The Secondment Trap: When Should Law Firms, Legal Departments & Attorneys Avoid a Traditional Law Firm Secondment?
July 21, 2021
July 21, 2021
For more than half a century, corporate law departments and law firms have used secondment arrangements as a way to solve the law department’s need for high-caliber, interim additional counsel to alleviate leaves of absence or sudden increases in legal work. These law firm-provided flexible talent arrangements have largely been considered symbiotic, with each side convincing itself how happy it is with the deal. As it turns out, however, many of these attorney staffing arrangements are not, in fact, strategic and often negatively impact clients, law firms and the lawyers who serve as secondees.
Why law firm secondments? Secondments are sometimes perceived as a viable flexible talent solution when additional bandwidth is needed in-house, but where hiring new team members doesn’t make sense for the legal department. Typical circumstances include major litigation and during pre- and post-merger integration phases. Secondments are also frequently used to fill the role of existing team members who take time off due to illness, military or family leave. Some companies use law firm secondments when headcount limitations or hiring freezes preclude adding a needed permanent hire.
What makes a secondment symbiotic? For law firms, secondments can sometimes provide a means to accommodate a good client’s request, with the potential added benefit of having a law firm team member embedded at the client, presumably producing enough revenue to at least cover the firm’s cost of employing the attorney. For the law department, its immediate needs for additional resources are filled by a talented, high-quality attorney, as vetted by one of its prestigious law firms.
Law firm secondment arrangements are symbiotic when the goals of firm and client are aligned. For example, a secondment can sometimes offer a convenient avenue for in-house teams to embed knowledge of the company at their law firm and for the law firm to gain greater visibility regarding its client’s needs. It may also be a way to help young attorneys develop experience “on the business side” before moving back into the firm to better serve the client in the future. In some cases, the company is test-driving a potential future hire for the company and the firm doesn’t mind losing the attorney permanently based on the expectation that new work will flow back to the firm if the attorney moves in-house permanently. Sometimes a firm is happy to simply outplace an attorney who is not a long-term fit with the firm.
But there are many instances—most of the time, actually—where the disadvantages of secondments outweigh the benefits. Clients often seek secondment arrangements—and firms agree to them—simply because “that’s the way it’s always been done.” A deeper analysis indicates secondments are often not actually beneficial for law firms, clients or especially the lawyers who serve as secondees.
Let’s start with law firms. First, secondees are usually billed at deep discounts, resulting in the firm taking a substantial financial hit. Often, firms bill out secondees much closer to the cost of their employment than their bill rate. In these cases, the firm misses out on the revenue that attorney could have earned for the firm by billing out at normal market rates. This often results in the firm’s loss of hundreds of thousands of dollars in profits for each secondment.
Second, clients also often request a firm’s most talented or marketable associates, leaving them unable to serve other important clients. A top associate may be working with multiple clients simultaneously; devoting them full-time to a single client may disappoint the other clients or, at a minimum, impact the workflow on those projects. That workflow disruption often results in the firm writing off hours so clients do not bear the cost of substitute personnel getting up to speed. Then, when – or if – the secondee comes back, the same workflow difficulties arise again as the attorney is reintegrated.
Third, pulling an associate off a team can have the same feel as if you lost them to another job (as is often what, in fact, occurs). For smaller teams, especially, the effect can be pronounced, including lowering morale on already stressed team members, and risks further attrition due to burnout. There is also the issue of a potential drop in the quality of work product caused by the transition.
From a client’s perspective, attorneys made available by law firms are often junior attorneys. And even if they are more senior attorneys, they almost never have experience working in-house. That limits the secondee’s near-term effectiveness and results in increased stress on the existing in-house team, which must devote time to training the secondee to practice law in a new way. Attorneys with in-house experience understand that the skills necessary to be an outstanding associate at a law firm are not necessarily the same skills needed to immediately be an outstanding in-house attorney. Law firms seek analysis of many issues that require detailed thought, consideration of many different permutations of issues, precise drafting – and the layered review of work product by sometimes multiple more senior attorneys. Firms are looking for precise answers to legal questions – and this takes time.
Law departments, on the other hand, are required to work at “the speed of business.” In-house counsel need to provide actionable answers, often immediately, consistent with the business objectives and risk tolerance of the company. Law departments are looking for answers to business questions – as quickly as possible. The shift between the law firm style of practice and in-house practice often takes time and training – yet legal departments often turn to secondments because they need an attorney who can begin taking work off others’ plates immediately.
Finally, even when a secondee is provided at a significant discount, law firm resources are not cheap and typically significantly more costly to the law department than comparable alternatives.
Perhaps most importantly, secondment agreements can also negatively impact the lawyers that serve as secondees. Many associates who agree to serve as secondees do so with the perception that it will be an easier way of fulfilling their billable-hour requirement or that in-house work will be less demanding. However, as discussed above, the skill sets needed in-house are different than those at a firm. That may frustrate the client, but it can also be a big shock to the secondee.
Second, from the perspective of their law firm career, the time seconded is time not generating the same revenue as their peers due to discounted work. That can be problematic, depending on the stage of the attorney’s career and the firm. While partners may understand that less revenue was generated because the attorney was seconded, it does not change the fact that many of the secondee’s peers will have far outpaced them in billings and in exposure to decision-making partners. (Secondees that are out of sight are also out of mind.) Upon their return, secondees often find they have been passed by other associates, have difficulty getting back onto the same client teams or are now out of the loop with other clients because they have missed key events. In some instances, upon their return secondees can face resentment from their peers who had to pull their weight while they were gone. Some returning secondees can even be considered failures for not having been permanently hired by the client.
Third, that period in-house likely requires the attorney to pause or at least deprioritize up to a year of traction toward being able to originate their own business. This often makes it more difficult to make partner.
In an era when law firm and corporate leaders are striving to better develop young attorneys, secondments can in many situations have the opposite effect on a promising young attorney’s career. In short, as often as not, a secondment opportunity is not in a young associate’s best long-term interest.
The legal industry is moving into a new era, with many new options for getting work done. So why are nonsymbiotic secondments often still used? Sometimes it is due to not being aware of other, better options, and often it is due to both firms and clients not fully understanding the disadvantages to all involved. Some, however, continue to be hesitant to embrace alternative means due to concerns over the quality of lawyers outside of traditional law firms. We are past the days when only law firms and legal departments employ top-tier attorneys, so there is no need to compromise on quality. There are now many outstanding attorneys with sophisticated Big Law and in-house backgrounds available on a flexible basis. These attorneys have track records of success that enable them to embrace the type of very well-compensated, flexible practice that is only available to the most accomplished attorneys.
While in the past law firms may have had little choice but to accede to a client secondment request despite the negative consequences to the firm and secondee – or refuse and risk driving the client into the arms of a competing law firm – now law firms have great alternatives to traditional secondments. Likewise, legal departments no longer have to press their law firms for a secondment and can instead preserve that request for a favor for other occasions.
With the growing pace of legal teams requiring highly developed specialties and rapidly changing activities, including the rise in proactive investigations and ESG-related compliance, there has never been more need for attorneys with a Big Law pedigree to bridge the gaps for corporate legal departments. But, in an increasing number of instances, traditional law firm secondments are not the best model. Instead, it will be imperative to find legal team members that can quickly and cost-effectively start working and fit in with the existing in-house team, without putting undue pressure on law firms or negatively impacting the careers of promising law firm attorneys. And flexible talent legal service companies may provide the key to filling in the gaps and avoiding those costly traps.
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