Lawyers in the money as compliance climate bites

2007

The ever more rigorous legal and compliance environment in which U.S businesses now operate has led to a sharp upturn in take-home pay and bonuses for in-house lawyers.

A study for law firms Altman Weil and Martindale-Hubbell has found that compensation packages for in-house lawyers rose sharply in the past year, with bonuses in particular sometimes rising by as much as 43 per cent.

"In-house lawyers in management positions saw their total compensation rise between 8 per cent and 14 per cent this year, while non-management lawyers took home from 4.5 per cent to 23 per cent more," said Altman Weil principal James Wilber.

"These increases, even after adjusting them for inflation, were very solid. Generally, as in recent years, base salary increases were relatively modest, with bonuses increasing more than salaries," he added.

Increasing demand for compliance expertise and a more rigorous regime of corporate governance and shareholder scrutiny have been key factors in this trend.

"In this era of increasing compliance complexity and shareholder activism, it is not surprising corporations are paying a premium for attorneys with in-demand practice specialties," explained John Lipsey, vice president of corporate counsel services for Martindale-Hubbell.

"For example, high-level specialists with securities expertise earn top dollar, 21.8 per cent more than the national median in total cash compensation."

Chief legal officers saw their salaries rise by 5.8% to average $300,000 this year, the survey calculated.

The biggest increases were reserved for bonuses. CLOs averaged bonuses of $157,400, a whopping 43 per increase, meaning their total cash compensation rose by 14.3 per cent overall.

Down the scale, division general counsel saw their pay rise by a tenth to $232,000, topped up with an average bonus of $104,600, or a 13.7 per cent increase in total compensation.

The salaries of managing attorneys rose 4.6 per cent to $179,900, augmented by a $50,200 bonus, or 8.2 per cent up on the prior year.

The only ones bucking the trend were deputy CLOs, which reported a slight dip in salary, down 1.7 per cent to $215,000.

But, again, higher bonuses (in their case averaging $84,000) meant they also ended up better off by 9.6 per cent overall.

It was the same story for lawyers in non-management positions, who also saw solid increases in total compensation.

High-level specialists earned 6.4 per cent more in salary, at a median $168,000, plus a 5 per cent bump in bonus dollars of $44,000, up 5.1 per cent overall.

Senior attorneys (normally non-managers with eight or more years' experience) took home 4.5 per cent more in total cash compensation; attorneys (four or more years of experience) earned 11.2 per cent more and staff attorneys (with at least one year of experience) saw an increase of 23 per cent.

"Increases in total cash compensation for non-management lawyers were significantly higher for those of lesser experience. This may reflect a need to counter the dramatic increases in law firm starting salaries as general counsel compete with law firms for talent," pointed out Wilber.

Stock options were another important factor in helping businesses to attract and retain top legal talent.

Options for CLOs had an average fair market value of $900,800 this year, down two per cent from last year's survey but still worth more than twice the same group's total cash compensation, the survey calculated.

Stock options for other management positions ranged in value from 79 per cent to 92 per cent of their total cash compensation, it added.

Non-management lawyers reported average option values of between a third and nearly a half of their cash compensation.