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Corporate Counsel Connect collection

August 2013 Edition

Of income and insights: going behind the scenes of the 2012 in-house counsel compensation report

Rees Morrison and Bob Graff"People are always interested in how much they are paid." It's a simple truth, spoken by Rees Morrison, half of the force behind the 2012 In-House Counsel Compensation Report. This new report offers a comprehensive view of the earnings within the corporate counsel market, offering insights into salary breakdown by industry, tenure, practice area, and more. This is the first joint effort between General Counsel Metrics and Major, Lindsey, and Africa (MLA), and has uncovered some unique conclusions. Corporate Counsel Connect had the opportunity to speak with Bob Graff, VP Global Business Development for MLA, and Rees, President of GC Metrics on the report which included data from 1700 participants and some of the trends and issues in in-house compensation today.

The data dispels the general myth that all lawyers are over-compensated. Looking at the data, Bob remarked on how much in-house lawyers are actually making. "There is so much hype about lawyers making so much money, in-house lawyers are making less than people might think," adds Rees, "If you think about the opportunity cost of spending $150,000 to go for three years of law school and... then look at these levels of compensation and bonus, it's kind of a sobering comparison." The single greatest factor that influences both base compensation and bonuses for in-house professionals isn't size of department or specialization, but more the company itself. In-house counsel are subject to the same salary structure that applies to their organization. "They must trundle along, for the most part, as other employees of similar professional credentials," states Rees. There may be a broader trend that companies in certain industries pay better, which then trickle down to the in-house lawyers. The one other major influential factor on compensation is seniority.

And while it may be unexpected that the in-house counsel aren't quite the overpriced lawyers that some media may make them out to be, it is even more surprising to compare them to some of their legal firm counterparts. Much is made of how going in-house means a cut in pay from the work at the firm. MLA also publishes an annual Partner Compensation Survey. Bob points out some interesting differences and similarities between the two in terms of compensation. "Once you step outside of the AmLaw top 50-100 firms...and the top lawyers...[compensation] is pretty close. [Compensation at law firms] becomes much more volatile and depends much more on their ability to generate business." Once one adds up the benefits, publicly traded securities, and flexibility working for a corporation can provide, often the compensation is even or in favor of those in-house.

Another interesting trend seen in the data was the GCs in the Extractive/Mining/Chemicals and Food & Beverage arenas were the highest paid. Bob and Rees postulated this was because both are highly regulated industries. Rees pointed out that they are looking at industries that have high "legal intensity," companies that require much more out of their GCs and legal departments, working heavily within IP or antitrust issues. With this higher legal intensity comes presumably higher compensation. On the low end of the compensation spectrum was Construction & Engineering, data perhaps skewed by the fact that data points within that area were few. Joining Construction & Engineering on the low end were Not-for-Profit/Government and Utilities.

The In-House Counsel Survey also looks at tenure, where unsurprisingly those 30 years into practice have the highest compensation numbers and those most recent graduates make the smallest amount. Historically, the number of lawyers hired out of law school into corporations is quite small. "They need lawyers who can hit the ground running," according to Bob. Time at a law firm is essentially like a residency for a doctor, with corporations benefitting from the training. However, two trends are impacting this. One, companies that hire large law firms are starting to require work to be done by senior lawyers, as opposed to junior associates, leaving those training grounds empty. With lower starting salaries for those just out of law school, a small number of corporations are finding they can hire a lawyer for just a little more than a paralegal. Still, adds Bob, "new grads should not expect to go directly in-house."

While this survey looks at one year's worth of data of compensation, it was difficult not to ask these two experts on some past and future trends. As far as the effects of recession, both Bob and Rees feel that as the effects are starting to wane, GC compensation is returning to its normal levels. "GC compensation is usually in the top compensation level of the company... on par with the other C-suite professionals," stated Bob. As the recession hit their companies, GCs lost their bonuses and any equity, which can be as much as one-third or more of their compensation. Bonuses that may have been lost in '09 and '10 are now making a comeback.

Future trends include the effects of globalization. With more lawyers in local offices overseas, working for a U.S. company, but with a vastly different local pay scale, reporting of compensation will become difficult. There is a large range of salaries in many international countries based on training and quality. In addition, globalization has a huge impact on current GCs. As their companies expand overseas, it will require additional travel and take more personal time, which in turn should result in higher compensation.

Finally, an influx of part time and temporary-to-permanent positions will certainly be changing the industry. Some lawyers want the flexibility of working part time. Additionally, in order to meet short term needs, companies are hiring "rent-to-own" lawyers, pulling in temp help to do the work. With luck a position may open up and successful temporary lawyers may find a full-time position.

Given the response to the survey, a return is nearly guaranteed for 2014. However, adds Bob, not many changes are expected. "Big fluctuations in a one-year period are rare. In-house lawyers' compensation is fairly stable over time." Bob and Rees share some of their significant findings, along with the full data, in their In-House Counsel Compensation Report, available for free download on the MLA website.

About General Counsel Metrics

General Counsel Metrics, LLC, has for years conducted the largest benchmark survey in the world on legal department staffing and spending. Over the past three years, for example, more than 2,500 law departments have submitted data to the no-cost survey and obtained releases covering 25 benchmarks and 26 industries. Founded and led by Rees Morrison, a veteran management consultant to corporate law departments, GC Metrics has developed an array of innovative data analytics for internal legal teams. To learn more about GC Metrics, visit GC Metrics also offers you the world's largest benchmark report on law department staffing and spending. Be a part of Release 3.0 - complete the quick, confidential survey and receive the standard results.

About Major, Lindsey & Africa

Founded in 1982, Major, Lindsey & Africa is the world's largest and most experienced legal search firm. Combining local market knowledge and a global recruiting network, MLA has earned recognition for its track record of successful General Counsel, Corporate Counsel, Partner, Associate and Law Firm Management placements. MLA also rounds out its suite of legal human capital solutions for both law firms and companies by providing highly-specialized, temporary legal staffing solutions. With offices throughout the U.S., Hong Kong, London and Tokyo, MLA recruiters are dedicated to understanding and meeting clients' and candidates' needs while maintaining the highest degree of professionalism and confidentiality. MLA considers every search a diversity search and has been committed to diversity in the law since its inception. For these reasons, MLA has been voted "Best Legal Search Firm in the U.S." in the most recent national survey of National Law Journal readers. To learn more about MLA, please visit