Executive recruiters, "headhunters", receive an inordinate number of telephone calls from attorneys wanting in-house positions in dot.com companies. Those attorneys read pages of press information, such as Fortune magazine's front-page story, Young and Rich which hypes one side of this phenomenon . They are further seduced by the internet age version of old fashioned "tall tales" about associates 'right out of law school' leaving their first-job mega-law firms and sliding into a cushy pillow of stock options and instant wealth.
Despite last April's downturn in the technology stock market, the allure of dot.coms still persists. Law firms are doing all they can to keep associates and partners from leaving to start up clients. Some are offering enormous new salary structures, others are paying more attention to associate work assignments (a good idea no matter what the reason), still others are offering the use of firm condos for vacations and bridge loans and down payments for homes. But the drain to these companies continues. A partner at one of Seattle's technology giants, had a key associate in his regional office this week announcing that he was leaving to an Internet start up. Despite the partner's valiant efforts in an ensuing discussion on the risks involved in joining such a company, he lost the battle -- and the associate -- to that tantalizing temptress, the dot.com company. In addition to the allure of stock options, associates - and partners - leave law firms to start-ups for an opportunity to be involved in a new company's business decisions. Traditionally when lawyers leave law firms for in-house positions, they are also seeking a better lifestyle and a shorter work week. But dot.coms, generally, come with less support staff, hours as long as the large law firm and less infrastructure. If ever there was a "buyer beware" situation, the decision to leave a law firm for dot.com practice is a classic which brings to mind two words: due diligence. The decision to move from private practice to a dot.com is one, which requires more research than a move to another type of in-house job. Let's look at some points to explore:
Be aware of the risks. A pre-IPO company may be bought out, may not secure additional funding after the initial infusion, may go completely bust or may go public with an instant dip in stock worth, leaving you under water. Too many attorneys and other employess end up with thousands of worthless shares of stock. And it is important to remember that the critical due diligence on the company will have little to do with the law. To properly assess the company's potential you will need to network with technology and business people you trust.
Make sure you're finding a lawyer-friendly home. Many businessmen and women in this fast-moving culture view lawyers as "no" people - obstacles to their goals and rapid advancement, asking too many questions, but a necessary evil. They might also be looking at an attorney hire simply from a financial basis. There is a naove perception they can save that expensive outside counsel bill by bringing in a lawyer into the company, which more often than not just doesn't end up being the case. Attorneys who have had real-world business experience outside their law training and education, such as a side venture or management of a small business, will have an easier time of the transition.
Be aware of the many hats you might wear. When lawyers leave private law firms, they often cite the wider variety of work as a positive draw. When they get to the new dot.com job, they find this variety too often means they wear all the legal hats and may deal with issues of which they are not particularly fond or suited. Many of the legal hats are those areas where the attorney has had no experience. Still others are tedious and time consuming, such as employee relations and explaining stock options of the company over and over again.
You are leaving a culture where law is the primary product. In a law firm, every moment of your time is consumed with law and the law product. There is prestige associated with being part of the whole. There are tens of other lawyers who understand what you do and how you got there. There are others are your level and more senior and experienced, who can offer guidance and a think tank environment for the solving of business and legal problems. Start-up companies rarely have a legal team. A lot of times, there is only one legal hire. You may have no infrastructure to support you, no paralegal, no one to buffer phone calls or warn you of employment potholes. You may be the only person at the company who does what you do.
Having read these warnings, you may still be excited about the opportunity. The limitations to one individual are the most attractive factors to another. Know yourself. To some lawyers risk is natural and comfortable, to others it is not.
If an opportunity should present itself and you have the personality that would fit a dot.com company, get professional advice on an employment offer. Law firm compensation is fairly straightforward, especially in large law firms where salary is set by number of years of practice and has an uncomplicated bonus structure largely triggered by billable hours. The details of employment agreements and employee benefit plans and equity compensation in start-ups can be complicated and almost impossible to understand if you are not familiar with dealing with these matters. Securities, legal and tax issues are often part of the negotiations and are quite complex.
Salary cut and risks, coupled with the excitement of a first Board meeting and working on an IPO from inside the company are parts of the dot.com culture. So is being intertwined with the business and responsible in part for its success and failure. Law firm salaries are usually predictable and earned in a secure environment where there is satisfaction in helping a company or individual, winning a particularly difficult case or closing the deal "that wouldn't die." Law firm work can be fascinating, challenging, high-profile activity where you work with a range of clients.
In an age of choices -- which of the seven sauces do you want on your turkey burger, or which features to add to your cell phone service - moving to a dot.com is a choice to ponder carefully. For all of the above reasons we are starting to see more attorneys bounce back to law firms or into large traditional in-house corporate opportunities with more basic financial structure and less stock potential.