In-house Counsel Research Paper

2. Delimiting The Role Of In-House Counsel

Many individuals with legal training work for organizations in other than a distinctly legal capacity. In most of the world, university legal study usually does not lead graduates into a career as a legal professional. These graduates take a facility in the law into whatever positions they assume. Others may leave a career in law to work for organizations in positions other than that of in-house counsel. In some countries, including the USA, individuals may combine being lawyers with careers as organizational actors.

In-house counsel do not differ from these other law-trained employees because they are primarily employed for their law training and practice experience. Corporate finance departments, for example, may employ many law graduates, some with significant careers as lawyers, to perform law work. These individuals, however, have not been considered to be in-house counsel. Although they perform legal work and are law graduates, they are responsible to the corporate finance department, not to the organization’s general counsel. An organization’s law department is the home of in-house counsel.

In-house counsel are responsible for only a limited part of the law jobs of an organization. Legal work is performed in organizations by other than in-house counsel. Executives, staff members, regulatory specialists, managers, and salespeople all may have degrees and experience in law and be responsible for a number of law jobs. Other law jobs may be performed by individuals who do not have any formal legal training. They may negotiate, write, and sign contracts, or deal with banks and enter into loan agreements. Organizations may have such continuing relations with regulators that they develop specialized subunits, such as employment or environmental relations, with responsibilities for legal compliance and dispute resolution.

With in-house counsel, organizations delimit a distinctly legal capability, but in-house counsel’s responsibilities are neither co-extensive with the organization’s law jobs nor comprehensive of organizational law compliance. In-house counsel are employed lawyers who provide the organization with a professionally managed legal capability (Mackie 1989). Organizations vary greatly in how they manage in-house counsel. Depending on the legal regime and its professionalization project among other factors, in-house counsel differently attest to the organization’s legal function.

3. In-House Counsel As Organizational Actors

In-house counsel vary in their work responsibilities. Some organizations make in-house counsel rather than buying their legal services across the market, in order to increase the economic and efficient meeting of recurrent predictable legal needs. Others may hire in-house counsel because of the firm-specific knowledge needed in providing legal services. Others may hire in-house counsel in imitation of other organizations. Yet others, risking reducing organizational flexibility, hire in-house counsel to increase the organization’s co-ordination and control of legal services (Chayes and Chayes 1985).

The extent to which in-house counsel assume organizational responsibilities varies greatly. In-house counsel perform a staff function, but, either individually or organizationally, they also may command executive functions. Hiring in-house counsel attests to the jurisdictional claims of law graduates. In-house counsel may extend beyond fulfilling a staff function by making professional jurisdictional claims, for example, gain a voice in the choice of remedy for legal problems.

In the USA, in-house counsel make professional claims to organizational power. The rules of the legal profession require in-house counsel and legal departments to have access to the Board of Directors. Some in-house counsel secure these claims by emphasizing their skills in handling legal risk. Others do so through their unique and nontransferable skills. In gaining organizational responsibility, in-house counsel be-come managers of aspects of the organization’s legal services.

Today, in the USA business sector, many in-house counsel are involved in compliance issues and strategic decisions that gain them access to the ultimate organizational decision makers. US corporate counsel have won the right to monitor and review many legal services produced internally or purchased across the market by the organization. Often, they are sought for their judgment about decisions where legal risks do not predominate (Rosen 1989).

In many economies, corporate in-house counsel are less frequently ceded executive responsibility (see e.g., Van Houtte 1999, Daly 1997). In most of the business world today, in-house corporate counsel resemble US corporate counsel of an earlier era. Although situations varied, depending on the trust and confidence particular in-house counsel attained, in-house counsel performed scrivener and secretarial tasks, carrying out decisions reached without their significant input (Rosen 1989). But even in economies where in-house counsel have few responsibilities, global corporations located there use in-house counsel as do modern US ones (Daly 1997).

Outside the business sector, in-house counsel for organizations—especially public interest organizations—face the possibility—and are cognizant of the attendant responsibilities—of performing executive tasks in the organizations or causes they take as clients (Sarat and Scheingold 1998).

Even where in-house counsel have executive power, they share control with others. As a matter of professional ethics, lawyers cede some forms of control to their client, the organization. Decisional authority over the scope and content of legal work, however, may be allocated within an organization by dynamics driven by other than the norms of the legal profession. Students of organizations may study inside counsel to gain information about organizational decision making, especially in regards to certain aspects of regulatory compliance.

4. In-House Counsel As Professional Actors

Professions whose professionalization projects stress autonomous employment as a hallmark of the profession—the ‘liberal’ professions—may denigrate employed lawyers for lacking professional independence. During the progressive era, in the USA, in-house counsel were called ‘kept lawyers.’ In the European Union, unlike self-employed lawyers, in-house counsel are not legally privileged to protect the confidentiality of their work product. In many civil law countries, a lawyer must resign from the bar before taking salaried employment. A ‘heteronomously employed’ legally trained individual who performs legal work may not be professionally respected as a ‘lawyer.’

The law jobs performed by in-house counsel may be bought by contracting with external providers. In the marketplace, there are sellers of legal services in professional law firms, multi-disciplinary practices, and competing professions. In-house counsel compete with autonomously employed lawyers who compete with accounting-consulting firms, regulatory engineering specialists, and business advisors of many sorts. In the USA, this competition has altered the distribution of deference within the legal profession, with independently employed lawyers no longer denigrating in-house counsel.

The substantive claim in the professional denigration of in-house counsel is their supposed lack of professional independence. Organizational control over the work of professionals, from a legal perspective, creates a potential conflict of interest. Al-though the control may better align legal services with the interest of the organization, it may cause conflicts with legal interests, sometimes crystallized in the personal and professional interests of in-house counsel. In-house counsel may experience conflicts of interest that will shape their professional judgments.

The professional independence of in-house counsel is relative to both that which can be bought in the market and the organizational role in-house counsel assume.

The independence of external providers of legal services is relative to the organization’s abilities to control them. By increasing the organization’s ability to monitor the legal services purchased, in-house counsel may decrease external providers’ abilities to effect their independence. Sometimes, in-house counsel may demand that external providers be independent. Other times, their influence on whom and when to hire in the external market can decrease external providers’ willingness to exert their independence. In-house counsel also decrease the abilities of external providers to be independent by inhibiting personal relations with organizational members or by limiting either the time frame in which the external providers respond or the problem posed. By retaining authority to select external providers, define the goals of their work and define the problem that is the subject of legal work, organizations control what legal services they purchase in the market, decreasing the professional independence of external providers (Kagan and Rosen 1985).

The independence of in-house counsel is also relative to the organizational roles they assume. First, in-house counsel may be delegated or may assume organizational decisional authority. In-house counsel vary in the extent to which they are assigned thick responsibility in their organizations. Second, organizations differ not only in their enacted cultures, but also in the extent to which they seek to gain the advantages of in-house counsel commitment by supporting job-enrichment schemes mirroring professional privileges. Third, in-house counsel differ not only in their professional orientations, but also in their abilities to draw on professional resources of independence. Fourth, in-house counsel differ in the human capital they bring to their jobs. In-house counsel may be trusted organizational actors, using that trust to exercise their professional independence. Fifth, organizations differ in their internal politics, so that in-house counsel may have opportunities to assert their independence by bargaining. And sixth, in-house counsel may be induced to assert their independence as the addressees of laws or as a result of threats of their own legal liability.

Legal professions differ in where and how they establish the lack of plasticity in professional work that is deemed to warrant the assertion of professional independence. During much of this century, there have been calls that in-house counsel serve as con-sciences of their organizations. In the US business sector, where in-house counsel have attained organizational power, this is no longer on the agenda. Nor on the agenda are limits on what information about the law in action in-house counsel may professionally provide. Students of professions may study inside counsel to gain information about the plasticity of the professional legal role.

In their work, in-house counsel attest to the law’s legitimacy for the organizations they serve. In their work, in-house counsel apply professional knowledge. Inside counsel and their work create subjects for research for students of both organizations and professions.

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