As the year draws to a close, we sense that lawyers have already begun the annual ritual of nervously analyzing their careers: Whether they should switch firms, move in-house, or stop practicing entirely. And with law quickly transforming into an industry driven by capital and technology, lawyers have never had more choice. For many people, this might feel like opportunity; for a lawyer, this may feel like a dangerous amount of freedom.
We symbolize this new age of lawyer. Since graduating from law school in the early ‘90s, our careers have run the gamut. Between the two of us, we’ve spent time at law firms, a Big 4 accounting firm, and in-house legal departments; we’ve become legal entrepreneurs by founding Pangea3; and now, Sanjay continues to work at the nexus of law and tech while David works at the largest legal financier in the world. Our experiences are by no means the norm for lawyers, but they’ve given us novel frames of reference –standards and benchmarks by which we measure and evaluate the industry around us. In the spirit of lawyers re-evaluating their careers, we offer some insights.
The frame of reference for a law firm lawyer is relatively narrow. As a wise man once said: “If you’ve seen one law firm… you’ve seen one law firm.” A race among several firms to innovate with technology and new business models including legal-tech funds and incubators is creating even more avenues for differentiation.
Despite their idiosyncrasies, law firms possess certain ubiquitous features — they’re collegial, intellectual and collaborative. They’re also intense. A lot of the intensity owes to the law firm ownership structure. From an aggregate firm perspective, partners don’t just make business decisions, they also make cultural decisions. But often, partners operate in a decentralized construct. So even within a firm, the experience of one associate is likely to be different than that of another.
The grand unifier within a law firm is its hierarchical structure. At law firms, the world is divided into partners, lawyers, and “non-lawyers” — a term we hate, but which remains sadly in wide use. Lawyers focus on their partners and cases; partners focus on their clients and new business. Within such narrow bands of focus, perfection is essential, detail is critical, and competition is omnipresent. At a law firm, associates will become specialists, but if they aren’t on track to make partner or follow some of the newer entrepreneurial (business within a firm) focused law firm tracks, it raises the question: What will they do with their highly-specialized knowledge? Often, they’ll take that knowledge in-house.
Corporate legal department
If the law firm lawyer’s frame of reference is one or even two dimensional, the in-house lawyer’s frame of reference is 3D. The difference is stark. At a law firm, lawyers’ experiences are governed by their partners — the people with whom they interact and are influenced by. In a business, a lawyer’s experience is governed by many more people inside the company (CEO, CFO, marketers, salespeople, product specialists, et al.) and by the industry of their company — a force they will be unable to influence. Although in-house lawyers must answer to their CEO and board, companies are usually less monolithic than law firms, especially given that many different departments are working toward a common goal that is defined, in large part, by the industry itself. This means that in-house lawyers must understand their industry just as well as they understand their company’s business and its legal work.
Moreover, fundamentally, in-house lawyers have a different mandate than outside counsel: They must make decisions that balance time, risk, and cost in accordance with their company’s goals. There is simply too much work for in-house lawyers to do for them to aim for perfection in the way they would at law firms. Moreover, they are not penalized for imperfection or failure. They are rewarded for exercising sound judgment in making tradeoffs between those three: time, risk, and cost. And ultimately, the market is the judge, jury, and executioner (even if it’s a c-level executive delivering the verdict).
Alternative legal services provider (ALSP)
At their core, ALSPs are just companies that happen to work in the legal sector — their cultural frames of reference are hybrids influenced by law and business. Like law firms, ALSPs have clients to which they’re beholden; like traditional companies, their approach to dealing with those clients is uniform, and not influenced by specific partners. This makes for a much more consistent culture and one that is often shaped by the founders or leaders of the company. And because ALSPs are companies, they tend to embrace risk and value progression, rather than harping on perfection.
The name of the game for an ALSP is doing something better than a legacy provider has previously been able to do it. This necessarily means doing things differently than law firms have ever done them. Moreover, lawyers have more avenues of opportunity to grow within ALSPs — more ways to leverage their skills and knowledge — and their frames of reference are often somewhat wider than they would be at in-house legal departments. Examples include managing functional teams, managing client-specific teams, and becoming subject matter experts in specific business process areas, to name just a few.
Of all the industries in which we’ve worked, legal finance is arguably the most dynamic: A legal capital provider is structured like a company, but it straddles the worlds of finance and law, so its cultural frames of reference necessarily include elements of both industries. Legal finance is client-facing, and like ALSPs, providers of legal capital (rather than individuals) own the relationships with those clients, reducing the influence of individual stakeholders and allowing for a more consistent culture, the hallmark of which is teamwork and inter-departmental problem-solving.
Despite the differences in structure between law firms and legal capital providers, perfection is still expected when making investments. The difference is, at a legal capital provider, the farther one gets from case selection and underwriting, the more the company emphasizes progression over perfection. In business units like marketing and business development, there is significant room for lawyers to exercise creativity, with the implied mandate of balancing risk, cost, and time. In short, legal capital providers bear many of the attributes of law firms, corporate legal departments, and ALSPs, and they do so from the frames of reference of finance and law.
Ultimately, for however much the legal industry changes, it will remain one of lawyers. And lawyers (let’s face it) tend to share certain traits and characteristics. Still, lawyers have more career options than ever before. While law firm incubators, corporate legal departments, ALSPs, and legal financiers aren’t right for everyone, the reality is, lawyers should take comfort in the range of options and work cultures out there for them. If we are evidence of anything, it’s that what it means to be a lawyer is becoming broader by the day — and we think that’s a great thing. And with that, we wish our readers a happy new year and the best of luck with their 2019 career choices.
David Perla is a managing director at Burford Capital, and Sanjay Kamlani is a managing director of 1991 Group.