You’re heard the story before: you are a lawyer at a law firm and your client offers you the chance to move in-house. There are a couple of caveats. First, you will have to set up a legal department from scratch. Second, the client wants the department (you) to handle any and all legal work for the company.

Flattered by his proposal and elated about the prospect of excising your billable-hour past and the chance not to wear a tie every day, you gleefully accept. “Oh yeah, one more thing,” he says, “we’d like you to start in two months.” “That’s definitely doable,” you say, your voice reflecting a slight tone of self-doubt.

After the dust settles, reality sets in. Although you are excited about this opportunity, you begin to wonder if you can indeed deliver on the promises. “All I will need is a desk, a phone, a computer, and my files,” you say. Deep inside, however, you know you have to clue where to begin. This two-part article describes 10 considerations for facing the challenge of creating—and leading—your new employer’s first law department.

1. Do Your Due Diligence

Research your prospective new employer with the same care you approach a new legal issue. Chances are you think you know your client very well. That may be true to a certain extent. The question becomes, how well do you know your client as an employer? Get to know the company and its culture better. Spend time at headquarters and observe carefully. Is the working environment pleasant? Do employees seem comfortable? Does the general morale appear to be healthy? Trust your gut. More importantly, evaluate how your relationship with your client may change when you become the company’s sole attorney and it becomes your sole client.

2. Define Expectations and Recognize Your Limitations

As in most situations, direct and frank communication with all those impacted by your decision is essential. Ask your client-prospective new employer what her vision if for the law department and what is that she hopes to achieve by bringing you on board.

Responses may range from saving on expensive outside counsel fees to bringing a potentially valuable business contributor on board. Is the company expecting you to handle absolutely all legal matters affecting the company regardless of your current level of expertise or concentration?

Be prepared to recognize and disclose your limitations.

For instance, you may have a problem if the client expects you to handle litigation and you have never set foot inside a courtroom other than your attorney swear-in ceremony. Inevitably, the time will come when an issue will arise that will require specialized knowledge. Make it clear which matters or legal areas you are equipped to handle.

3. Draft a Checklist

Moving in as the company’s first counsel is not as simple as showing up for work at a different law firm or at another established professional legal setting. To the extent practicable, conscientious planning and organization is sine qua non to a smooth transition.

Obviously, you will need to sit down with your partners or supervising attorneys and discuss the transition. You also should notify your other clients from the firm and assure them their matters will continue to be handled with the same level of dispatch. Decide whether the law department should be treated just as another organizational unit (i.e., accounting and billing) or whether it should be incorporated as its own “mini” company. Where applicable, you should register the law department with the appropriate state regulatory body and have it assigned its own law firm or “Juris” number. If you are bringing litigation files with you, make sure to file the proper “appearance” in lieu of that of the current firm. Check your Rules of Professional Responsibility for any applicable provisions governing in-house practice. Do the same for each jurisdiction in which your client has offices or conducts business.

Familiarize yourself with multi-state jurisdictional practice issues and take advantage of any reciprocity rules allowing you to practice in other jurisdictions without taking the bar exam.

4. Discuss and Agree on Money

Although you love and trust your client-prospective new employer, iron out all compensation issues before you start. Research compensation of similarly-situated professionals and agree on a compensation scheme that defines how you will be compensated on a short, medium, and long-term basis. If you are concerned about your status as an at-will employee, particularly in tumultuous economic times, consider entering into a written employment contract for a specific term. Define how, if at all, bonuses will be awarded. Since this is the company’s first law department, management may not have the proper experience determining law department compensation. Be proactive and assist your client in this by sharing articles, surveys, or other reference materials addressing these issues. Identify goals and general metrics by which you will be able to demonstrate the value your department will bring to the organization. For example, if your client is the subject of regular workers’ compensation, unemployment compensation, or employment practices claims (i.e., discrimination), a reduction in such claims over a given period of time after implementation of your legal recommendations and counseling can serve as a metric to show success. Similarly, a significant reduction in bad debt write-offs, thanks to your successful collection strategies, also shows value.

5. Discuss and Agree on Budget

Law firm clients don’t like surprises, particularly those that arrive monthly and contain unexpected large numbers at the bottom of the last page under the rubric “Total Due for Services Rendered.” The same can be said for in-house counsel. At the onset, present your prospective new employer with a list of start-up and recurring business expenditures reasonably necessary for operating the law department. Start-up costs may include a computer with a minimum configuration scheme, PDA, printer, scanner, and basic reference materials including practice manuals, and casebooks. Recurring expenses include staff (you will need at least a part-time secretary or paralegal) online legal research services, periodical subscriptions, professional development allowances, professional taxes, and other dues. Use your judgment and be reasonable in your estimates. You may no longer be able to buy the expensive legal pads and fancy filing materials you are used to.

6. Technology Is the Solo Practitioner’s Best Friend

As a gadget and technology aficionado, I am immensely grateful to my employer for catering to my latest office and productivity tool craving. All kidding aside, technology such as email, scanning, and video-conferencing can enable a modern small law office to operate with similar---if not higher---efficiency to that of a fully-staffed medium-size firm 15 years ago. For those who prefer a laptop, invest in a portable 13-or 14-inch screen, with at least 2 GHz processor and 3 MB of RAM. Get a PDA with document viewing and tethered modem capabilities. Discover the joys of Bluetooth as a means of interconnecting peripherals or accessing internet service wirelessly.

My latest---and most cherished friend---is a Fujitsu ScanSnap S510 Scanner that allows me to scan every piece of paper that crosses my desk from business cards and newspaper articles to documents. Scanning every document into PDF files not only lessens paper clutter but also provides you with an easy and efficient document archival and retrieval system. Finally, one of my favorite applications is Premier Global Service’s “Fax2Mail” service which enables you to send and receive faxes via email.

7. Carefully Adapt to Your Surroundings; Learn How to Listen

So you’ve managed to survive the transition and have settled in your new office. What do you do next? Do you wait for assignments? Do you go around looking for potential legal landmines requiring your immediate legal intervention?

As lawyers, we love to talk and give advice. Lawyers often forget that brilliant legal analysis and counseling, however pristine and compelling it may read on paper, may be difficult or impractical to implement in the real world. Although it is clear your new employer has brought you on board because it likes you and trusts your counsel, you should spend a great deal of your time as new in-house counsel listening and observing. Clearly, it is your responsibility to advise your client to promptly rectify a practice or refrain from engaging in conduct that violates the law of is likely to put the client in legal jeopardy. However, as a “recovering” private practice lawyer turned first in-house counsel, you should resist the temptation to over-legalize every situation and press for sweeping organizational and operational changes your first week on the job. Also beware of offending sensitivities by appearing arrogant, dismissive of others’ opinions or judgmental n your advice. You must divorce yourself from law firm culture and learn how to deliver localized practical and efficient legal advice that can be implemented without unreasonable operational burden or significant cost. Avoid writing long memos or communicating with unnecessary legalese. Get used to issuing advice on the spot.

Finally, slowly immerse yourself in the company culture. Attend and participate in company-sponsored events. Also, develop an expertise in the industry. Ask to be sent to industry-specific conferences normally attended by others in the organization. You will gain invaluable insight into industry-specific issues and trends and, in the process, will show your interest in learning about the industry and appreciation of your client’s product or service.

8. Keep Your Superiors in the Loop; Develop Good Habits

Reaction to the new law department depends on many factors such as company size, corporate culture, and nature of the industry. Some initial apprehension caused by the presence of an attorney on staff is likely and normal. This may even include your boss---the very person who brought you on board.

The reasons are obvious. Management may not be entirely clear as to what exactly it is that you will be doing and how your presence will affect the day-to-day operation of the business. Most of these fears will vanish over time as people get to know you and the exact nature of your work.

Chances are you report to the CEO or his or her representative, or to a board. It is imperative, however, that you keep these individuals regularly apprised of the major projects you are working on. Get in the habit of meeting with the CEO at least once a week to go over things. Develop and email your CEO a weekly or bi-weekly summary report of the matters you have been working on and those to which you will devote your attention in the following days. Acquire a clear understanding of the CEOs priorities.

Finally, refrain from making any important legal strategic decisions (i.e., making or accepting settlement offers, pursuing prejudgment remedies, acting on offers of judgment, waiving specific rights or remedies) without consultation with your client.

One final thought. Ask anyone what they believe is the greatest thing about moving in-house. Most likely they will answer no longer having to keep track of billable time. Clearly, not having to meticulously keep track of your time in six-minute increments is one of the joys of in-house practice. Nonetheless, practitioners should consider getting into the habit of maintaining a general sense of how much time he or she spends on certain matters. This can be an important tool for self-assessment purpose, productivity and priority realignment analysis, and even as a compensation metric. Also, if your law department is litigating a case in which attorneys’ fees is a component of a potential damages award, the court will expect you to submit detailed timekeeping records to support such award.

9. Never Hide Your Mistakes

No attorney---particularly those who, by their nature, operate as solos or without supervision---should ever hide a practice blunder from their bosses. Inform the CEO of the situation before she finds out on her own or, worse, before a party on the other side of the transaction or litigation does. Fortunately, experience shows us that many of these problems have solutions and, if we act promptly, the damage can be reasonably contained.

Arm yourself with the valor to meet with your boss and come prepared with a remediation plan. Doing so will test your professional courage and maturity, but will also constitute evidence of your integrity, honesty, high ethical standards, and overall preparedness. Present the situation calmly and methodically, without spin. Remember not to gratuitously attempt to suggest someone else in the organization is to be blame. As the general counsel, the proverbial buck stops with you.

10. Don’t Allow Yourself to Become Isolated

Being a one-person legal department has inherent disadvantages---chief amongst them being what I call the “loneliness” factor. Working at a law firm allows you a great deal of interaction with your colleagues. You can run an idea or theory by a colleague, have someone proofread your work, or seek a much-needed second opinion from someone you trust. These are luxuries not available to the solo in-house generalist.

As a result, some become isolated and frustrated. Solo in-house counsel, therefore, must not take for granted any opportunity to interact with other lawyers. Hopefully, you will have forged valuable relationships with former colleagues at your firm whose talent you can tap from time to time for advice. You should remain active in bar activities and join any specialized practice groups fit to your new practice. Subscribe to listservs, discussion groups, and other rapid exchange information tools. Attend networking events, seminars, and even offer to speak or write about a topic you know or care about. Also, do not let your original skills rust out. For example, even if the company has hired outside litigation counsel, offer to take a deposition and assume a substantive role in the litigation, aside from merely engaging in a cursory review of written filings or reviewing legal bills.

Finally, engage in periodical professional self-assessments. Is this what you envisioned life as an in-house counsel would be? Is the work fulfilling? Are there any particular knowledge areas you need to learn more about? Is your present position in line with your professional development strategy? Are you happy with your decision? Forming a small legal department and heading it all by yourself is an exciting, one-of-a-kind opportunity. Nevertheless, it is not an undertaking for the faint of heart. It requires good planning, adaptability, and a strong sense of discipline, self-monitoring, and individual entrepreneurship. Consider and follow these suggestions and, like me, three years later you will be reminiscing about that special lunch date with your client with enjoyment---not regret.

Remember not to gratuitously attempt to suggest someone else in the organization is to blame. As the general counsel, the proverbial buck stops with you.