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In-House Lawyers Make More, But Not Like Associates

Aug. 24, 2016, 8:53 PM

Salaries for in-house attorneys are increasing by more than four percent annually, but almost half are still unhappy with what they’re being paid, according to a survey released this week.

Although the survey focused on trends in legal department compensation, it also left room for in-house attorneys to compare themselves to firm lawyers by asking them to rate their pay relative to their “peers.”

Bob Barker, a partner at BarkerGilmrore, the legal recruiting firm behind the surveys, said respondents were free to interpret that word however they saw fit, adding that the questions were asked before Cravath, Swaine & Moore’s June announcement of associate salary raises and couldn’t have been affected by the raises.

While their salaries are going up at a rate of 4.2 percent across industries — well above the U.S.'s 2015 inflation rate of 0.1 percent — 44 percent of respondents said their compensation, including cash bonuses and equity awards, is “below or significantly below that of their peers.”

Forty percent said they were likely to consider a new position next year because of compensation issues.

The report, available here , was based on a 12-question survey filled out online by 1,073 in-house attorneys between February and May. That was at least a month before Cravath’s associate raise was announced, which triggered a ripple effect at other large law firms, pushing up the entry level salary from $160,000 to $180,000 at many firms.

Barker played down the law firm to in-house comparison: “In-house lawyers may look over at law firms and say ‘I sure do miss the money, but I don’t miss the hours,’” he said.

But the survey results do suggest a “significant level of dissatisfaction,” Barker said, adding that as the gap between law firm pay and in-house pay continues to yawn, companies will have a harder time luring away top talent from law firms.

“Across the board, large law firms are increasing Associate compensation for the first time in ten years,” the report says. “This, in turn, pressures companies to add or increase in-house counsel compensation in the form of salaries, annual cash bonuses and long-term incentive packages.”

According to the report, lawyers in the services industry reported the highest dissatisfaction rates, with 56 percent saying their pay was below or significantly below their peers’. Lawyers in the energy sector were the most likely to be looking for new jobs: 50 percent said the likelihood they’d be shopping around next year is “high” or “very high.”

In addition to the dissatisfaction numbers — which may even be higher after the recent law firm associate raises — the report also found that energy, healthcare, and finance are the three highest paying industries.

Although the survey looked at in-house lawyers at several seniority levels, it also broke out GC compensation specifically: not surprisingly, pay is strongly correlated to company size.

GCs at companies bringing in less than $100 million in annual revenue averaged just over $400,000 in total annual compensation; for GCs at companies bringing in $1-10 billion, that number was about $1.5 million.

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