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4Feb/110

In-House Legal Departments & Salary Reports for 2011

Now that the dust has settled from the economic tumble of 2008, where are in-house legal departments today? InsideCounsel explores the state of in-house legal departments, including in-house compensation.

With most economic experts declaring the recession over—the aftereffects of the crash are evident across all corporate sectors, including in-house legal departments. Staffs are smaller, workloads are heavier, budgets are tighter and salaries are somewhat stagnant.

Having to adjust quickly to the changes—whether they liked them or not—was essential for survival, notes Vanessa Vidal, president of ESQ Recruiting. "There is a sense of resignation and acceptance when it comes to low base salaries and freezes," she says. "Counsel have no choice in the matter, because no one else is offering anything different, and jobs remain hard to come by."

What Are Salaries Like?

In 2010, according to Hildebrandt’s annual law department salary survey, the average base salary for all attorney levels in-house was approximately $174,000. The median was even lower at about $167,000. While such six-figure salaries are nothing to sneeze at, it can be difficult for in-house counsel to suppress the sniffles when comparing those figures to law firm salaries. According to the 2011 Robert Half Legal Salary Guide, first-year associates at large law firms will earn, on average, between $107,250 and $132,000 this year. When a first-year associate can make nearly the same salary as an experienced in-house attorney, it’s easy to wonder why anyone would go in-house.

Robert Major, founding partner at Major, Lindsey & Africa, says it’s actually the overwhelming demand among lawyers to go in-house, though, that keeps the salary gap so wide. Since this is a “supply and demand” issue, with many lawyers going after few in-house positions, the gap is likely to remain.

The most highly compensated practice area in Hildebrandt’s survey was mergers and acquisitions. Intellectual property lawyers specializing in licensing earned the second largest amount of money. They also had the highest median base salary, $193,738. Lawyers specializing in securities litigation saw the largest median base salary increase (3.3 percent), as well as the largest median cash bonuses, which amounted to $71,000.

What Are the “Hot” Practice Areas?

Accordign to Robert Half Legal, companies continue to look for lawyers with business-development skills and strong interpersonal. Litigation, bankruptcy and foreclosure continue to drive the need for bringing on new talent.

Vanessa Vidal, president of ESQ Recruiting, says that companies looking for new growth will likely consider small acquisitions as opposed to multibillion-dollar deals, which will mean an overall uptick in M&A activity over the next couple years. "Some of the bigger deals will most likely occur in consolidating industries, such as energy and health care," she says. Vidal also predicts that "emerging markets will lead the M&A surge in 2011, with Asia in the lead."
What Does It Take to “Shine” In-House?

Michael Melbinger, a partner at Winston & Strawn and chair of the firm’s employee benefits and executive compensation practice, says that "The No. 1 skill that we see [being rewarded] is the ability to minimize the use of outside counsel," says Melbinger. "Companies are rewarding legal departments that are able to do the work themselves and build their skills. Sometimes this means spending more hours and taking on more work with fewer people. But what it comes down to is that if he or she can save money, then that should be rewarded."

Vanessa Vidal, president of ESQ Recruiting, says companies are frequently recognizing counsel who demonstrate flexibility and adaptability. "They are what I call the ‘MacGyvers’ of the legal world—counsel who can come up with creative strategies to accomplish their goals with few resources available," she says.

Can We Talk Bonus?

Scanning through Hildebrandt’s annual law department salary survey, one data set practically pops off the page. Bonuses, the survey results indicate, have jumped an average of 73.5 percent between 2009 and 2010. Even the significantly lower median increase of 10.2 percent is enough to make jaws drop in envy. But it looks like these figures are just a return to standard levels after a recession-motivated low in 2009, cautions Lauren Chung, director in the law department consulting practice at Hildebrandt. Today, bonuses tend to be set and non-negotiable, just like base salaries.

What About Long-Term Incentives?
They’re baack! Long-term incentives—deferred compensation such as stock and equity—may not have returned to pre-recession levels, but they’re likely to become increasingly important components of compensation packages in years to come.

InsideCounsel, "In-House Salary Report," by Kayleigh Roberts and Ashley Trent, February 2011 Issue.

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