2012 In-House Report: Salaries & Hiring Trends
InsideCounsel has released its hugely popular “2012 in-house compensation report,” discussing compensation, the hiring forecast, hot trends, and what it takes to land an in-house position, and how to succeed as in-house attorney.
Companies Are Hiring, But Selectively
The good news is that companies are hiring, the bad news is that they are only doing so very selectively. With the economy finally on the upswing, law departments are looking to hire new help. But experts caution that companies aren’t necessarily hiring attorneys.
The bulk of the hiring seems to be dedicated to paralegals and contract managers. When it comes to hiring attorneys, the numbers are still very low, and the competition very stiff.
Who’s Getting Hired: Standout Experienced Business Lawyers
Companies are most interested in mid-level and senior lawyers with four to nine years of experience. Additionally, they’re seeking jack-of-all-trades attorneys who can work independently.
Being a lawyer that delivers high quality services is no longer enough to land an in-house job. Today, lawyers hoping to get hired by a company need to show that they understand the company’s business and can contribute to its bottom line.
A law degree might no longer be enough. Today’s, in-house lawyers have to understand financials, business strategies, and need to be able to wisely manage projects and budgets. Many are now armed with M.B.A.’s to deliver just that.
One thing is clear: As companies emerge from the recession and slowly increase their legal hiring, attorneys searching for new careers must stand out among the competition. That often means being armed with more than legal excellence to do so.
Advice to Young Law Grads: Start with a Firm and Network.
The vast majority of corporate legal departments are still steering clear of recent law graduated. What can a recent law graduate do to improve his or her chances at landing in-house? The solution: try your hand at a law firm position first, focus on transactional work, stay there for at least five years, and network aggressively.
Base Salaries Slightly Up by 3.3%
2011 has brought moderate increase in in-house base salaries. According to the 2011 HBR Law Department Survey, the average base salary increase among all legal department staff levels in 2011 was 3.3 percent, up from an average increase of 2.6 percent in 2010.
The Bonus Is the New Gravy
The 2011 HBR Law Department Survey found that the average bonus increase among attorneys was an astounding 25.7 percent. The average cash bonus for all attorney levels was $67,000? What does it take to earn those bonuses? Today’s in-house lawyers are held accountable for the level of performance and their contribution to the bottom line. By the same token, they’re asked to share the risk of their companies’ performance. So, in-house lawyers have to meet their objectives, and contribute to the company’s bottom line to expect to get some gravy on top of base.
What’s Hot: Management Skills, IP, M&A and Compliance
The most in-demand practice areas: transactional (M&A), IP, labor and employment, and compliance. In terms of industries, health care and pharmaceutical are generally offering higher salaries.
The hottest skills required from in-house lawyers aside for outstanding legal and business skills, are management skills. Knowing how to manage projects, people, and budgets is key to increasing one’s value in-house.
Trends of the Future: International Expansion and E-Discovery
As companies are pushing for international expansion as a competitive strategy to expand their core business and increase their market share, so are corporate legal departments. Today, many clients are looking to hire in-house attorneys for their international operations, with a focus on Asia, South America, and India.
E-discovery is also very much in-demand. Companies are looking for lawyers who can effectively manage e-discovery and document review with a smart process that saves money.
What can we take away from this report? Lawyers with any hopes to succeed in-house need to be able to bring value beyond outstanding legal skills and experience. Contribution to the bottom line is what it’s all about.
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.
GC Compensation in 2011
Cash is King
While 2011 has been far cry from an economic recovery; chief legal officers have done pretty well for themselves, even making some modest gains according to the annual compensation survey conducted by Corporate Counsel. What is remaining steady is cold hard cash, in the form of base, and nonequity incentive compensation, which is tied to corporate performance goals. Gone are the bonuses GC’s got for just being there and performing well. What is out? Stock options continue to fall out of favor.
Women On Top
Who has gotten the biggest paycheck this year? The top prize goes to a woman for the first time since Corporate Counsel started this survey, in 1994. Denise Keane, the top legal officer since 2007 at tobacco giant Altria Group, Inc., took home $6.5 million in total cash compensation. She is a not alone, in-house woman counsels are for the most part continuing to make steady progress in terms of compensation.
Company Performance Dictates
GC compensation is based on 2 sets of requirements: individual performance and company performance. The success of in-house counsels is directly tied to that of the company they serve. Therefore, they really have to contribute to the bottom line if they want to improve their own take home pay. Choice of company and industry has never been more crucial for on-house counsels looking to make a transition. The top performers in this year’s list tend to be clustered in the tobacco, oil, and entertainment industries.
The Top 10 Money Makers
1. Denise Keane – Altria Group, Inc. (Total cash: $6.4M)
2. Donald De Brier – Occidental Petroleum Corporation (Total cash: $5.9M)
3. Russel Deyo – Johnson & Johnson (Total cash: $4.9M)
4. Thomas McCoy – Advances Microdevices, Inc. (Total cash: $4.6M)
5. Louis Briskman – CBS Corporation (Total cash: $4.2M)
6. Paul Capuccio – Time Warner (Total cash: $4.2M)
7. Alan Braveman – Walt Disney Company (Total cash: $4.1M)
8. David Bernick – Philip Morris International, Inc. (Total cash: $3.6M)
9. Michael Fricklas – Viacom Inc. (Total cash: $3.0M)
10. Alan Schnitzer – The Traveler’s Companies, Inc. (Total cash: $2.8M)
To see a complete list of the Top 100 Best Paid GC’s, click here.
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.
What Will In-House Counsel Salaries Look Like in 2011?
Are Salary Freezes and Flat Salary Increases To Continue in 2011?
Base salary increases are slowing within in-house legal departments. The average increase in 2010 was 2.6%, compared to about 6% just two years ago. Base salary increases will most likely continue to remain flat in 2011. Legal departments have cut expenses as far as they could, and while they could potentially trim a little more, they have a lot less to work with at this time. The bleeding and heavy cost cutting has already happened, now it’s more about maintaining status quo, and trying to keep people on board. There is a sense of resignation and acceptance when it comes to low base salaries and freezes. Counsels have no choice in the matter because no one else is offering anything different, and jobs remain hard to come by.
Who Will Most Benefit From Merit-Based Compensation?
About 93% of all salary increases are merit-based, which is a huge incentive for in-house counsel to find ways to please their companies. What are some ways to do this? What skills are receiving praise? Are alternative fee arrangements and other cost-cutting measures resulting in salary increases?
In-house counsels that benefit from merit-based compensation are those who know how to deal with the changing times, and can demonstrate flexibility, adaptability, and creativity in the workplace. They are what I call the “MacGyver’s” of the legal world, counsels who can come up with creative strategies to accomplish their goals with few resources available. In-house counsels that tend to be highly regarded are also those who know how to save their company money, by effectively managing outside counsel fees or resolving ongoing litigation. There are also those who help contribute to the bottom line and generate revenues by mining the company’s intellectual property portfolio, or identifying new business opportunities. In short, counsels who do many things with few resources, cut costs, and contribute to revenues are the ones who will benefit from this new incentive-based environment.
Despite a push by companies and slow acceptance of alternative fees by law firms, the billable hour still rules, and savings resulting from these cost-cutting measures have not had a major impact on salary increases. Primarily, because the saving from alternative fees have been relatively modest, and second because law departments have been looking to keep costs down and their expenditures flat.
Recession Hits GC’s Bonuses
The recession has battered markets — and jobs — over the past couple of years. According to Corporate Counsel 's 2010 GC Compensation Survey, publicly traded companies saw their profitability hammered, and compensation tanked even for the top lawyers at major corporations. Big chunks of take-home pay — particularly those bonuses — took a beating. Discretionary bonuses dropped nearly 40 percent.So what should we make of all this — bonuses hammered, but salaries and stock holding their own, and even getting an uptick? "The days of super excessive pay may be over," said one compensation expert. "But companies still need to incentivize and retain people. They'll come up with packages."
Why the huge drop in discretionary bonuses? A bad economy and increased visibility. Recent SEC rules, for example, require companies to go into detail on their proxy statements about how they calculate compensation for their top executives: What companies does it compare itself to? What information did it look at? A narrative of the process must be provided — a Story of the Pay. And discretionary bonuses are a story not all companies want to tell. Yet companies had to keep their top employees — a point that helps to explain the salary uptick: that 3.8 percent.
In the end, the economy may return back to the good old days, but the process for determining top executive pay likely won't. There will most likely be more rigor and oversight involved in determining executive pay. In the meantime, GC’s need not worry too much, companies will still look for ways to keep their top lawyers and provide healthy compensation – just structured differently.
Google’s CLO Has Many Reasons To Be Happy
We recently heard about how happy CLOs are to be in-house, with 90% of CLOs reporting their contentment to the ACC. That said, some CLOs are definitely happier than others.How Does Drummond’s Compensation Package Compare to Other Executives’ at Google?
According to the Mercury News, Google's founders and CEO drew a $1M base salary in 2010. Other top Google executives received double-digit raises in base salary and bonuses. Is the sky the limit? Not exactly. Google capped its bonuses at $4.5 million for the 2009 fiscal year, according to the SEC filing.
Of course, if Google is being generous with its executive, it’s because the company is enjoying unprecedented profits. Google is one of the few companies in the country that was recession-proof during this crisis. Google reported a record profit of nearly $2 billion for the fourth quarter of 2009, a fivefold increase over the last quarter of 2008.
How Does Drummond’s Compensation Package Compare To Other CLOs’?
While Drummond is being handsomely compensated, he still falls short of the top ten. According to last year’s list of the 100 top-paid general counsels (total cash compensation), Drummond came in 23rd position, earning a total of $1,826,251.
While Google may be a happy place, Walt Disney, known as the “happiest place on earth," lives up to its reputation, especially for Alan Braverman, its CLO, who earned $4,032,885 last year and came in 5th place overall. Who beat out Disney and Google for the top spot? The most highly compensated CLO last year, in terms of cash compensation, was Gregory Doody of Calpine Corporation, who brought home $9,743,621. It is indeed good to be CLO!
Newsline – 02/22/10
- What the New White House Counsel Made Last Year. New White House counsel Robert Bauer made just under $1 million last year as the head of the political law group at Perkins Coie, according to a financial disclosure form he filed this month. Bauer reported $958,788 in salary and bonuses from the firm, where he was a partner in its Washington office. That's almost 20 percent above the firm's 2009 profits per equity partner of $802,111, as reported this month by The AmLaw Daily. He also reported $14,000 in speaking honoraria and a $7,500 fee from teaching at Yale University last spring. Bauer, who started at the White House in late December and succeeded Gregory Craig, reported household investment assets worth between $2.38 million and $5.55 million. It’s a good thing that Bauer has such a nice nest egg stashed away, because he is now slated to earn about earned $172,200 per year - the highest salary paid to any of the White House counsels, and what his predecessor Craig earned last year (see our previous Blog post "What Do White House Lawyers Earn?"' It’s not bad by any standard, but these attorneys are clearly not in it for the money. Craig had also left a very lucrative private practice with the Washington, D.C.-based law firm of Williams & Connolly, where he was earning $1.7 million a year. It is refreshing to see attorneys motivated by other things besides the bottom line when making a career move. The National Law Journal
- Levi Slashes its Outside Counsel. Levi Strauss has been busy making cuts, and we’re not talking about jeans either. Last spring Levi Strauss & Co. cut the number of outside law firms that it uses down to just two — one of the most sweeping reductions yet by a large company. The lucky survivors were: Orrick, Herrington & Sutcliffe to handle all of the worldwide legal work, and Townsend and Townsend and Crew for its global intellectual property matters. General counsel Hilary Krane said that in addition to yielding improved work at lower cost from her outside firms, the deals have also had a side benefit: better performance from her staff attorneys. While this may come across as sweeping reform by a clothing giant, this may signal a new trend for companies: fewer outside counsels to assist better-staffed in-house legal departments. Corporate Counsel
- SEC Says BofA GC Didn't Get Fired Over Legal Advice. The Securities and Exchange Commission is going against the generally accepted speculation that former Bank of America general counsel Timothy Mayopoulos was fired because of his unwelcomed legal advice regarding the merger. In a court filing on Wednesday, the SEC says Mayopoulos got fired to create a position for Brian Moynihan in an effort to keep him from leaving, according to stories in the New York Law Journal and the Wall Street Journal Law Blog. Moynihan served as general counsel for 44 days before taking over as CEO. The SEC position reinforces congressional testimony by Moynihan that, before his appointment as general counsel, he had planned to leave Bank of America because he was not pleased with the position he would get after the merger. Yeah, right! The SEC’s conclusion lacks fundamental logical credibility! Here's the story: GC gives advice executives do not want made public, GC gets escorted out of the building 24 hours later, and is subsequently treated like a pariah. Despite receiving excellent reviews during his tenure at BofA, Mayopoulos was given little love after he was told to pack his stuff and leave. When Mayopoulos reached out to two of the bank's executives to obtain references to try and find a new job, he was snubbed by one and got a cool reaction from the other. Th internal dialogue was probably something like this: A reference? Yeah, you did a great job for us, but I'm not sure we can do that for you. You know, rules and all. Good luck though. I'd hate to see how Mayopoulos would have been treated had he not done a good job. ABA Journal
- Ford Gets Mileage Out of Fewer Lawyers. When Ford's sales collapsed — from 2006 to 2008, and the company lost a cumulative $30 billion, something had to be done. The response: Laying off a third of its 300,000 employees worldwide. The Company’s In-House Legal Department was no exception to these cuts. Ford's general counsel David Leitch made the painful move of slashing his staff by 40 percent, from 200 lawyers to 120. His department continues to perform at the same level, he said. And it hasn't increased its use of outside lawyers to make up for the loss of in-house attorneys. However, while Ford’s attorneys “have adapted, and are more efficient and effective than they ever thought they could be" when the economy turns around, Leitch will have a new challenge on his hand. If your car takes on a lot of mileage, it’s bound to break down sooner rather than later. If you want your car to keep performing at a high level, you’ll either need to ease up on it, or get a new one. The same can be said about employees who’ve been asked to “do more with less,” over a long period of time. His overworked counsels will probably be the first to look for greener pastures, and he will need to either up his internal numbers or use of outside counsel to keep up with demands. Corporate Counsel
2010 Predictions for In-House Legal Departments
It’s safe to say that few in the legal profession were sorry to see 2009 end. This was a year that was marked by one of the worst recessions in recent history, also dubbed the “Great Recession.” According to the blog LawShucks, 12,196 people were laid off at 138 large law firms tracked last year. In all, 4,633 lawyers and 7,563 staffers lost their jobs.While there is always a certain level of enthusiasm along with bringing in a new year, that excitement is not simply seasonal, but based on a historically busier quarter for hiring. The first quarter of the year tends to set the tone. While some recruiters seem to be optimistic about the lateral partner market at law firms picking up, and the thawing of salary freezes, that effervescence may be cooled by some harsh realities.
The dip in unemployment numbers may be a sign that the hemorrhaging has stopped, but if 2010 is slated to be a “better” year than 2009, better is relative. Many predict that we won't get back to full employment – or to about a 5% unemployment rate prior to the recession – until 2013 or 2014. This really speaks to the severity of the job losses that have been absorbed by the economy. They are massive. The economy lost over 7.2 million jobs since the recession began in December 2007.
Law firm partners with a book of business have always been considered a hot commodity, no matter what the state of the economy. So now that more of them may be willing to make a move does not indicate an improved market. Only the creation of new positions and an uptick in associate hiring would signify a real improvement of the market, and no one is seeing or predicting anything like it in the coming months.
We expect to see a slow return to hiring over the next six months. How slow? It will be highly conservative, with departments looking to hire replacement positions first, followed by critical needs second.
We predict that about 15-20% of corporate legal departments will be selectively hiring over the next six months of 2010. If the economy is to stall again, we will start seeing sign of a slow down in the 3rd quarter.
What might this look like over the course of the year?
• Quarter 1> 5-10%
• Quarter 2> 15-20%
• Quarter 3> 20%
• Quarter 4> 20-25+%
Companies this quarter (Q1) are re-evaluating their needs and considering staffing requirements. Many legal departments have affected cost-cutting measures, and most are now working at or above capacity. As a result, some replacement positions will become available, a small number of companies will hire to re-balance their legal departments, and some companies will look to hire their first in-house counsel. That said, unless we see a determinative change in the economy, the hiring market for in-house counsels will not be markedly different from the market we experienced in 2009. While there will be fewer layoffs, positions will continue to be few and highly competitive.
Who Will Be Hiring in 2010?
We expect few changes in the types of companies that will likely hire in-house counsels in 2010. Companies who will be hiring at a greater rate than others will most likely be in the following industry sectors:
• Health care
• Education
• Government
• Energy (alternative)
• Manufacturing (possible)
• Services (possible)
If the economy does show some signs of a recovery, we could see companies in manufacturing and service enter the hiring circle, albeit conservatively.
• Regulatory/Compliance
• Litigation
• M&A
We can also expect smaller companies to take advantage of the market and hire their first in-house counsels. We have seen an uptick in hiring in the areas of regulation/compliance, litigation, and employment, although the boost in the number of hires was not necessarily significant. We are looking for a re-emergence of deals for 2010, with a conservative uptick in mergers and acquisitions.
What Will Salaries Look Like?
In-house attorney compensation always depends on several factors, including:
• Industry
• Geography
• Size of the Company
• Size of the Legal Department
• Position Level/Responsibilities
• Position Requirements
• Company Finances
• Economic Market
We expect compensation to remain flat for 2010. Salary freezes for current staff, small bonuses, and a reduction in base pay for new hires. Of those companies not cutting lawyer compensation, we can expect the majority of salaries to remain at status quo, and a minority to increase by a lower margin (expected 3%-5% increase in 2010, over 8% in 2008, and 10% in 2007).
Large Company In-House Lawyers (2010): Average of $200,000 in pay and bonuses.
Large Company In-House Lawyers (2009): Average of $206,000 in pay and bonuses.
Large Company In-House Lawyers (2008): Average of $236,000 in pay and bonuses.
Large Company In-House Lawyers (2007): Average of $226,000 in pay and bonuses.
What Should Lawyers Expect In-House?
For most attorneys practicing with law firms, 2010 will not be the year for them to transition in-house. Why? Because they will see few open positions, together with a plethora of highly qualified in-house counsels fighting for every available job.
For counsels practicing in-house, most will end up having to work more for less money. They will also work with less support – both in terms of outside counsels and internal administrative assistants and paralegals. Resources will be stretched thin. However, legal departments may be more open to selective hiring to handle the increased workload. 75% of the General Counsels we polled said they wanted to bring more legal work in-house for 2010, and 45% said they were actively planning to hire additional staff to handle the increased workload.
What’s “hot” for 2010? Compliance/regulatory is the new in-demand practice area for in-house counsels. Companies will be hiring selectively to fill in the gaps. Those looking for job security should look to develop skills in these areas to demonstrate their value and cost-saving effectiveness.
What are your predictions for 2010? Share your thoughts with us.
CLO Compensation Increases While Other In-House Lawyer Compensation Declines
In 2009, we have seen salary cuts for associates at large law firms, where the $145-$160K starting salaries are no longer the norm. What about the salaries and bonuses of Chief Legal Officers and other in-house counsels at large companies?In light of the current economic climate, CLO’s have goods reasons to be happy to be taking home nearly half a million dollar in pay, even if it falls short of the 13% increase they received in 2008. CLO’s are not far from their law firm counterparts, when law firms like Cadwalader posted a 30% decrease in profits per partner, but still took home $1.88 million during one of the worst economic markets in nearly 60 years. Clearly, there is still plenty of money being made.
Those who are experiencing most of the compensation squeeze are “other in-house counsels." While CLO compensation increased, total cash compensation for deputy chief legal officers, division general counsel and high-level specialists decreased during the same period, by 1.4 percent, 9.8 percent and 5.3 percent, respectively. The ALM Survey did not provide figures. For more information on salary and bonuses for "non-CLO in-house counsels", see our previous Blog post: “In-House Compensation Remains Flat As Companies Continue Cost-Cutting Measures.”
If you are not in a “management” in-house position, what’s the best paying practice? Not surprisingly, patent law is the most lucrative specialty for senior attorneys and attorneys. Senior IP attorneys took home 40 percent more than the national median total cash compensation last year. It pays to be in IP, whether in private practice or in-house.
To compile this survey, the ALM polled organizations with 5,000 or more employees (46%), with 66 percent of participating organizations reporting annual sales revenues of $1 billion or more.
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