Hard Times to Hit In-House Counsel Bonuses

Will law firm associates get their bonuses in 2008? That’s the questions the New York Law Journal has been asking as law firms re-evaluate the value of associate bonuses. While I empathize with associates who regularly bill 3,000 hours in the hopes of one day being rewarded with partnership, or at least getting a good bonus, I am more concerned about bonuses for in-house counsels. How will this recession impact in-house counsel bonuses?

In the last few years, the compensation trend for in-house counsels favored deferred compensation over cash salaries. Extra incentives such as bonuses and stock options were a significant component of in-house compensation packages. A typical bonus for most in-house counsels ranged between 20%-40% percent of the base, and sometimes much more depending on the position and company.

Although stock options and equity vary too greatly to be given a range; they nevertheless comprised a significant portion of an in-house counsel’s compensation package, especially for more senior level counsels (GC’s, CLO’s, Deputy Counsels, etc.)

Given that deferred compensation – which is basically tied to company performance – easily adds up to 50% of an in-house counsel’s overall compensation, the impact of this recession will be felt deeply by in-house counsels across the country. Although amid this financial credit crisis some top executives will forego their annual bonuses, 2008 bonuses will still be viable for most in-house counsels. 2009 on the other hand will be a year of serious belt-tightening across the board.