Anonymous User wrote: ↑Fri May 13, 2022 10:09 am
Buglaw wrote: ↑Fri May 13, 2022 6:47 am
Anonymous User wrote: ↑Thu May 12, 2022 10:40 pm
Anonymous User wrote: ↑Thu May 12, 2022 5:34 pm
Anonymous User wrote: ↑Thu May 12, 2022 5:14 pm
SGTslaughter wrote: ↑Thu May 12, 2022 1:59 pm
Wow. Never, ever, ever go to a PE shop on the legal side. These people are psychopaths who have no qualms firing people to squeeze extra value out of a dime, and they also don't value lawyers at all on top of that.
This is pretty shocking to me. Not sure if things are real tough over at Ares these days? Hard to imagine this switch working out well for them. They are not going to get the same caliber of lawyers they currently enjoy...
Lol. One of the biggest jokes is that the "caliber of lawyers" in a PE firm makes two bits of difference to its bottom lines. If you want competent people you use outside counsel. The people you are getting in-house are the ones who couldn't cut it / burned out in a firm. There is a reason so many PE firms do perfectly well with cut rate 3rd tier people in-house.
Completely disagree. A few of the smartest tax lawyers I know transitioned to in-house roles at large investment funds around the 4 or 5 year mark.
Yeah, not sure what this guy is talking about. Some of the best associates I e worked with went in-house. Burning out at a firm doesn’t mean you aren’t a great lawyer. Working to 2:00 A.M. on a regular basis is not a sign of legal accumen. Also, if these places don’t care about the quality of their lawyers, why do they spend sooo much money trying to hire good ones?
Finally, the role of in-house lawyers is not to increase the bottom line. It’s to decrease the risk while keeping the profits relatively flat. Good lawyers do that.
Lol. "sooo much money"? Are you kidding me? Cravath partners will make $4 million dollars a year. Good in house counsel at a PE shop make what, $650k? It is a massive, massive pay cut from what a successful lawyer can make at a firm, and it isn't fundamentally all that good of a job. Starting comp is in the $400-500k range, and doesn't go up all that fast. Many top firms place the people they rejected for partnership in house. This isn't a success story.
In-house counsel at PE firms are just not very important, and all the heavy lifting will anyways be done by outside counsel. I think Ares is totally right to cut costs and outsource this function to a better and cheaper option. Hopefully more firms to follow.
This logic is suspect. It's hard to imagine any financial services firm will outsource "all the heavy lifting" to outside counsel - wouldn't that be insanely expensive?
Also, I'm at an asset manager (not a PE fund) - only the arcane or bespoke questions go to outside counsel. Most of the deal work stays in house. The value of good in-house counsel is 1) issue spotting (so you can pitch any questions to outside counsel) and 2) good project management (which is arguably more important). At the end of the day, your job is not to "add to the bottom line", and it's arguably not even to "reduce risk" - it's to manage internal relationships and processes. You keep the lights on and ensure that the front office people are happy and getting what they need. To do that, you need to be a sufficiently good lawyer (but you probably don't get points for being an excellent one) and a better corporate manager and insider. It's certainly a different skillset relative to outside counsel, but it's not a less valuable or important one.
Generally, you can't outsource the entirety of these functions to a vendor. The vendors don't know anything about how your organization works, so they're just working on transactional docs in a vacuum. What you can do is, say, reduce the number of in-house counsel and have the remaining ones intermediate by supervising the vendors. Alternatively, you can have an outside vendor take over an entire function, but usually what happens is they will have their people be "in-sourced" into your organization on a permanent or long-term placement. Keep in mind the latter, while likely cheaper than having a native in-house team, is not going to be significantly cheaper, because while the vendor is paying a discount on salaries to its "consultants", it has to make money charging a spread/premium.
On the one hand, I don't know enough about the Ares situation to pass judgment without there being more context. It's possible they axed a team serving a singular function that could be outsourced to a cheaper vendor, but they have other in-house lawyers who are supervising.
On the other hand, in a vacuum, this decision looks stupid and I've seen this playbook before. Usually, it's some ambitious person rising up the ranks of senior management who is looking for cost-saving measures they can take credit for, so they come up with a brilliant idea to axe an entire legal team. Maybe they save a few 100k per year up front, but the quality of work suffers, and anything moderately complex now has to go to outside counsel. In the long run, they might not save any money (because of the increased outside counsel spend), but that person has already gotten their promotion and/or has left the firm for some other, better gig. It's all just corporate engineering MBA chicanery.
The "outsourcing" model for legal talent has been happening for more than 20 years. It's not a new idea. Sure, maybe at one point, in-house legal teams were bloated and too big, but at this point, most organizations have the appropriately sized in-house legal team, and that team serves vital functions that make the organization run smoothly, and those functions cannot be outsourced. We are probably at equilibrium between in-house vs. outsourced, and it's stupid to assume the latter will or should grow from here.