By: Kaitlyn Hunter & Nancy Palermo
Lawyers with Commercial and/or Technology Transactions expertise are among the most highly sought after for in-house positions in the DMV. Given this high demand, recruiting a lawyer with this expertise versus, say, a general litigator or corporate generalist requires a different approach. This article provides a roadmap for employers to effectively position themselves to attract top talent in this competitive specialty within our region.
For context, commercial/tech transactions positions constitute more than 20% of the searches we conduct annually. While law firms rarely have associate openings for this specialized expertise (currently, we only have three open positions), there are numerous opportunities for these candidates to consider in-house. This high demand oftentimes results in candidates receiving multiple competing offers. If you’re an attorney hiring manager looking to fill one of these positions, you need to understand the market, carefully consider ways to distinguish your position from your competitors and utilize best recruiting practices so your hiring process is as effective and streamlined as possible.
Practice Evolution:
Over the past 20 years, the in-house hiring market for transactional attorneys has evolved significantly. Historically, when we recruited transactional lawyers for corporate openings, our clients wanted expertise in M&A, securities law, and/or corporate governance. However, over the past 15 years, due in part to rising billing rates at firms and the sheer volume of commercial/tech transactions work, many companies have been bringing this work in-house. Conversely, the volume of in-house positions focused on the more traditional areas of corporate law (i.e., M&A) have decreased significantly.
This has resulted in the need to hire attorneys with this expertise at all experience levels, and some in-house departments even recruit directly out of law school now. As a result, the candidate pool for attorneys with commercial/tech transactions expertise in firms is much smaller. Specifically, our research shows that there are only around 50 associates in the D.C. region who focus on this work at firms.
Additionally, law firm associate compensation has increased exponentially over the past decade (e.g., mid-levels now earn salaries between $295k-370k), and companies have not remained competitive on the salary front. The compensation gap continues to widen, which only makes recruiting law firm candidates more challenging.
Understanding the Candidate Pool and Differentiators You Can Use
Expertise and Mix of Work: The substantive mix of work often depends on the specific company and structure of legal department. These in-house positions can be a mix of vendor/procurement contracts and sales/revenue generating contracts. If your company can structure the position to encompass a mix of both (vs. solely focusing on vendor contracts), that diversity will appeal to more candidates. Attorneys prefer to draft and negotiate sales contracts because they believe it to be more sophisticated/challenging work, and it’s external facing. If they work with sales teams in their current role, it will be a difficult sell to recruit them for a position where the procurement department will be their primary client. Although these positions focus on commercial/tech transactions, to the extent that you can offer some diversity in the attorney’s portfolio (e.g., assist with employment agreements, data privacy issues, corporate governance, etc.), that will make the role more appealing so they can gain more varied experience. Additionally, if your company has a contracts department which negotiates more standard procurement agreements, and you can create a reporting structure where the contract manager can report to this lawyer, the inclusion of management experience is often highly appealing and will differentiate your search. Profile/Background Consideration: If you’re seeking to hire a junior attorney (someone with four or less years of experience), it is unlikely that you will find someone who has a combination of law firm and in-house experience. In addition, since our research indicates that there are only approximately 20 associates with commercial/tech transactions experience in D.C. area firms, your candidate pool is very small. We therefore suggest also considering corporate M&A, finance, and governance law associates. While not directly on point, they likely draft and negotiate some commercial and/or licensing agreements as part of their larger M&A practice which can be transferable. Additionally, many of these associates are among the most talented in AmLaw 200 firms. The sweet spot for hiring this profile of attorney in-house is someone with five to ten years of experience. At that level, employers often require candidates that have significant commercial/tech transactions expertise. This search will likely have a higher success rate because you or your recruiter is likely to find a good number of candidates with the ideal mix of law firm and in-house experience in our region. There is a larger number of associate candidates (approximately 35 per our research) with this experience at firms, and they’re more likely to be interested in transitioning in-house at this stage of their professional career. Finally, as noted with the more junior profile, don’t rule out corporate M&A associates for this level of hire. We recently completed a search for a biotech industry client who was open to hiring top-tier M&A associates for an Associate GC role, and they would train them on commercial/tech transactions. Result: We ended up recruiting two senior corporate associates from an AmLaw top 10 firm, and they couldn’t be happier. It's also important to note that the majority of our in-house clients want to hire commercial/tech transactions lawyers who come from AmLaw 200 firms because of their training. However, don’t be too quick to dismiss lawyers who have been trained exclusively in-house, as we’ve found that their training can be equally as strong. Why? Because many of them have been trained and mentored by more senior lawyers who previously practiced at top law firms before going in-house.
Compensation/Benefits: When a lawyer transitions from a firm to a corporate legal department they almost always (90% of the time) take a hit in their base compensation. Currently, it’s common for the decrease to be around $100k. However, if a commercial/tech transactions lawyer is coming from another in-house position, salary is much less likely to be an issue (unless you are underpaying for the role as compared to your peers; if that’s the case, we will tell you). The way that companies can “win” when recruiting law firm associates is to have them focus on the totality of the compensation package (including benefits), the improved hours expectation, the increased predictability in their schedule, etc.
Other baseline elements of compensation:
Bonus: Most companies offer a bonus target of 20-30% of base salary, and at the junior level it’s typically 15%.
Equity: While equity grants are rare for junior in-house lawyers, they are more common for lawyers with 5-10 years of experience, and almost required for attorneys at the Director and VP levels (i.e., 15+ years). This is also true for privately held companies which offer phantom stock programs.
401(k)/403(b): The standard is a 3% match, and some organizations offer as high as an 8% match (that’s a great perk for candidates if it’s your policy).
Differentiators:
Sign-on Bonus: If the candidate is coming from an AmLaw 200 firm, a sign-on bonus to bridge the compensation gap will set you apart from other companies. If the candidate is coming from another in-house role, a sign-on bonus will signify significant interest and will go a long way because they will likely have competing offers in this highly competitive market.
Equity: If you have a junior level opening and can offer RSU’s and/or stock options, that would be an enticing differentiator. Also, if the position is equity eligible, consider giving the attorney a small initial grant of equity either at the outset or after six months of employment.
PTO: Most companies offer new employees three to four weeks of PTO (vacation & personal leave). You may consider enhancing this by requesting that HR waive the formal policy and provide the attorney with one additional week of leave. It’s not huge, but it’s one more arrow in your quiver.
Best Recruiting Practices:
Your Story: It is important that your search narrative (i.e., reason for the need) is clear and understandable. If a candidate is considering the opportunity with your company, odds are they are considering other positions because they are ready to transition in-house or explore alternative in-house roles. Your story should succinctly and effectively explain not only the substance of the position, but the selling points to the candidate. In terms of why your position is open, it’s always preferable if the role is newly created due to increased workflow or an internal promotion. However, if the position is a backfill due to an attorney departure, this is a bit more challenging unless there’s a “candidate friendly” explanation as to why (e.g., the person relocated, left to become GC of another company, etc.). Just remember that the search narrative is essential and must be developed carefully. We often spend considerable time helping our clients best articulate their narrative, which is different for every search.
Interview Process: Making your interview process as streamlined as possible and knowing the process (e.g., number of rounds, interviewers for each round, etc.) at the outset is extremely important. Take the time to explain to your recruiter and/or the candidate what the process will look like, from beginning to end. Think of it as “mapping” the process. As mentioned above, many candidates are likely to consider multiple opportunities. Having a process in place that is somewhat predictable (in terms of timing) reflects well on your organization. Another point worth noting: If someone on your interview panel is unable to meet in person on a particular day, it is better to have them meet via Zoom vs. postponing it until they can meet in person. Most interviews are still a combination of in person and video and that will likely remain the case. Also, if there’s a large number of people to meet, consider doubling up your interviewers or doing panel interviews (for more senior positions). We recognize the importance of thoroughness and proper vetting, but we’ve seen too many companies lose their top choice candidate due to a process that is not as streamlined and efficient as it could have been, which we explain below.
Speed of Search: Time kills all deals. In the current market, employers are moving incredibly fast in terms of their hiring process (some of our clients do all interviews via Zoom and only have the finalist candidate come into the office for the final interview with the GC). You may need to be prepared to make decisions on candidates much quicker than you have in the past.
Geography and Remote/Hybrid Schedule: Most law firm associate candidates live and work in D.C., so if your company is not located in D.C. proper, they are likely looking at a much longer commute. Most companies are offering hybrid schedules with two or three days a week in the office, and some offer fully remote. If your company can offer a fully remote schedule, this will significantly expand your candidate pool by including geographic regions outside the DMV, but also make your position more enticing to local candidates who desire this level of flexibility post-pandemic. Unfortunately, if you require four to five days in the office, we’ve learned over the last few years that this requirement is likely going to be a non-starter for many candidates.
Timing of Year: Because the average search takes three months (tightest time frame is two) from launching the search to offer, if you decide to start your search in August or shortly thereafter, you’re going to be faced with candidates wanting to start the following year (January to March depending upon year-end bonus payout date). If you want them to start sooner, you need to be prepared to make them “almost whole” in terms of what they are leaving on the table, and because law firm bonuses are so significant (e.g., a 5th year associate in BigLaw receives a bonus of $90k), most of our clients are not willing to do this for good reason; however, if your company has the resources to and the immediacy of the need is great enough, this will obviously be a significant and enticing differentiator.
Where Garrison Can Help:
Garrison has placed over 500 attorneys in corporate legal departments in Washington, DC, Virginia, and Maryland region. You can learn more about our unique recruiting process by visiting our in-house recruiting page here.
