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2009 IN REVIEW Key trends: The rise and rise of in-house
Once considered the poor cousins of private practitioners, in-house lawyers have been quietly rising up the legal status ranks for some time now, but it was the fallout from the GFC that proved…
Once considered the poor cousins of private practitioners, in-house lawyers have been quietly rising up the legal status ranks for some time now, but it was the fallout from the GFC that proved just how far they've come.
Once considered just another support role, the increasing sophistication of the regulatory environment has meant in-house lawyers have now become indispensible advisers to business senior management, with general counsel often sitting on businesses' executive teams, and holding dual company secretary roles.
They have become particularly crucial given the increase in offences attaching personal liability, in the form of fines and penalties, to directors.
Australian Corporate Lawyers' Association CEO Peter Turner explained: "The environment in which we all work ... has become so incredibly complicated and [senior management] just see huge downside risk. They're just terrified of putting a foot wrong and reading in tomorrow's paper about the disaster they've created," he said. "So ... if the in-house counsel does his or her job well, they become really trusted advisers in all manner of business activity."
Though this change had been plugging away in the background of the profession for at least the last decade, it was the GFC that brought things to a head and demonstrated that in-house lawyers were well and truly on par with private practitioners in the prestige stakes.
The economic downturn saw a significant shift in the balance of power, away from law firms - who, pre-GFC had so much work banked up they could pretty much charge what, and how, they liked - towards in-house lawyers, who, with their legal budgets reined in, suddenly became more discriminating when it came to briefing out work. Quickly - with law firms' workflows petering out, and partners having to compete more fiercely for a smaller pool of revenue - in-house counsel became the ones calling the shots, and firms were forced to sit up and listen.
Time-billing is one aspect of law firm practice that has been increasingly questioned by in-house lawyers throughout the downturn, and they've put pressure on firms to come up with innovative alternatives that offer greater business certainty.
Speaking to Lawyers Weekly in August, Telstra's group general counsel, Will Irving, said that in its last review of its legal panel, Telstra asked firms to consider alternatives to time billing, and a number - which entailed greater risk sharing - were proposed and taken on.
He added that in-house lawyers have also become more discerning about the style of legal advice they receive, forcing some firms to change gears.
"Clients are looking for pithier advice - short and to the point," he said. "I want to know that the law firm has done the detailed advice in the background ... but clients are not going to spend a lot of time reading a very detailed advice."
Law firms - take note.
Other significant trends in the legal profession this year have included (click on link for a full examination of each trend):
>> Mid-tiers make their mark
>> Climate change on the horizon
>> The rise and rise of in-house
>> Speaking out about outsourcing
>> Too many city lawyers highlights rural shortage
>> Alternatives for billings methods gain momentum
>> The trend to business-minded lawyers
>> Mental health issues come to the fore
>> Workplace relations tug of war
>> Big firms place freeze on salaries
