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In-House Legal Department Predictions for 2012

The good news for in-house lawyers in 2011 was that there were raises for base salaries and a slight uptick in hiring.  The bad news is that those improvements were relative.  Base salary raises were very slight compared to the rate of inflation,.  They also came after several years of salary freezes.  Bonuses did offset some of these lackluster base salary numbers, but being tied to company performance, not everyone enjoyed them.

The uptick in employment did not stem from the creation of new positions per se, but rather as an effort to replace departing attorneys and rebalance overworked corporate legal departments that had suffered heavy layoffs during the Great Recession.   In other words, the number of available in-house attorney positions remained quite low.  On the other hands, there was some positive movement out there, which we expect to continue in 2012.

What Will In-House Legal Hiring Look Like in 2012?

The hiring trend that we identified in 2011 by corporate legal departments is likely to continue in 2012.  The good news is that corporate legal departments are planning to hire in 2012 – about 40%.  The bad news is that the majority of the hires will not be full-time attorneys.

Corporate legal departments are dealing with a heavier workload in part by using more paralegals and contract lawyers.   About 67 per cent of corporate legal departments are comprised of lawyers with the rest made up of paralegals and other support staff.   Legal departments are still operating with flat or decreasing budgets, and therefore, they are seeking the highest level of competency at the lowest cost.  Compliance and contract review has been increasingly delegated to paralegals and contract managers.  In other words, corporate legal departments are hiring more "staff" rather than "lawyers" in an effort to improve efficiency rather than “bulk up.”

What Are Corporate Legal Departments Looking for?

Corporate legal departments that are hiring full-time lawyers are doing so primarily to replace departing lawyers or add a specialty to handle work in a growing area.  While corporate legal departments may be conducting some hiring, they are definitely looking for “more bang for their buck.”  What exactly are they looking for?

Corporate legal departments are looking for experienced (5-10years) all-around corporate lawyers with a broad legal background, strong business acumen, and proven management skills.  And that’s just the tip of the iceberg.  Factors that are also taken into consideration includes national law firm background, few transitions, specific industry experience, and proven in-house track record of success.

The ideal candidate is a businessman who happens to be a lawyer, not the other way around.  This is in response by corporate legal departments to want to demonstrate to the C-suite that they have what it takes to handle legal matters in a manner that contributes to the bottom line.  Today's in-house attorney has to be packed with achievements that show how he/she can contribute to the company's bottom line; being an excellent lawyer is simply not enough.

What Are In-Demand Practice Areas?

General Business/Corporate Law (M&A a Plus) – Attorneys that can handle a company’s various transactions, regulatory and compliance matters, while understanding the business, and managing internal and external counsels, are the most in-demand.  Attorneys with all of the above, and a strong M&A background are also prized.

IP/Licensing – The wave of protection for innovation that was driven by the Great Recession continues.  As a result, licensing is a very hot in-house practic. An increase in patent prosecution has also heightened the need for attorneys with experience in trademarks and patents.

Contracts & Compliance – Corporate legal departments have an ongoing need for support to handle contracts and licensing.  They are increasingly hiring contract administrators to manage procurement issues, and paralegals for compliance issues.  There are some attorney-level hires, but these tend to be contract attorneys or contract administrators with a law degree.

International – As companies look to focus on expanding their core businesses and increase their market share, they are likely to look outside of the U.S. as part of their competitive strategy. This will drive the international law practice. U.S. companies will continue to look opportunities in the three most popular emerging markets—Brazil, India and China. Some other markets that may generate some new and renewed interest may include Mexico, Vietnam, Korea and the Middle East, with Turkey, Saudi Arabia, and the United Arab Emirates as attracting most of the attention. This boost in international transactions will come primarily from companies in the consumer and infrastructure sector seeking to expand into new markets.

What Will Compensation Look Like in 2012?

Total compensation for in-house counsel will most likely continue to rise, albeit modestly in 2012.

Base salaries will see moderate increases (around 3%).  Raises will be primarily reserved for in-house attorneys that bring something unique and/or can save money by managing projects, people, and budgets.  In other words, senior lawyers (10+ years) with management responsibilities at publicly trade companies, and specialty area lawyers (healthcare, patent, IP, etc.), will enjoy higher compensation levels.

Average In-House Attorney Compensation:
4-9 years = $100K-$180K
10+ years= $130K-$220K

Bonuses are where the difference will be made up.

Gone are the days of earning a bonus at your boss’ discretion.  Today’s in-house counsel bonus is driven by:  individual performance and company performance.  In-house lawyers are held accountable for their contributions to the bottom-line, and are asked to share the risk of their company’s performance.    If the economy continues to improve in 2012, and companies perform well enough to be able to share the rewards, then bonuses will continue to rise.

What Else Could You See in Your Stocking for 2012?

Companies are reticent about reaching into their pockets to offer more cash up front in the form of salaries.  They want to see a return on their investment.  That said, for hard-to-find candidates and performers – there are making efforts, if not with cash, by offering other incentives that include:

•    Telecommuting
•    Flexible Hours
•    More Vacation Time

The Bottom Line

Hiring will still be very tight for 2012, but we will continue to see some improvements.  Performance-based compensation is also here to stay.  This is still driven by the economy, and while we have been through the worst since 2007, we have not quite gotten back on track yet.  Our economy is still very unpredictable and fragile.  Companies are hoping for the best, but still preparing for the worst.  Most organizations are remaining conservative regarding their fixed costs, including their salary expense.  Therefore, this will continue to make for a sluggish hiring market.  We may see some small increases in base salary if the economy continues to slowly gather momentum.  At the end of the day, much of the growth will be in bonuses. Hiring will focus on staff that can handle more commoditized work, and experienced management-level corporate attorney and specialists.  

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