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The role of the general counsel may no longer be as attractive as it once was. And it is the most senior members of the in-house bar--the so-called "First Generation" of general counsel--who are to blame.

When the First Generation started working in corporate America about

15 years ago, the position of the in-house counsel was that of a back-office legal adviser. The first generation changed that. They taught their corporate clients--in particular the CEO and CFO--how to value, and expect value from, the legal department. In the old days, law firm lawyers went in-house for job security, to escape the stresses of law firm life, to avoid hustling for clients and for the relative ease of working for one client. The trade-off was losing the excitement of working on ever-changing matters for myriad clients and being surrounded by top legal minds.

Thanks to the First Generation, the role of the general counsel now is one of the most important positions in corporate America. The downside, though, is that by elevating the position, they invited more scrutiny, both from within and outside the company.

Regulators and state attorneys general, for instance, are keeping a much closer eye on the top lawyers within companies, and are more than willing to lay blame on the GC when a company engages in illegal activities.

Meanwhile, CEOs are demanding that their GCs be accountable for the department's performance and for any legal troubles that befall the company. When a legal crisis strikes, the GC is often the first person on the receiving end of the CEO's wrath. CEOs also are chewing them out for much more minor "corporate" offenses--such as failing to keep their departments within budget, an almost impossible task in today's litigious world. Those who exceed their budgets can expect to lose their jobs (or at least their bonuses). Whether that is right or wrong, justified or not, that's the reality of the playing field.

If you ask to be an equal business partner (which you should if you haven't already) you need to be prepared to take responsibility for your department's successes and failures, and ultimately be prepared to put your job on the line. After all, as this month's cover story reveals, many of you are paid handsomely to take that risk. Among your top-paid colleagues are Benjamin W. Heineman Jr. at General Electric who received $4.3 million in total cash compensation in 2003, and Thomas A. Russo at Lehman Brothers Inc., who raked in $3 million.

One trend that we have been seeing recently is a rash of GCs going back to law firms. For example, a major law firm recently hired three senior in-house lawyers. One served for 10 years as AT&T's chief counsel for the northeast region of the United States; another was formerly vice president of legal affairs and general counsel of RSl, a telecom company; and the other served as general counsel of Novartis for 15 years. One high-profile East Coast firm recently hired the former general counsel of Turner Broadcasting System, and a large firm with multiple offices overseas recently hired as partner the former GC of the Philadelphia Stock Exchange. A couple of things might account for this trend. For one, law firm lawyers are still paid much more than in-house lawyers, especially in-house lawyers below the GC level. As a result, some senior in-house lawyers are realizing that it just isn't worth it anymore to stay in-house and believe, in the current environment, the risks outweigh the rewards. Here are some other reasons:

>Mergers and corporate failures have significantly reduced the job security for in-house lawyers.

>GCs now face the risk of personal liability (jail time and fines) when they give the wrong legal advice to a client.

>Since the collapse of Enron, in-house counsel are working just as many hours as law firm lawyers (but getting paid less).

>The financial benefits such as stock options and pensions are no longer as lucrative as they once were.

>Law firms realize that GCs with business experience can be of tremendous value to their firms. Law firms are much more attractive to GCs, because they are running them like businesses.

Let me know what you think by

e-mailing me at nat@cltmag.com.

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Nat Slavin is the publisher of Corporate Legal Times.

staff Writer

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