Going in-house early to a PE fund or staying in biglaw (1.5 years) Forum

[Anonymous User]

Note: I've read a lot of topics on this, but it seems to me that most of the posts are choosing between a very stable F500 in house role and a big law role and not a more volatile middle-market fund. I wanted to get any opinions that may pop-up b/c of this difference.

I'm a MVP grad making a move from my current firm, a v5 in a non-NYC large market, and have received an offer from another v5 in the same non-NYC large market (dc/sf/chi) to do M&A work. I have also received an offer from a middle market private equity fund doing high-level term sheet and legal doc negotiations leveraging outside counsel. I would be joining a young fund which has roughly $4 billion AUM and is about five years old as one of three junior attorneys working directly under one of the co-founders (non-attorney). Pay is 130k (50 base / 50 bonus) with a raise to 165 in my second year as a I move up a title. I'd be 3-4 years away from carried interest.

I'm very interested in the in-house role as it is not your typical 9-5 compliance / reporting role. I'd be very involved in the M&A process including high-level negotiations (something I haven't seen in most in-house positions). There are a few things I am worried about. First, I'd be at the mercy of the co-founder as I am working directly with him on a small team. Second, the fund is doing very well, but it is young and doesn't have a long, established track record. This could mean that fund has a possibility of folding. Third, I'd be taking a significant short term pay cut, in that I'd lose out on roughly 200k (gross) in the next two or three years with the possibility of making all of that up and more if I get carried interest. Fourth, I was told that the fund is looking for one of the juniors to step into more of a GC role, but that, in my eyes, is not guaranteed.

Major Considerations
- Job Security - I think there is a recession coming. We are in the third longest bull market in the history of the United States and the bears will come calling soon.
- Long Term Potential - I think the fund has better long term potential than big law, but I am unsure. Even if I don't make up the money I would have made in big law I would be able to avoid going in house and doing boring compliance work for the rest of my life which is a fate that sounds worse than death. On the flip-side, I'd have a stronger skill-set to market myself if I stay in biglaw and somewhat more job security (I think). I'll be able to stay in my next position at least 2-3 years as it takes forever for them to fire someone in biglaw whereas I feel that funds can fire people at the drop of a hat.
- Lifestyle - While I do not think the PE fund would be a drastic improvement of lifestyle (I'll have more responsibility and will likely spend more time looking at docs), I will have better scheduling on nights and weekends when I send stuff to our outside counsel.

The most important thing to me is maintaining my lifestyle long term. I want to be sure I can make a decent salary and live a good life. However, I also want to have an interesting life and that does not mean getting paid 250K doing public reporting at a F500.

1. What do you guys think is the best option and why?
2. Does the PE job have too high of a risk profile given the size/age?
3. Is there anything I should be considering that I am not?

Any advice is much appreciated.

[Anonymous User]

Some questions to consider:
1. Pay is $65k base + $65k bonus? Can your lifestyle/loans situation handle dropping from $180k to $65k base? If you are going V5 to V5 it sounds like you aren't in Chicago which sounds expensive.
2. How many funds has the fund raised and whats the most recent they raised? Probably an OK evaluation of their health is if they have a recent fund and it isn't fund #1.
3. If you get canned or you want to move in 1 to 2 years whats your next move? Does this firm have a good name brand? Where have their pre-MBA associates gone to get their MBAs?
4. What is the background of their current legal team? Similarly prestigious, recognizable firms?

[Anonymous User]

65k seems really low imo. I would negotiate higher base and lock in a bonus instead of making it optional for them.

[Anonymous User]

Some questions to consider:
1. Pay is $65k base + $65k bonus? Can your lifestyle/loans situation handle dropping from $180k to $65k base? If you are going V5 to V5 it sounds like you aren't in Chicago which sounds expensive.
2. How many funds has the fund raised and whats the most recent they raised? Probably an OK evaluation of their health is if they have a recent fund and it isn't fund #1.
3. If you get canned or you want to move in 1 to 2 years whats your next move? Does this firm have a good name brand? Where have their pre-MBA associates gone to get their MBAs?
4. What is the background of their current legal team? Similarly prestigious, recognizable firms?

OP here.

1. Yes but it will hurt.
2. Fourth fund. Largest by far. 10 digits.
3. This is a mystery to me.
4. No legal team besides myself and another junior atty. I would be running the vertical with the help a very senior m&a guy and outside counsel.

[Anonymous User]

65k seems really low imo. I would negotiate higher base and lock in a bonus instead of making it optional for them.

Tried this. They won't budge from the salary matrix. I already pushed them to a higher title for the raise next year.

[mvp99]

My gut tells me its more likely your biglaw exp will hold you back than rising through the ranks at this PE.... It sucks and there is no real reason for this but I think its something that happens. People that leave biglaw 4 6 years in go father than those leaving 2-3 years in.. good luck.

I wouldn't consider the possibility of there being a recession at all.

[MillllerTime]

My gut tells me its more likely your biglaw exp will hold you back than rising through the ranks at this PE.... It sucks and there is no real reason for this but I think its something that happens. People that leave biglaw 4 6 years in go father than those leaving 2-3 years in.. good luck.

I wouldn't consider the possibility of there being a recession at all.

I'd be a little concerned about this as well - going to a fund without a GC / senior partner with a JD to learn from could be limiting to you career on the legal side. They're eventually going to need to hire attorney above you, so maybe that problem is solved but that comes with its own negatives / uncertainties. I've turned down a few opportunities for similar reasons. Good outside counsel could fix this, but it'd be a weird dynamic.

I'd also be concerned about the $65k salary - that's not a serious number for someone they expect to have decision making power. I would expect to see something more like 90+65. Saying you're 3-4 years from carry sounds like a dangled carrot to me, though it could certainly be true.

All that said, the position (or at least the way you've framed it) sounds like a fantastic opportunity for someone with <2 years experience in biglaw. I don't think it sounds great from a legal perspective, but if you're someone thinking about switching to a primarily business role - it does sound great.

[spha12]

I'm a MVP grad making a move from my current firm, a v5 in a non-NYC large market, and have received an offer from another v5 in the same non-NYC large market (dc/sf/chi) to do M&A work. I have also received an offer from a middle market private equity fund doing high-level term sheet and legal doc negotiations leveraging outside counsel.

So basically you're at Skadden or DPW in California and have an offer to switch to the other. Try to be careful about how much you out yourself. You could have said v10 and t14 and been a lot safer.

I would be joining a young fund which has roughly $4 billion AUM and is about five years old as one of three junior attorneys working directly under one of the co-founders (non-attorney). Pay is 130k (50 base / 50 bonus) with a raise to 165 in my second year as a I move up a title. I'd be 3-4 years away from carried interest.

That is a great situation. Being 3-4 years from carry is not something you'll come across again very easily. Here's the issue. The pay they are offering is a joke. It's not at all in the realm of being a serious player. When you get there you'll be able to earn a great reputation (or not and then they'll get rid of you before you blink) but you weren't trained to do that in law school or your law firm. Doing well in a PE firm requires an entirely different skillset. Your supervisor, the co-founder, will generally have no clue if your drafting is good or if your a shitty lawyer (unless you screw something up so bad that in a few years the firm gets screwed by your legal moves).

That tells me that you'll be getting like .0005% or so of carry in 3-4 years. That's not awful if they kill it. But when they say you'll get some carry, just know that in some firms even the head of IT gets carry. It doesnt mean they see you as a managing director one day.

I'm very interested in the in-house role as it is not your typical 9-5 compliance / reporting role. I'd be very involved in the M&A process including high-level negotiations (something I haven't seen in most in-house positions). There are a few things I am worried about. First, I'd be at the mercy of the co-founder as I am working directly with him on a small team. Second, the fund is doing very well, but it is young and doesn't have a long, established track record. This could mean that fund has a possibility of folding. Third, I'd be taking a significant short term pay cut, in that I'd lose out on roughly 200k (gross) in the next two or three years with the possibility of making all of that up and more if I get carried interest. Fourth, I was told that the fund is looking for one of the juniors to step into more of a GC role, but that, in my eyes, is not guaranteed.

Your fate is entirely in the hands of this co-founder. Understand the expectations. PE firms don't care about procedure. If this dude doesnt like you, you are out on your ass within 6 months. But if he does, you've got it made.

1. What do you guys think is the best option and why?

Take the job if you've done enough dilligence to think that you have the ability and tools to succeed there. If you doubt that, then stay. There is no senior attorney to have your back, you're really being thrown into the wolves den. Who is the chief compliance officer? Non-attorney? This PE firm is very unique in how they structure their legal dep't.

2. Does the PE job have too high of a risk profile given the size/age?

The size/age has no risk profile. If they've raised 4 funds including a billion dollar fund then they are fine and have a proven track records by now.

3. Is there anything I should be considering that I am not?

Can you get involved in the fund formation side as well? If so, and you can master and run that process, it is crucial to the survival of the PE firm and can differentiate you from the other lawyers. You'll become the "firm's lawyer" not just a deal accessory. I'd look into that.


Good luck.