Business of Law

Some Corps Cut Costs By Hiring Law Grads to Work In-house Instead of Using BigLaw Associates

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For years, corporations have complained about the high cost of using untrained recent law graduates hired to work as associates for BigLaw firms.

Now some are trying an innovative cost-cutting technique, reports the Wall Street Journal (sub. req.).

They are hiring BigLaw-qualified graduates themselves, straight out of law school, to work in-house.

Although the companies are still paying hefty salaries to train the new lawyers, those salaries are presumably lower than the legal fees that young associates can quickly rack up at a BigLaw firm’s billable hourly rate of nearly $300–or even a more client-friendly special billing arrangement.

And the salaries can also be lower than what associates would make in BigLaw: Hewlett-Packard Co. pays new in-house attorneys $115,000 annually, plus a $15,000 bonus, the newspaper reports. Starting associates at major private law firms in New York and some other cities can earn another $50,000 in salary and, especially as they advance, hefty bonuses in a highly profitable year.

The approach, predicts H-P’s general counsel, Michael Holston, will be “the wave of the future.” His company, which started recruiting new law grads in 2009, plans to interview at 13 law schools this year for third-year students to fill half a dozen in-house positions.

Pfizer Inc.recently hired three third-years from Harvard Law School and Yale Law School in a pilot program, and plans to repeat the move this fall.

“We need the services of first years and we need to train a generation of lawyers who know how to respond to what clients need,” Amy Schulman, the company’s general counsel, tells the newspaper.

As part of their training, at least some in-house lawyers will work at BigLaw firms, in what seemingly amounts to a reversal of the secondment programs that traditionally have sent BigLaw attorneys to work for a time in-house for large clients.

Bethany Foster, a Yale law grad, says she didn’t have much luck interviewing with law firms as a third-year but landed a job with Pfizer starting this fall. The pharmaceutical giant will, at some point, send to her work at Ropes & Gray and, if she does well, she will eventually be able to decide whether to stay at Pfizer or move to the law firm’s attorney roster, the article explains.

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