Are Internet Jobs Going ... Going ... Dot — gone?
Chutes and Ladders
by Jennifer E. King
Corporate Legal Times — January 2001
THIS JUST IN: A correction in the form of an anecdote and the results of a totally unscientific poll.
Magazines such as Corporate Legal Times have a long lead time. Most of the articles are written about two months before the magazine is in the readers' hands. We can't yell, "Stop the presses," in an effort to add late-breaking news (only in small part because most of our company is in Chicago and our printer is in St. Cloud, Minn.). So on rare occasion an unexpected turn of events may significantly change the facts in an article well after it's written, far after it's edited, long after it's laid out and days after it's printed.
(This also happens to daily newspapers and TV news shows, too. See, for example, the papers and networks that had the audacity to try to call a winner in the presidential election on the night of the election.)
The correction is in the form of an anecdote: On Sept. 21, 2000, Senior Editor David Rubenstein interviewed Jeff Brooks, executive vice president and corporate counsel for Broadband Infrastructure Group Corp., for our December 2000 issue. They discussed what Brooks predicted would be tenfold growth in the high-tech-Internet company's legal department during 2001, and Rubenstein quoted Brooks in his article "Technology Specialists Are in Demand" [December 2000, p. 76]
On Nov. 19 - about a week before most readers received their copy of the December issue of the magazine - Broadband Infrastructure ceased operations. When things like that occur, we wish we could stop the presses.
And now, the results of a totally unscientific poll: In my February 2000 column, there were 10 announcements of people joining or being promoted at Net-dot-com-web@-iCompanies. In the April 2000 column, that number rose to 13. In December 2000, the announcements went the way of the stock market, and plummeted to five.
Is there any life left in dot-com legal departments, or are those same folks who teased us with talk of the virtual world now beckoning at our brick-and-mortar doors?
"There has been a slowdown in hiring for legal positions at dot-coms," says Anna Marie Armstrong, a legal search consultant in the San Francisco office of Major, Hagen & Africa. " A number of dot-coms that have managed to survive in this market are scaling back their hiring needs and taking a wait-and-see approach."
"Many of those that haven't frozen legal hiring will be out of business next year because they haven't ended their compulsion to spend money," says Aaron Williams, president of Aaron Consulting, Inc., a nationwide legal search firm based in St. Louis.
"Traditionally you had to have profits and about $1 million in outside counsel expenses before you were realistically compelled to hire in-house counsel," Williams says. " Now companies with no short-term prospects for profitability already have two, three, even five attorneys. A year from now, a significant number of the dot-com companies will be out of business. An extremely strong group will remain. And they will be the ones with appropriately sized legal departments."
And where are the casualties of the Internet shakeout going? Some return to more mature companies. Others want to give the high-tech sector another try.
"Most of the dot-comers love the industry and environment, and want to stay in it," says Corinne Cochran, partner at the Chicago-based search firm Early Cochran and Olson. "They have had a taste of the maverick business lifestyle and enjoy it. They might perhaps fear that going to the brick-and-mortar sector would be boring. I don't see a clamoring of these folks to move to a more traditional environment."
But some are running as far away as possible from the in-house practice, says Catherine R. Nathan, senior partner in the legal search practice group at TMP Worldwide Executive Search.
"A number of the dot-com lawyers are moving back to law firms," says Nathan. "When someone leaves a law firm, they typically have a hard time going back, but in this instance, they're not having a hard time. I attribute that to the fact that it's hard for law firms to retain good associates. So when a good associate wants to return, they're happy to take them back. I also attribute it to the fact that law firms are perceived to be more stable in this environment these days."
For those who decide to stick to high-tech, Cochran predicts a somewhat different attitude from the next round of counsel to join Internet companies.
"Stock options in the tech and dot-com arena are viewed in a different light than perhaps a year ago," she says. "In a more traditional company, stock options still remain an attractive aspect of a compensation package. Even if the value isn't high, there is still some value. In the tech and dot-com sector, so much of the compensation package was built around huge option grants. People considering high-tech offers are not being wowed or enticed by huge stock option packages, particularly given the current status of the market and the sharp decline of the industry."
The moral of the story?
"Invest your career like your accountant would invest your money, not like you would invest your money," says Williams. "Accountants don't like red ink. They are a lot more conservative than you are. With this strategy, you'll improve your chances that you don't get laid off and your employer won't go out of business. But on the other hand, you won't become a millionaire in a heartbeat. If you want to become a millionaire overnight, try to get on the game show. Your chances are much better, and at least you will have earned it."