I've been hanging out with a lot of
in-house counsel recently, and one thing's clear.
They love their secondees.
Really love them.
Whether it's a GC who is relying on
a specialist skill set that he or she can't quite find the budget to recruit, a
mid-level corporate counsel who is working with a junior lawyer from private
practice who helps with the "heavy lifting" on a big deal, or a small in-house
team that find having a secondee gives them much broader access to their
external law firm's resources than their usual interaction - the sentiment is
unanimous.
For law firms, secondments offer
some incredible benefits too. Time and time again, clients point to knowledge
of THEIR business as a critical factor in selecting their external lawyers. The
insight secondees getting living and breathing in that environment can't be
gained from market research or reading up on the company. Plus, alongside the
knowledge of how a client works, their culture, their pain points comes the
opportunity to build broader and deeper relationships - not just with the
in-house teams, but with their internal clients too.
Where a secondment programme has a
rolling element (whether trainees or more experienced lawyers) and the firm
puts in a continuous series of lawyers over time (for example a change every
six months), this can build an incredibly strong connection over time between
firm and corporate team and build a powerful competitive advantage for
an incumbent law firm.
Outside of the particular secondment
relationship, lawyers often return to private practice with a broader skill set
and a better understanding of clients at a more general level, and are much
better placed to empathise with the in-house community as a result. Plus
in-house experience, even at a secondment level, really does count
when pitching for work with corporate counsel.
So it's all sunshine and light?
Hell, let's try and stick everyone
on secondment and then we'll never lose a client. Right?
Alas, it's not quite that simple.
The major challenge law firm's face
is economics.
The basic premise of a secondment
being that if a client has enough of the right type of work (generally
consistent in terms of volume, skill and experience required), but not enough
to make permanent recruitment an option, then taking a single lawyer on
secondment will be cheaper than paying for that resource on an hourly rate
basis. In return the law firm gets guaranteed utilisation of the lawyer, a
degree of certainty of revenue and predictable cash flow.
But the world has changed. Because
the competitive intensity in the legal market is increasing rapidly, and
because firms have wised up to the broader benefits of secondments (set out
above), the price that in-house teams have had to pay for a secondee has fallen
rapidly.
As the economy tightened, putting
secondees in "at cost" became more prevalent. At a superficial level, this
again made sense - with firms restructuring and struggling to find work to keep
all their lawyers busy (and therefore employed), farming them out to clients
allowed them to retain their good people while keeping clients happy.
But in reality, often the exercise
often ended up costing the firms more than they anticipated. Questions arose to
what "at cost" actually meant. Was it salary cost (and if so did that include
benefits, bonus etc)? What about a proportion of overheads (often asked as the
finance director walked past the secondee's empty desk in an expensive City
location)? Who picked up the tab for the upgraded laptop that was required to
get on the client's network? What about the opportunity cost when another project turned up
unexpectedly and the firm was struggling for a particular resource profile to
do the work efficiently?
As the requests for secondments
increased, difficult decisions had to be made - who can we say "no" to? If we
say "no" will another panel firm put someone in? Is it an investment rather
than a revenue stream, and if so, how do we calculate the return on that
investment?
Competition for resource within
firms, already fraught with politics in many cases, heightened.
The pressure on resources is made
worse still when a secondee doesn't return (not as sinister as it sounds!). Two
common outcomes are that the secondee "goes native" and is simply recruited by
the client. If the relationship with the law firm is financially material, the
firm will have limited ability to negotiate any form of compensation,
irrespective of terms in the engagement letter. The other alternative is that
the secondee gets a taste for in-house life, and after returning to the law
firm simply finds another job with a corporate legal team as quickly as
possible.
Speaking from experience, while I
had already decided that an in-house role was probably the next move for
me, three months I spent on secondment a year before I made that move did help
to crystallise my thinking when the time was right to make the change.
Another challenge is for longer term
secondments, how does the law firm effectively keep the connection with the
secondee? I've seen this challenge at several levels - from the junior
associate living out of a hotel for nine months, disconnected from her peers
and far from her family, to the partner slowly becoming marginalised in the
partnership and losing the emotional connection to the mothership.
Pros and cons.
Swings and roundabouts.
To my mind however the overall value
equation is clear. If the engagement is structured well, the economics thought
through and the fit between secondee skill set, personality and appetite with
the in-house team's culture and need is good, a secondment is a winner every
time. The key is not to assume every secondment fits this model and to put the
time in up front to get to a working relationship rather than to simply react
and throw resource in at every opportunity that comes along.
Happy seconding.
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