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The Proving Ground

When it comes to beefing up their in-house legal teams, more corporations are taking a “grow your own” approach.

If you’ve attended a meeting lately with someone from a corporate legal department and thought, “They’re getting younger every day,” chances are you’re not alone in your observation. That’s because a growing number of companies are looking directly to law schools to identify and cultivate in-house legal talent, through both direct hiring of recent law graduates and participation in corporate “externships” (experiential learning programs, similar to internships). While the traditional path has been to look to large law firms for a steady supply of already-trained corporate counsel, more businesses are abandoning this model in favoring of starting their own farm systems. This lets them develop the lawyers they want, rather than change the lawyers they get. 

For some corporations, the catalyst was the mounting wariness of paying high hourly rates for inexperienced, young associates at law firms. In 2009, Hewlett-Packard Co. started to break from its mold of hiring in-house lawyers who’d done stints of five to seven years at large law firms and began recruiting at law school campuses. While starting salaries for in-house attorneys don’t match the entry-level compensation at elite law firms (roughly $115,000 at HP, compared to the $160,000 a year offered by some New York law firms), the daunting job market for new law graduates has made the in-house option a more attractive one. The technology giant’s general counsel at the time, Michael Holston, considered its approach “the wave of the future.” 

Like HP, pharmaceutical powerhouse Pfizer Inc. launched its own pilot program several years ago and recruits directly from law schools in order to identify and train “a generation of lawyers who know how to respond to what clients need,” as Pfizer’s former general counsel, Amy Schulman, told The Wall Street Journal in 2011. Pfizer’s approach, like HP’s, incorporates an element of “cross-training” in which its legal recruits spend some portion of their time with one of the company’s outside law firms. 

Law schools at SMU and Texas Tech are among only a few nationwide to offer externship programs.

Here in North Texas, corporate counsel externship programs developed by Southern Methodist University’s Dedman School of Law and Texas Tech University’s School of Law take somewhat different approaches to accomplishing the same goal: giving students a taste of what it’s like to work in-house, while connecting corporate legal departments with the next generation of legal talent.

SMU’s Corporate Counsel Externship Program was developed in the fall of 2013 by Steve Yeager, assistant dean for student affairs and the program’s faculty supervisor, who’s a former general counsel himself. Observing the drop in large law firms’ hiring of entry-level associates and the desire of corporate America to cut both costs and the learning curve in terms of legal hiring, Yeager, along with Program Director and Professor Marc Steinberg and Career Services Executive Director Karen Sargent, created a curriculum that blended hands-on learning in an in-house environment with instruction on the role of the general counsel in a classroom setting. Over the course of the fall semester, students complete a minimum of 120 hours working in-house by day (averaging 10 hours per week), while also taking a weekly class that explores such topics as corporate governance practices, ethical responsibilities of in-house counsel, and substantive areas of law like securities, employment, and intellectual property. 

One of the main goals, according to Yeager, is to fill a gap in knowledge about in-house work. “In my experience, law students and even many practicing attorneys contemplating a transition don’t have an understanding of what in-house practice is like,” he says. Those in a corporate legal department, Yeager points out, are often working in highly regulated, compliance-driven environments and face just as much pressure as their law firm counterparts. “It’s like drinking water from a fire hose,” he says.

Immersed in Business Operations

The program has been a resounding success for SMU. Thirty companies participated in 2014, including AT&T, Baylor Scott & White Health, Dean Foods, Fossil, Interstate Batteries, Lennox International, Michaels Stores, and the Dallas Cowboys. The school has already received more than 60 student applications and expects the tally of corporate legal departments to grow to about 50 for the fall 2015 term. 

Steve Boyd, chief legal officer at Baylor Scott & White, says education is a very important part of the healthcare system’s mission. He says: “Teaching the externs about the business of healthcare and the related legal issues we encounter keeps us fresh. Plus, it is a lot of fun and rewarding to see how much they learn over the course of a semester.” Baylor Scott & White externs are included in “everything from drafting contracts to interaction with management in various business units from our system.”

Dallas-based The Beck Group is supported by two in-house lawyers, including General Counsel Tonya Johannsen. The company’s SMU externs are immersed in the operation, including everything from legal research and contract review to going over legal strategies in meetings with clients. “They learn a lot about the ebb and flow of a business,” Johannsen says. “They learn about quickly responding, and acting not just as a lawyer but as a business partner as well—that’s a lesson that many lawyers don’t learn until years into their legal careers.” 

The externship program gives law students what SMU’s Yeager describes as “a view of the practice of law from the clients’ perspective, including their likes and dislikes.” Lauren Thedford, now in-house counsel with investment company Highland Capital Management LP, was among the first group of SMU externs in 2013. She notes that her experience as an extern with Summit Midstream Partners not only cemented her desire to pursue an in-house career, but also prepared her for an atmosphere of “being ready to tackle a variety of legal issues, never knowing what will come through the door, and pushing to get the most out of everyone in a lean legal department.” 

Dana Arnold went from an externship at Commercial Metals Group to her current position as one of seven in-house attorneys at Matador Resources, a Dallas-based oil and gas exploration and production company. For her, the externship experience taught “the importance of being able to communicate and express legal issues quickly and clearly to non-lawyers,” and the “importance of learning about a company you’re working for—its history, vision for the future, business strategy, and corporate culture.”

Texas Tech University School of Law may be in Lubbock, but its regional externship program is thriving in North Texas, thanks to Dean Darby Dickerson. With 30 percent of its law student population hailing from Dallas-Fort Worth, and with many looking to return here to begin their legal careers, Dickerson realized the importance of forging relationships within the North Texas in-house legal community soon after she assumed the reins in July 2011. By fall 2013, the program had its first placement in Dallas. The program has since spread to Austin, Houston, and San Antonio, and participants include 7-Eleven, Children’s Medical Center of Dallas, Interstate Batteries, and the San Antonio Spurs. 

‘Transformative’ Experience

For the 72 law students who have participated to date, Texas Tech’s regional externship has been a more immersive experience than its SMU counterpart. In addition to a multi-day “boot camp” at the start of the semester that emphasizes lawyering skills and professionalism training, students work about 35 hours per week (490 hours over the course of the semester) at their new corporate homes. In addition, there are twice-monthly class meetings, mentoring sessions, mandatory networking events, and a pro bono or community service project requirement. 

Lillian Kirstein, vice president and deputy general counsel at 7-Eleven, says she is very pleased with her company’s participation in the Texas Tech program. By doing everything from legal research and contract drafting to assisting a government affairs team, Kirstein says that students are exposed not only to a lot of different areas of a business, but also to the clients’ perspective. “In a tough job market, learning what the client wants is critical,” she says. 

Elena Khorokhorina, a recent Texas Tech grad who did her externship at Children’s Medical Center of Dallas, says her experience not only made her decide to pursue an in-house career, but it also made her “a better coworker and a team player.”

With only a handful of U.S. law schools offering even a course devoted to in-house counsel legal issues, much less an externship (SMU’s Yeager estimates about 14 nationwide), SMU and Texas Tech are well-positioned to offer students what SMU Dedman School of Law Dean Jennifer Collins calls “a transformative capstone legal experience,” with the Dallas-Fort Worth region serving as “a living laboratory.” At the same time, such programs may be the proving ground for a new kind of in-house counsel—one who graduates already attuned to the needs of the C-suite.