Total compensation for in-house lawyers in corporate law departments across the country is on the rise, according to a recent survey.
In-house lawyers in management positions saw their total compensation rise 8-14 percent in 2007, while non-management lawyers took home 4.5-23 percent more, said James Wilber, partner of Altman Weil, a Philadelphia-based national legal management consultancy, which conducted the survey (entitled 2007 Law Department Compensation Benchmarking Survey).
“These increases, even after adjusting them for inflation, were very solid. Generally, base salary increases were relatively modest, with bonuses increasing more than salaries,” he said, noting that compensation was boosted more based on performance of the individual and company, rather than being front-loaded into base salary.
Recent “dramatic” increases in law firm starting salaries are spurring higher pay for in-house lawyers, because the two entities are somewhat competing for the same employees, Wilber added.
And more valuable stock options are being awarded, marking another significant compensation change, he said.
The survey, published with LexisNexis Martindale-Hubbell, contains data as of March 1, 2007, from 343 law departments providing compensation information for 8,148 lawyers. It reports on nine lawyer positions in law departments, analyzing the industry, company and department size, region, metropolitan area and years of experience.
For trend analyses, only companies with submissions in 2006 and 2007 were studied to determine the change between years.

Management positions

Promotions, rather than regular annual merit increases, often are the reason for larger paychecks for corporate attorneys, said Paul Marcela, associate general counsel and assistant secretary of Dow Corning Corporation, as well as a past president and board member of the Michigan Chapter of the Association of Corporate Counsel.
“Many companies are adjusting their lawyers to higher levels, which results in increases beyond normal merit increase amounts,” Marcela said.
Chief legal officer salaries rose 5.8 percent to a median $300,000 in 2007, supplemented by a whopping 43 percent increase in bonus dollars of $157,000, the survey reported.
Total cash compensation for chief legal officers was up 14.3 percent overall.
Division general counsel earned 10.2 percent more in salary at $232,000, plus a median $104,600 bonus, for a 13.7 percent increase in total compensation.
Managing attorneys’ salaries rose 4.6 percent to a median $179,900, augmented by a $50,200 bonus – up 8.2 percent in total cash compensation from 2006.
But deputy chief legal officers saw a slight dip in salary, down 1.7 percent to $215,000. Regardless, they ended up ahead by 9.6 percent in total cash compensation with an $84,000 median bonus.
Size of the law department is a key factor in top officer compensation.
For instance, chief legal officers in departments with more than 25 lawyers took home $645,000 – 56.6 percent more than the national median in total cash compensation for all chief legal officers.
At the other end of the spectrum, chief legal officers in single-lawyer departments earned total cash compensation of $201,500, only a little more than half the national median.

Non-management lawyers

Lawyers in non-management positions also saw solid increases in total compensation, the survey showed.
High-level specialists earned 6.4 percent more in salary, at a median $168,000, plus a 5 percent bump in bonus dollars of $44,000, for an increase in total cash compensation of 5.1 percent.
Senior attorneys, meaning non-managers with eight or more years of experience, took home 4.5 percent more in total cash compensation. Attorneys with four or more years of experience earned 11.2 percent more and staff attorneys with at least one year of experience saw an increase of 23 percent.
Recent graduates earned 10.8 percent more overall in 2007, reporting a median salary of $70,600, plus a $4,000 bonus.
The total cash compensation for those with less experience was significantly higher, Wilber highlighted, likely reflecting “a need to counter the dramatic increases in law firm starting salaries as general counsel compete with law firms for talent.”
Wilber explained that until Sept. 11, 2001, in-house lawyer compensation was increasing. But after the terrorist attack and the end of the dot-com boom, law departments pulled back, giving minimal to no increases until about three years ago, when compensation for upper-level attorneys was raised.
“But, in the past two years, compensation increases started for the mid- to lower-levels, generally for people with less experience. That continued this year, where in-house lawyers were catching up with increases that their colleagues had gotten earlier,” Wilber said.
In addition, practice specialty in non-management positions is a significant differentiator in compensation, the survey found, stating that copyright, trademark and patents specialties are the most lucrative.
“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,” said John Lipsey, vice president of Corporate Counsel Services for Martindale-Hubbell. “For example, high-level specialists with securities expertise earn top dollar – 21.8 percent more than the national median in total cash compensation.”

Stock options

Stock options represent non-cash payments that can more than double the value of an in-house lawyer’s total compensation package.
“There was a period of time after 2001 when the economy was not doing well and stock options decreased. Now it’s becoming a more important part of compensation,” Wilber said.
“Many private companies have phantom stock programs for the management level attorneys. These formulaic bonus programs are based on a number of financial dynamics, such as return on assets and earnings,” Marcela added. “Often, there is also a personal goal achievement component of these plans.”
Options for chief legal officers had a median fair market value of $900,800 in 2007, down 2 percent from the prior year’s survey – but still worth more than twice the same group’s total cash compensation, the survey said.