close to your previous hypothetical.

specialkayme

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Re: Practice Change - Considering Going In-House
« Reply #14 on: February 06, 2018, 10:12:22 AM »
So I'll ask a second time -- what is the realistic worst case scenario? 

Objection. Asked and answered.

Cheezy jokes aside, the realistic worst case scenario is probably either:
A) I take the job but realize in 18 months that I don't like the type of work. At that point, I have a job that I don't enjoy, but I attempt to make a transition to some other field. If I don't like the type of work, 18 months of experience in the field will mean nothing, as I don't want to use that experience. At that point, I would probably attempt to do something different, that builds on the experience I gained (not sure what that would be); or
B) I take the job but after 12 months the company decides it isn't a good fit and I'm terminated. Probably less likely, but I still can't say its impossible. 12 months is kinda the odd ball time period, as I'd have enough experience that moving back into private practice would be difficult but not anywhere near impossible, but not enough experience to guarantee a transition to an in house counsel position at another company, although still possible. Less than 12 months makes transition to another private practice position (even if it isn't bankruptcy) much more likely, while more than 12 months makes transition to another in house counsel position much more likely. Those estimates are probably very pessimistic, and on the very low end of reasonable, but still plausible.

Both would probably put me in a bind, but wouldn't be life ending. And actually could be a good move long term, depending on how you view it.

specialkayme

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Re: Practice Change - Considering Going In-House
« Reply #15 on: February 06, 2018, 10:15:28 AM »
I should mention that I realize I'm being overly pessimistic in these projections of worst case scenario. I'm not that much of a pessimistic person, and I don't think any of them will actually happen, but I'm truly trying to analyze the WORST possible thing that could happen, and weigh it against the BEST possible thing that could happen, to determine which has more upside and which has more downside risk.

And I greatly appreciate the contributions made by others on here, as well as your willingness to challenge my thought processes.

YTProphet

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Re: Practice Change - Considering Going In-House
« Reply #16 on: February 06, 2018, 11:42:50 AM »
In-house attorney here. My advice is simple - take the in-house job. I've never met an attorney that regretted going in-house. Ever. So, even though there are rough companies to work for out there, those companies are basically always better than law firm life.


nedwin

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Re: Practice Change - Considering Going In-House
« Reply #17 on: February 06, 2018, 02:05:51 PM »
Do you mind explaining a little more what you enjoy about it, what some of the drawbacks are? Do you have any advice for someone looking to move into that area?

I enjoy the work.  Within the legal department here we are all generalists.  I do contract review/negotiation, real estate, employment, corporate governance, finance, transportation, and oversee outside counsel for litigation and other matters.  I have the opportunity to travel periodically.  The company has operations in 30 states, Puerto Rico, and Canada that may direct work to me, plus more operations in Mexico, Australia, Europe and South America.  The job is generally an 8-5 schedule, but that is situational and changes depending on company needs.  I have worked one or two saturdays since starting (August), but that's it.  I am never waiting for the phone to ring with new work or hustling for referrals.  I don't have to do timeslips and there are no minimum billables.  This company requires all types of inputs and equipment, which keeps the work interesting.

Contract review/negotiation gets repetitive.  Other drawbacks are similar to private practice (time/resource constraints, unrealistic client expectations, unreasonable opposing parties).  The company has been profitable during my tenure, so I am not sure what it will be like when that turns.  We have a very small legal department compared to other companies our size and even compared to our competitors, which may give us some layoff protection.

My advice would be to closely examine your current situation and how it impacts all aspects of your life.  Do you feel stressed in your current job?  Do you want more time with your family/friends?  How far away is the (potential) income increase from more bankruptcy work?  What is the potential that retiring partners will siphon income from you upon retirement?  It was a terribly hard decision for me to make, but in the end I'm glad I made the change.  I spend more time with my family, I am more relaxed on a daily basis, and am generally happier.

I am not sure your worst case scenarios are realistic.  I imagine there are scenarios where you could be kicked out of your current partnership as well or it could turn toxic in the next 18 months.

As for originations, I brought that up because it sounded like the older partners were lowering your potential income by claiming your referrals.  My previous firm paid primarily based on collections only, even for associates, and advancement was graded on collections, originations, and collected originations.  To make partner something like 90% of collections had to also be your own origination.  There were other metrics also, but thankfully i've forgotten them.

specialkayme

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Re: Practice Change - Considering Going In-House
« Reply #18 on: February 06, 2018, 03:40:30 PM »
In-house attorney here. My advice is simple - take the in-house job. I've never met an attorney that regretted going in-house. Ever.

Thank you for the advice.

From those I've talked to that have made the move, most of them it just wasn't working out in private practice (either salary, hours, expectations, ect.), so it's understandable that they're happy with the transition. Not exactly the same situation for me. My mother worked with someone who made the transition from private practice to in-house, and he basically made it sound like there were trade offs. To him, the transition was neither bad nor good. It was simply a horse trading game with a net sum close to zero.

But its good to hear from someone in the industry that is regularly interacting with other in-house counsel individuals. Thank you for that.

My advice would be to closely examine your current situation and how it impacts all aspects of your life.  Do you feel stressed in your current job?  Do you want more time with your family/friends?  How far away is the (potential) income increase from more bankruptcy work? 

The problem that I've seen from private practice is you're always stressed. Always. If you have more work than you can handle, it's a good thing, but you're stressed about it. And you don't spend much time with your family in the process. Historically, not a big deal for me, but I had a daughter 18 months ago, so its a little different now. If you don't have that much work, you're stressed about your next paycheck, and spending extra hours trying to find cases/network. So it's always stressful. For me, the paycheck doesn't justify the stress. I make decent money, and I'm able to shrug off alot of the stress better than some of my coworkers. But even still, seems disproportionate.

Bankruptcy work may come back next month. Or next year. Or longer. Several people locally think it will take 3-5 years, but its all a crap shoot. No one knows. Like picking the right stock, everyone has their guess, but its all a guess. The thought of me sitting around for 3-5 years just waiting for the next case, doing crappy cases in the meantime, sounds horrible. 3 years ago I was doing 50-55 billable hours a week, easy. Now, it's probably more like 25-30. The rest is tied up with admin or "brand recognition" tasks. Not really fun. Plenty of downtime to worry about why you aren't doing 50 hours a week.

What is the potential that retiring partners will siphon income from you upon retirement?

The longer I'm here, the higher that potential becomes. You can tell the mentality is changing. It was a traditional firm and everyone shared everything. A few cases were picked off here or there in the past few years, but not enough to really get up in arms about. Last year a big settlement came in that was labeled "legacy" funds, and myself and another partner weren't entitled to (I knew about it and agreed to it, so I'm ok with it). When the funds actually came in, they didn't hit the firm account at all. Just went straight to the other partners. The firm had a hard time hitting payroll, and the other partners just went "oh well." I was astonished. Luckily we found the cash and it worked out, but it was very touch and go for a bit. Year end last year, "discussions" were made about calling additional cases as "legacy," and I believe it will only get worse from here.

I am not sure your worst case scenarios are realistic.  I imagine there are scenarios where you could be kicked out of your current partnership as well or it could turn toxic in the next 18 months.

Agreed. I need to be more realistic on both ends.

Thank you for the insights and considerations. Very helpful.

specialkayme

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Re: Practice Change - Considering Going In-House
« Reply #19 on: February 06, 2018, 03:52:24 PM »
For those that care, my interview went very well. It quashed many of the concerns I had about transitioning, but raised new ones. The company wants someone with my level of experience (somewhat greener) because they want to build and mold an employee. In the interview, they repeatedly told me that they don't hire easily, but its because they stick behind their employees long term. They started coming up with a 5 year plan within the interview. So it was very promising. It of course is no guarantee of long term employment, but it puts my nerves at ease a little bit about the possibility of starting there only to find out it isn't a good fit and being let go in 6 months.

Downside is that I'd be "starting" a domestic in-house department. Its a large international company, but they are just getting started domestically. Because of that, I'm not sure current management has a complete understanding of some of the practice areas I can actually help with (wide range from railroad law, utilities law, environmental law, all the way to basic contract and employment law). I expressed some concerns that I'm hesitant to be the only person in the company that can touch on some of those issues, when I don't know them at all. They still want to retain outside counsel, so we could rely on them when I don't feel comfortable, but the expectation is to cut out outside counsel as much as possible. I understand its inherent in the role of an in-house attorney, but I wasn't expecting as much of a broad range of practice areas to be covered, several of which are fairly specialized.

Additionally, there is more of an expectation that I'll take on a role of management, and not just in-house counsel. They want the position to merge more into an executive level risk mitigation role, and advise on company wide policies not just from a legal stand point, but from a business and logistics standpoint. Not initially, but a few years down the road. The concept somewhat took me off guard, as its not what I was expecting. Not in a good or bad way, just wasn't expecting that. I still need to think it over.

There are two or three more rounds of interviews, so its tough to tell if it will go anywhere, but its positive so far. I enjoy the people I've met, and the company model and plan seems very solid and promising. It could be a great opportunity to get in the door to large growth moving forward.

Pay wise, the new position would probably be considered a "bunt" while my current job is a "swing for the fences." In my current job, I may hit a home run every 10 years and walk away with a hundred thousand dollar distribution, but most of the time I'd hit a single or a double, and occasionally I'd strike out. The new position would be a consistent "bunt." I'm getting less than the home run, but more than the strike out. Its very tough to tell, but I would guess right now that I'd probably be better off financially in the long run by consistently bunting. Especially with the retiring partner, "legacy funds" issues, and uncertain practice area. But who knows.

Alot to evaluate. Alot to ponder. Luckily I don't have to do it immediately.

ysette9

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Re: Practice Change - Considering Going In-House
« Reply #20 on: February 06, 2018, 08:50:01 PM »
Good luck with the next round of interviews. The in-house job sounds promising, though clearly you have a lot to ponder.

specialkayme

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Re: Practice Change - Considering Going In-House
« Reply #21 on: February 16, 2018, 08:46:27 AM »
Update: I had both my third and fourth interview. I didn't think my third went very well, but apparently my interpretation was inaccurate as he recommended the company hire me. I felt like I knocked the fourth interview with senior management out of the park, but its always difficult to tell if your assessment of an interview matches theirs. But I guess it did, as they made me an offer.

I told them I needed some time to think it over, and if I did accept there would be an open ended question regarding my start time. Technically my firm could "force" me to finish a 90 day time period, but they'd have to pay for the time. I doubt they would, and would elect to take the pay savings by waiving the requirement, in which case I'd need a short transition period to move my cases over, maybe two or three weeks. But we can cross that bridge when we get there.

Every meeting I have with the new company makes me more comfortable and optimistic regarding the position and the company's future. There are no guarantees at anything, but its positive.

To help me decide, I called up a few people that I strongly respect their opinions on. One was a former partner of the current firm, who is still somewhat involved. We talked for a long time and, based on a few things that I don't feel comfortable sharing online, he felt the current firm is quickly heading to an unsustainable level which would force me to seek some sort of an exit strategy in the coming years. The way he viewed it, since you often know very little about a new job, taking the new job would be like jumping off a cliff and hoping your parachute opens. But if my current position will likely require an exit in the coming years anyway, I'll have to jump off that cliff eventually, only if I wait I may have a backpack instead of a parachute. If I jump now, I may free fall, but if the parachute opens I'll be years ahead of where I'd be if I waited to see what happened. The analogy really stuck with me.

Profound advice given to me by many, and I greatly appreciate all the contributions on here. This one, in particular, for reasons I can't identify, stuck out to me the most:

My advice is simple - take the in-house job. I've never met an attorney that regretted going in-house. Ever.

Ultimately, I think I'll take the new job, and make the leap.

In the meantime I enter a round of negotiations with the new potential employer. I requested more information on the health benefits, and I know I'll counter with a request for more vacation time. They actually offered more in salary than I requested, so I'm leaving that be.

If I make the transition it will likely involve tax consequences for me. Because I'm currently in a partnership, I'm set to have a tax draw in April. If I leave before April I'm not entitled to the tax draw, but I already took the salary. So I'll end up owing the fed and the state several thousand dollars. I'm going to see if they'll be willing to provide a signing bonus to cover the taxes, but we'll see on that end.

In the meantime it makes things very awkward. I know I'm most likely going to leave, but I don't have an offer to accept just yet. My current firm takes a "scorched earth" policy if someone quits, so I can't discuss the possibility of leaving, or tell them I'm negotiating an offer, until I'm ready to accept. If the negotiations break down and I told my firm I was planning on exiting, I'll highly anticipate I'll be either forced out at the worst, or cut off work wise at best. Which is kinda a sad and depressing way to show up to work every day.

Thanks again for all the advice, and I'll probably post the results once I actually make a transition.

Phoenix_Fire

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Re: Practice Change - Considering Going In-House
« Reply #22 on: February 16, 2018, 11:04:44 AM »
No legal background here, but reading through the thread, I was on board with you making the jump from the beginning.  The more I read, the more of a no brainer it seemed.  Then I got to the end and read how they take a "scorched earth" policy if someone leaves, and that completely solidified the decision.  Your current law firm sounds like some pretty horrible people what with the stringing along of transition plans, partners trying to keep drawing after they leave, and in the way they treat people that want to move on from the firm. 

While you might have some doubts about having a broad legal background at the new place, even after you made them aware of that they still want you.  They obviously like what you had to say, even when you feel you didn't do well.  If it is an international company, I would guess that your growth potential is actually greater there than it would be with your current firm, especially given the upheaval going on. 

Negotiate the vacation time and sign on bonus.  They will probably be open to a bonus.  As others mentioned, ask for a day or two to work from home each week if that is something you want. 

It sounds like you are ending up in a great situation.  Change is scary, but usually once it is made we realize that we were more focused on our fears than the potential upside. 

specialkayme

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Re: Practice Change - Considering Going In-House
« Reply #23 on: February 16, 2018, 12:31:00 PM »
No legal background here, but reading through the thread, I was on board with you making the jump from the beginning.  The more I read, the more of a no brainer it seemed.  Then I got to the end and read how they take a "scorched earth" policy if someone leaves, and that completely solidified the decision.  Your current law firm sounds like some pretty horrible people what with the stringing along of transition plans, partners trying to keep drawing after they leave, and in the way they treat people that want to move on from the firm. 

Our firm is particularly bad about the "scorched earth" policy, but many of the other issues the firm has aren't very different from most other law firms in the area. Which should probably speak volumes of the industry itself, but that's a different story. Plus, the firm is considerably more loyal, at least historically, than average. I hear horror stories from classmates of mine that get canned. A partner calls them into their office and tells them they only billed 1750 hours so far this year, and unless they finished the next 3 weeks with 2,000 billed hours they're gone (and good luck with those 80+ hour work weeks). Not that it makes my situation any better.

But honestly, nearly all of these negatives didn't exist 8 years ago. Much like a frog that sits in the water that gets progressively warmer, each negative change that happened was noticed for what it was, but it didn't offset the money or the positives of the firm (or so I thought). Until one day I take a step back and see a toxic work environment. It might be easy to see from the outside, but not as easy to notice in the thick of it. But maybe I should have earlier.

No matter. Soon to be traumatic water under the bridge.

It sounds like you are ending up in a great situation.  Change is scary, but usually once it is made we realize that we were more focused on our fears than the potential upside.

The fear of the jump is usually worse than the fall.

I appreciate your thoughts, and overall agree wholeheartedly.

ysette9

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Re: Practice Change - Considering Going In-House
« Reply #24 on: February 16, 2018, 01:40:15 PM »
Good luck with the negotiations. I hope you get what you want, because I agree with others that from the outside, it looks like a change will be the right move. I’m looking forward to hearing how this goes.

cheddarpie

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Re: Practice Change - Considering Going In-House
« Reply #25 on: February 16, 2018, 10:01:51 PM »
Echoing YTProphet, moving in-house was the best decision I ever made. It's very different from private practice, but I have zero regrets and I feel immensely grateful every day.

Good luck with your decision & transition!

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Re: Practice Change - Considering Going In-House
« Reply #26 on: February 17, 2018, 01:31:58 AM »
No legal background here, but reading through the thread, I was on board with you making the jump from the beginning.  The more I read, the more of a no brainer it seemed.  Then I got to the end and read how they take a "scorched earth" policy if someone leaves, and that completely solidified the decision.  Your current law firm sounds like some pretty horrible people what with the stringing along of transition plans, partners trying to keep drawing after they leave, and in the way they treat people that want to move on from the firm. 

Same

I'm a lawyer (not in private practice) and your firm sounds like bullshit. Definitely a place I'd want to exit ASAP.

Trifele

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Re: Practice Change - Considering Going In-House
« Reply #27 on: February 17, 2018, 05:44:51 AM »
Late to the thread here @specialkayme but wanted to chime in to say that this new opportunity sounds great, and glad to hear you will probably be taking it.

I went from a ball-breaking litigation firm to in-house counsel, and never regretted it for one second.  It was a slight step down in income at first, but that came with many upsides that more than made up for it.  I was that company's first in-house attorney.  I was asked to weigh in on issues that I was not experienced with (intellectual property, tax), and that was part of the learning curve for both me and the new company.  Together we figured it out, wove outside counsel into the mix, and moved forward.  I was also fairly rapidly tracked into managerial/executive risk management work.  This was a very good thing, as it opened up entirely new paths.  After 12 years at the in-house job, I took a new position with a different company -- purely executive, non-legal.  For more money than I was making as counsel. I still maintain my license, and use my legal training in a general way, but I no longer practice and honestly don't miss it.   

Sounds like this new company likes you and thinks you are a good fit.   That plus their stated commitment to their employees is a really good sign.  Sounds like it could be a 'feast' of job -- interesting, varied, fulfilling.  Mine was like that too.  Good luck!

 
« Last Edit: February 18, 2018, 07:19:27 AM by Trifele »

specialkayme

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Re: Practice Change - Considering Going In-House
« Reply #28 on: February 17, 2018, 08:15:23 PM »
I was that company's first in-house attorney.  I was asked to weigh in on issues that I was not experienced with (intellectual property, tax), and that was part of the learning curve for both me and the new company.  Together we figured it out, wove outside counsel into the mix, and moved forward.  I was also fairly rapidly tracked into managerial/executive risk management work.  This was a very good thing, as it opened up entirely new paths. 

It sounds fairly similar to their idea of the position, only replace "intellectual property, tax" with "product liability, utilities." Overall, I think it'll be fun to learn some new areas of the law. I wasn't anticipating transitioning into a more managerial/risk management role, but I think it can only open possibilities for me, much like it has for you. Great to hear it worked out very well for you.

Sounds like this new company likes you and thinks you are a good fit.   That plus their stated commitment to their employees is a really good sign.  Sounds like it could a 'feast' of job -- interesting, varied, fulfilling. 

Throughout the process I was extremely transparent about my weaknesses. I felt my strengths outweighed my weaknesses, but I wanted them to be aware of what they were anyway. In light of my weaknesses, I wasn't sure if I was the right fit for what they needed, but they were the ones convincing me that I was the right fit.

My third interview was done by a neutral attorney. Near the end he asked me how I planned on selling myself at the next interview, or how I planned on convincing them I was the right fit. I told the attorney very bluntly that I was not going to sell myself. I had knowledge, strengths, experience, and a hard working attitude. But I also lacked in-house experience, knowledge in many of the areas they were looking for, or "corporate" experience. I felt the situation needed to be mutually beneficial, in that I needed to be what they needed, and they needed to be what I wanted. It had to be a mutually beneficial fit. If I needed to sell myself to get the job, I was likely pushing myself into a job I wasn't qualified for, which would only lead to problems down the road. Instead, I planned on being myself, laying my cards on the table, and seeing if it was a good fit. I thought my answer was good and honest. I got the impression the attorney that was interviewing me didn't think it was a good answer. Oh well.

Despite putting my cards on the table, they still appear to want me. Which is the best part of this opportunity. They are aware of weaknesses, think they aren't a problem, and are interested in helping me develop them and grow professionally. Which is what I really want in the end.

specialkayme

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Re: Practice Change - Considering Going In-House
« Reply #29 on: February 20, 2018, 05:59:26 PM »
Update: I countered, asking for another week of vacation, fully paid CLE's, fully paid professional dues, and a signing bonus to cover the tax issue. All together, it was more than I knew I could get, but I was inviting them to counter somewhere between. They accepted my counter offer without any modifications. I was surprised, but it was a good deal for both sides.

I informed my partners of the decision, and they took it well. The devil will be in the details as I transition out, but I'm optimistic that it will be a good move.

Thanks to everyone for the advice and guidance.

ysette9

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Re: Practice Change - Considering Going In-House
« Reply #30 on: February 20, 2018, 07:09:19 PM »
Great news! Congrats on getting everything you asked for.
I wish you a smooth transition.

Trifele

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Re: Practice Change - Considering Going In-House
« Reply #31 on: February 21, 2018, 02:46:48 AM »
Congratulations!!  Best of luck.   :)

ReadySetMillionaire

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Re: Practice Change - Considering Going In-House
« Reply #32 on: February 21, 2018, 07:05:55 AM »
Update: I countered, asking for another week of vacation, fully paid CLE's, fully paid professional dues, and a signing bonus to cover the tax issue. All together, it was more than I knew I could get, but I was inviting them to counter somewhere between. They accepted my counter offer without any modifications. I was surprised, but it was a good deal for both sides.

I informed my partners of the decision, and they took it well. The devil will be in the details as I transition out, but I'm optimistic that it will be a good move.

Thanks to everyone for the advice and guidance.

Nice work negotiating.

Trifele

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Re: Practice Change - Considering Going In-House
« Reply #33 on: February 22, 2018, 05:29:03 AM »
@specialkayme, just wanted to throw in a couple more thoughts, in case you find them helpful.  Seems like we are on similar career paths.

The biggest learning curve for me going from law firm to in-house was the culture and mind-set difference.  I don't remember where I read this, but one way to look at work is to divide it into "engine work", and "cog work."  Engine work is getting projects done, cranking it out.  Cog work is interfacing with others.  Most job descriptions have some of both, in varying proportions.  Most people are capable of both kinds of work, to one degree or another.  For me, law firm work was 90% engine, 10% cog.  Going in-house, it was more like 50-50.  It took me a while to adjust to the slower pace, and recognize the importance of that cog work.  There were many days early on where I went home feeling like I hadn't actually done much all day.  But I had -- it was cog work.  I was building critical relationships, forging and turning my 'cogwheel'.

It took me a while to build my soft people skills up to optimal level for that cog work.  The thing that helped me most to get there with the 'soft' side of things was to learn all I could about human resource management.  You know all the popular books about different personalities in the workplace, and how best to work with various types, lead teams, etc.?  At first I looked down my nose at all of that, until I realized that some of it was super helpful.  I'd recommend you take an afternoon and spend it browsing at the library.  Some of it will seem like bullshit and some of it will resonate, especially after a few months at the new job.   If you can figure out what your interpersonal strengths are early on, you can lead with those and get there quicker.

Good luck and have fun!     


chasesfish

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Re: Practice Change - Considering Going In-House
« Reply #34 on: February 22, 2018, 05:51:43 AM »
Congrats on the move!  I was really late to this thread, but can provide some insight as someone in Bank leadership and often hiring your opposing counsel...

Bankruptcy/Creditors rights is going to be a tough practice area for a long time.  We just went through a lower for longer growth environment and not much loan growth in the industry.  Now we're going to have some inflation, which makes debt easier to pay because asset values go up.  We will have another cycle, but you were in a declining business with no end of that decline in sight.  At some point, you'd hit a home run because there will be a big need but you won't have competition in the bankruptcy field.  There's a lot of loose bank debt out there, but most of it is secured and the underlying assets have value, so you'll see voluntary resolutions before bankruptcy.

I do have one comment/thought - I could never figure out "why" someone desires to become bankruptcy counsel.  In business, you want to be working the side with money.  I'd think every lawyer would rather do creditor's rights for that reason.  It always seems like the Bankruptcy counsel has to divert creditor's money or constantly appeal the court for fee payments, which is basically asking the people you're opposing to pay your bills.  I know there are hard working people doing a duty to their client, but I've also had some laughable moments with some pretty absurd requests. 

Congrats in moving in house.  Best of luck in the new role, you're developing a lot of skills and I'm glad they accepted your counter

specialkayme

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Re: Practice Change - Considering Going In-House
« Reply #35 on: February 22, 2018, 02:17:25 PM »
The biggest learning curve for me going from law firm to in-house was the culture and mind-set difference.  I don't remember where I read this, but one way to look at work is to divide it into "engine work", and "cog work."  Engine work is getting projects done, cranking it out.  Cog work is interfacing with others.  Most job descriptions have some of both, in varying proportions.  Most people are capable of both kinds of work, to one degree or another.  For me, law firm work was 90% engine, 10% cog.  Going in-house, it was more like 50-50.     

What did you find about the "cog work" that was substantially different from private practice?

I invision private practice to include both of those areas. Substantially more "engine work," obviously, but still a fair amount of "cog work" in the form of interacting with partners/associates/paralegals to get them to feel more comfortable with you so they bring you in on cases or put your work ahead of others, interacting with opposing counsel to keep future negotiations/referrals/lines of communication open, and interacting with just about everyone else you meet with the mind set that you're selling your personality to them for a potential future case. So what portions did you find different in corporate life?

specialkayme

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Re: Practice Change - Considering Going In-House
« Reply #36 on: February 22, 2018, 02:59:34 PM »
Bankruptcy/Creditors rights is going to be a tough practice area for a long time.  . . .   At some point, you'd hit a home run because there will be a big need but you won't have competition in the bankruptcy field.

Which was probably why I thought so long and hard about the decision. Bankruptcy work is down, and will remain down for some time. How long is open to speculation (some say a year or two, others say 5+ years). In the meantime everyone is getting out because its so far down. With every person that gets out, you view it as another potential competitor that is no longer in the field. If you stick it out 5 years, you'll be the king of the hill with all the cases and no competition.

Ultimately, the other aspects of my position didn't justify the long term risk and decreased pay in the meantime. But it was still a tough decision for me.

I could never figure out "why" someone desires to become bankruptcy counsel.  In business, you want to be working the side with money.  I'd think every lawyer would rather do creditor's rights for that reason.

When I accepted the internship in law school, I thought the same thing. I saw no future in bankruptcy, because the clients can't pay your bills. And there is some truth to that. As a debtor's attorney you walk away from a TON of bills. Probably 1/3rd to 1/2 of my billable hours I end up walking away from (either taking on flat fee cases that didn't pay out, or we thought there would be money there and it isn't). It leads to inflation on your hourly rate so you can collect on the remaining 2/3rds to 1/2. But in part, the bankruptcy code protects debtors counsel's fees. They get paid fairly high up on cases that generate some cash. They often don't get paid before secured creditors (on their collateral at least) but you are usually paid very high up and above almost all other creditors. The judges often (used to, at least) protect debtors counsel's fees.

But the key is being able to work profitable cases. Dirtbag cases exist where the debtors can't turn a profit and they just don't know it yet. Occasionally you file some of them and you don't know it yet yourself. But the goal is to avoid them, and work on the cases where they can generate a profit, and everything isn't tied up as collateral (or the court allows a carve out of proceeds/profits from collateral to the debtors' attorney). Sometimes you quote a retainer on what you think the case will take to finish. Even failing businesses, with no cash in the bank account, can find a way to pick up $20-50k as a retainer. You might get $20k up front, when you think $40k will be the cost of the case, knowing you're taking a risk to finish the case. But it all lines up with the 1/2 to 2/3rds ratios in the end anyway. Just the nature of the business I guess. Occasionally you get big cases, contingent cases, that throw off enough profits that you can absorb the next 20-30 loss cases.

Creditor work isn't as sweet as it sounds, compared to debtor work. Debtors are in a bind and honestly have no other option but to pay the bill they're given (which is why the fees have to be approved by the Court, but if the Court is looking after debtor's attorneys who control filing statistics, it isn't much of a "check" in the system). By contrast, creditor clients WATCH THEIR BILLS LIKE A HAWK. They are very quick to cut time off your bill as "excessive" or "unnecessary." Some of it can be repeat work, so you want to keep the client happy. To keep them happy you keep the hours lower and, usually, the hourly rate too. I'd often cut my hourly rate from my "debtor" rate down 25% to my "creditor" rate. The repeat business, plus more guaranteed payment structure somewhat justifies the reduction in hourly rate. But when it comes down to it, the discount on hourly rate and shaving off of time usually means you're back in the 2/3rds situation in the end anyway, only you have a TON more competition to deal with.

Ultimately, when times are economically bad you can make a killing on flat fee cases and large business reorganizations, if you can have enough cases to have the flexibility to pick the good ones. When the economy is "average" you make a decent salary, but you're waiting for better times. When the economy has flatlined for a while, or is increasing, you live hand to mouth, hoping for another economic crash.

Trifele

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Re: Practice Change - Considering Going In-House
« Reply #37 on: February 23, 2018, 05:25:04 AM »
The biggest learning curve for me going from law firm to in-house was the culture and mind-set difference.  I don't remember where I read this, but one way to look at work is to divide it into "engine work", and "cog work."  Engine work is getting projects done, cranking it out.  Cog work is interfacing with others.  Most job descriptions have some of both, in varying proportions.  Most people are capable of both kinds of work, to one degree or another.  For me, law firm work was 90% engine, 10% cog.  Going in-house, it was more like 50-50.     

What did you find about the "cog work" that was substantially different from private practice?

I invision private practice to include both of those areas. Substantially more "engine work," obviously, but still a fair amount of "cog work" in the form of interacting with partners/associates/paralegals to get them to feel more comfortable with you so they bring you in on cases or put your work ahead of others, interacting with opposing counsel to keep future negotiations/referrals/lines of communication open, and interacting with just about everyone else you meet with the mind set that you're selling your personality to them for a potential future case. So what portions did you find different in corporate life?

Hmm.  Yes, some things crossed over, like general good manners and people skills.  But for me the inter-personal side of in-house work was very different than my prior interactions with other lawyers or clients.  I learned that I was often extremely dependent on these new non-lawyer teammates for information and assistance to get my own work done.  (In my law firm work the "engine work" itself occurred mostly independently.)  I had a learning curve on what my new co-workers in turn wanted from me in terms of communication, information, guidance, etc. and where I fit in.  Also, I had a basic learning curve about what exactly my new non-lawyer teammates actually did:  operations, finance, HR, risk, information security, etc., so I spent time learning the nuts and bolts of the new company.

YMMV on this, and it may depend on what your org chart looks like in the new job.  For me, I was on a par with other senior managers from all those departments, so -- equals with those non-lawyer teammates.  I began to think of myself less as a lawyer, and more as a manager.  Other in-house folks may chime in on this, but that's what it was like for me.


chasesfish

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Re: Practice Change - Considering Going In-House
« Reply #38 on: February 23, 2018, 06:13:06 AM »
Thanks for all the details.

On a positive note, my view is the recovery was so slow for so long and bank's were forced to dramatically tighten their commercial lending standards, instead of a bust every 8-10 years, we may go 15-20 from 2008 before something big hits.  At that point, there's a huge number of debtor/creditors rights attorneys that are out of the game.

I also agree with you on the creditor's rights work, the attorney has to evaluate every case like a business and present that business case to the debtor.  Their fees are a consideration in that case. 

specialkayme

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Re: Practice Change - Considering Going In-House
« Reply #39 on: February 23, 2018, 07:36:56 AM »
But for me the inter-personal side of in-house work was very different than my prior interactions with other lawyers or clients.  I learned that I was often extremely dependent on these new non-lawyer teammates for information and assistance to get my own work done.

A large portion of my practice thus far has been collaborative work, often with non-lawyers, to get information together (asset descriptions/values, budgets, financial reports, leases/contracts, ect.). I don't expect it to be the same thing in the future, but it isn't as if I work in a bubble of attorneys and paralegals right now. I guess in part you don't know what you don't know.

I'm wondering if it's worthwhile reading up on a few of those books before I start working there, or if I should start working for a week or two to get a better understanding of what I don't know before I start reading a few of those books.

I already know its going to be very different going from a profit center to a cost center. In the past it was always easy to sit back for a few days once the collections report came out. I often had more flexibility with partners when I was an associate when they saw the money I was bringing in. None of that will be the same. I'm not entirely sure how I'm going to deal with that just yet. I brought it up in a few of the interviews with the new company, and I was straightforward in my uneasy attitude about switching to a cost center, and very open about how I wanted to know the metrics I would be evaluated on to determine success. They didn't seem concerned about it in the slightest. In part because they have been spending a BOATLOAD in outside counsel fees, and they feel my worth will be easily measured when you compare outside billings pre and post hiring. I explained that it was an easy metric to measure in month 1-6, not so much in month 12-18, less so in month 36-42, and so on. But we'll see. One of the challenges I suppose.

specialkayme

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Re: Practice Change - Considering Going In-House
« Reply #40 on: February 23, 2018, 08:00:59 AM »
my view is the recovery was so slow for so long and bank's were forced to dramatically tighten their commercial lending standards, instead of a bust every 8-10 years, we may go 15-20 from 2008 before something big hits.  At that point, there's a huge number of debtor/creditors rights attorneys that are out of the game.

Its a very different viewpoint from those on this side of the fence, but everyone I've talked to agrees with your first part wholeheartedly, but thinks it will take significantly less than 8-10 years for bankruptcies to recover. I think there's a good, but non-zero chance that I won't be practicing long enough to see another 2008 happen (and I may not be alive to see it either). But its more likely that in a few years bankruptcies will revert back to average levels.

Not that it matters much for me, as I chose to leave that behind. But what I struggled with is that the view that so many are taking about getting out of bankruptcy work runs directly counter with my views on investing in the stock market. When the stock market declines its the best time to invest. You get it cheap. When the stock market is at a 60 year low, stocks are on fire sale. If bankruptcies are at a 60 year low, they should only be able to go up (ok, not guaranteed, but a high probability). So bankruptcy practices are cheap, competition is weak, and profitability may be very high. Ultimately I decided that there's only so much of a beating you can take in both the stock market and a declining business industry.

Anyway, good conceptual discussion.

specialkayme

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Re: Practice Change - Considering Going In-House
« Reply #41 on: February 26, 2018, 11:52:44 AM »
To anyone that has moved from private practice to in-house (@nedwin, @YTProphet, @cheddarpie, or @Trifele perhaps), have any of you had to deal with a "tail malpractice policy?"

My firm is supportive of me transitioning out so far. They sat me down and wanted to make sure I had all my ducks in a row (HSA account, 401(k) transfer, things like that). They told me I needed to get a "tail policy." The way they explained it, current malpractice insurance is a "claims" insurance policy, so once I'm removed from the policy I'm not covered, and any potential malpractice claims that could be out there in future years wouldn't be covered either and I'd be personally responsible. A "tail policy" would cover past acts, but not current or future acts. They said it was a cheap policy anyway. One current partner came from a solo firm and they had it when they moved over, another came from another firm and they had it when they moved over.

I called up our current malpractice carrier, who basically told me I didn't need to get a "tail policy" as the current malpractice policy covers everything I've done. They sent me a copy of the current policy agreement, and it clearly defines an "insured" to include:

Any lawyer who was a stockholder, partner, member
or employed lawyer of the Named Insured at the
time of the act(s) or omission(s) that are the subject
of the claim or suit, but only to the extent that such
act(s) or omission(s) were within the scope of and in
furtherance of duties for the Named Insured;

The rep told me everything I've done through the date of my departure would be covered in the firms policy, and the only reason to consider getting a "tail policy" is if I have a reason to believe now that when a claim is made in the future that the firm won't have a policy in place (either they let it lapse, or just canceled it for some reason, or the firm dissolved and each individual partner got their own "tail policy"). I think that's highly unlikely, but who knows.

The rep quoted me ~$8k for the "tail policy" if I wanted it, which would cover me for the next 4 years (SOL), or ~$13k if I wanted it to cover me forever (for statute of repose reasons). Both premiums are due up front. Significantly more than "cheap" in my book.

So the rep is telling me not to get it, and not to worry about it, but the firm is adamant that I need it. What have others done in this type of situation?

BuildingmyFIRE

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Re: Practice Change - Considering Going In-House
« Reply #42 on: February 26, 2018, 12:02:30 PM »
Hey there SpecialKayme,

Your firm is sort-of right, and sort-of wrong.  I've seen professionals get burned by not having tail coverage, so you do want to make sure you have it, and it is claims-made, so it doesn't matter when the malpractice allegedly occurred as when the claim is made against the firm/attorney. 

But why wouldn't you be covered under your firm's policy going forward?  Do they think they're going to dissolve the firm?  If they did, wouldn't they buy a tail for the firm and all attorneys?  Even if you are no longer with the firm at the time that the claim comes in, if the malpractice alleged involves work performed while an attorney at that firm, you should be covered.

Speak with an insurance broker about this issue.  If they tell you that you do not need to buy a separate tail (which I think they will), get it in writing and save the letter in your file.   

specialkayme

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Re: Practice Change - Considering Going In-House
« Reply #43 on: February 26, 2018, 12:54:31 PM »

But why wouldn't you be covered under your firm's policy going forward?  Do they think they're going to dissolve the firm?  If they did, wouldn't they buy a tail for the firm and all attorneys?

I think the partners don't understand. The one that went from solo to this firm had to get a "tail policy" because their previous policy was being canceled (solo was being dissolved). But I'm not entirely sure.

 
Speak with an insurance broker about this issue.  If they tell you that you do not need to buy a separate tail (which I think they will), get it in writing and save the letter in your file.   

I did. I spoke with our rep, and they said:

"As we discussed,  you will be covered as an “Insured” under the [firm's] policy for your acts or omissions that are the subject of the claim or suit, to the extent that such acts or omissions were within the scope of and in furtherance of duties for the law firm. 
. . .
If you are concerned that there may not be a policy in effect for the law firm at the time a claim is made and reported to Lawyers Mutual, you may wish to consider purchasing an extended reporting period (or “tail coverage”) via an endorsement to the current policy.
. . .
Again, you may rely on the coverage under the firm’s policy and forego purchasing an ERE."

My thoughts were that I didn't need the tail coverage, but wasn't sure if it was standard or not.

It may be that the current firm doesn't understand what their policy covers. Or it may be that the current firm is looking to "stick it to me" a little on my way out (I really don't think so though, they've been very supportive thus far). Either way, I don't want to tell them whether I am or am not getting tail coverage.

Trifele

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Re: Practice Change - Considering Going In-House
« Reply #44 on: February 27, 2018, 03:01:58 AM »
FWIW, I did not get tail coverage when I went in house.  Our insurance broker for the firm said I was covered for the time I was at the firm even after I left. 

Could you wait on the tail coverage -- i.e. wait to see if your firm dissolves in the next x years -- and THEN get the coverage if you need to? Or is this something that has to be decided now?   

nedwin

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Re: Practice Change - Considering Going In-House
« Reply #45 on: February 27, 2018, 11:04:27 AM »
I did not get tail coverage when i went in-house, and was informed by my former firm that I did not need to for the same reasons you have stated.  Tail coverage protects you, not your former firm, so why would they even care if you have it or not?

specialkayme

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Re: Practice Change - Considering Going In-House
« Reply #46 on: February 27, 2018, 02:38:12 PM »
Could you wait on the tail coverage -- i.e. wait to see if your firm dissolves in the next x years -- and THEN get the coverage if you need to? Or is this something that has to be decided now?

According to the insurance company:

"We must receive the completed form within 30 days of the date you are removed from the firm’s policy, and full payment within 60 days of the date you are removed from the firm’s policy. "

I didn't press to see if there was some way I could get tail coverage in the future, should the firm dissolve. Although I'm not sure I'd be told it is happening.

Tail coverage protects you, not your former firm, so why would they even care if you have it or not?

I think they are trying to look out for me. I don't think they are requiring me to get it, but they were adamant that it's important for me.

I just don't see it. Seems like a giant waste of premium for me, that won't cover anything (unless the firm dissolves, which the other partners are likely to get a tail policy to cover the resulting liability anyway, as was previously mentioned).

It's possible the partners are hoping I get a tail policy so if I do have some type of malpractice claim, the insurance company will make me cover the deductible on the claim through my tail policy rather than the firm pay it through their policy. I'm just guessing though, as in reality it wouldn't work like that. They'd sue the firm AND me for malpractice. But I don't think there was any malice in the suggestion.

chasesfish

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Re: Practice Change - Considering Going In-House
« Reply #47 on: March 01, 2018, 05:36:32 AM »
I guess the question is how prevalent are professional liability claims in bankruptcy?  I'd imagine different types of legal practice have different levels of claims.  If you're doing creditor representation at loan closings, the liability would be pretty big.  I'd think many of your clients are dissolved and/or restructured in bankruptcy and your work is being overseen by a judge with a pretty straightforward playbook, so I see why it seems like a waste of money.

How much do you have exposed anyways?  Retirement accounts and home equity is usually exempt.  You could always just shelter assets then bankrupt if someone gets a big claim.... :)

specialkayme

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Re: Practice Change - Considering Going In-House
« Reply #48 on: March 01, 2018, 07:57:09 AM »
I guess the question is how prevalent are professional liability claims in bankruptcy?

Your assessment is fairly accurate. I'd say very infrequent. I'm not aware of any claims that have been made against any bankruptcy attorney in this district in the past 8 years for bankruptcy work (not that I'd hear about all of them). But I know when they come up they're usually big. Much more likely/common when you act as a trustee or receiver, which I haven't independently of other members of the firm.

How much do you have exposed anyways?  Retirement accounts and home equity is usually exempt.  You could always just shelter assets then bankrupt if someone gets a big claim.... :)

Assuming such claims wouldn't be counted as non-dischargeable under Sec. 523(a)(4), which I haven't looked into whether they are or aren't, but I've probably got about $100k in unexempt property (taxable accounts, rental home, ect.). Enough that it would suck donkey dong if I had to lose it, but not enough to ruin me for life. But it isn't what I own now that's the question. It's what I'd own in 4 years (SOL/SOR time frame).

All things considered though, I think its a risk I'd be willing to take in not getting the tail policy.

specialkayme

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Re: Practice Change - Considering Going In-House
« Reply #49 on: April 17, 2018, 12:58:43 PM »
UPDATE: I started working for the new company about two weeks ago, and so far I very much enjoy it. There are alot of things that I'll still need to get used to (I get random panic attacks believing that I've forgotten to keep track of my billable hours over the past ___ time period, only to remember that I don't have billable hours anymore). But overall I'm very glad I made the move, and I greatly appreciate everyone who provided feedback/advice and convinced me it was a good idea to take the plunge. You were right!

On another note, for those that have taken similar moves, what have you done relative to the "in-house" version of malpractice insurance? I've read/heard from some that it's almost a requirement, and from others that its pointless (as the only claims you could have are from your employer, who won't sue you and will only fire you if it comes down to it). I called the malpractice carrier I had in private practice, who said they don't offer that type of insurance (they will only cover law firms or solo practitioners, and I'm neither). Google searches don't appear to come up with much instead, just trying to get you to sign up for an E&O policy that doesn't appear to cover anything that would really come up regarding a malpractice action. What have some of you done? Coverage or no? Suggested company?