Compensation for In-House Counsel on the Rise

November 14, 2012 - (Chicago, IL) – The salary rate for in-house legal counsel has increased at a modest pace over the last year, according to HBR Consulting, leading consultants to the legal industry. HBR Consulting today announced the release of key data on in-house compensation from its 2012 Law Department Survey, reporting that 79% of companies indicated compensation for in-house lawyers increased modestly; 19% said it stayed flat; and 2% reported a modest decrease in compensation.

The Law Department Consulting Survey gathers data from more than 6,000 attorneys across nine levels and more than 5,000 non-attorney staff. The median company in the compensation report is one with 32 lawyers worldwide and more than $9 billion in worldwide revenues. HBR’s survey is unique among law department surveys in its continuity over the past 26 years and representation of larger law departments. The compensation data in the 2012 Survey is effective as of March 2012, compared with the same period a year earlier. References to the data from the 2011 Survey reflect compensation data as of March 2011 and March 2010.

“We are seeing healthy increases in in-house compensation at all lawyer levels, despite the challenging economic environment,” said Lauren Chung, Senior Director and Survey Editor. “With a continuing focus among law departments to keep more work in-house and with steadily increasing compensation levels, the outlook for the in-house market is positive,” she noted.

Total Compensation

Total compensation, which includes base salary, cash bonus and the value of long-term incentives, increased an average of 2.6 percent (median: 1 percent) among all lawyer levels according to the 2012 Survey. The average increase in the 2011 Survey was 7.8 percent (median: 4.4 percent).

“Last year’s Survey revealed a dramatic increase in average cash bonus levels between 2010 and 2011,” commented Ms. Chung. “That jump was attributed to the readjustment of bonus levels. Prior to 2011, bonus payouts were very limited. Bonuses appear to have leveled off this year. This has resulted in relatively lower rates of increase in total compensation compared to the 2011 Survey,” she said.

· Total compensation for the Chief Legal Officer was $1.96 million (average) and $1.67 million (median).

· The average total compensation for all attorney levels was $314,700 (median: $257,200). The 2011 Survey reported an average of $310,400 and a median of $243,600.

“Our figures report higher compensation levels for Chief Legal Officers compared to other recently released surveys,” commented Ms. Chung. “This likely is due to the universe of companies we survey. The HBR Law Department Survey primarily represents Fortune 500-level companies. This year, 68 percent of the participants had revenues at or above the Fortune 500-level.”

Base Salary

According to the 2012 Survey, there was a slightly higher rate of base salary increases for in-house lawyers. The average salary increase was 3.4 percent (median: 2.6 percent), up from an average increase of 3.3 percent (median: 2.6 percent) reported in the 2011 Survey.

· The Chief Legal Officer had an average base salary of $521,000 (median: $500,000).

· The average base salary for all attorney levels was $183,800 (median: $175,700). The 2011 Survey reported an average of $177,600 and a median of $169,600.

“Chief Legal Officers received the highest base salary increases - average of 5 percent and median of 3.5%. This speaks to the growing significance and visibility of the most senior legal officer position,” said Ms. Chung. “They play a crucial leadership role in the organization, bear greater compliance risk, and are under tremendous pressure to increase efficiencies,” she noted.

Cash Bonus

Cash bonuses continued to increase in this year’s Survey. Across all attorney levels, there was an average of 3.4% percent increase (median: 6% decrease) in the cash bonus. In contrast, rates from the 2011 Survey showed average cash bonus increases of 25.7% (median: 7.9%) between 2010 and 2011.

· Chief Legal Officers received an average cash bonus of $518,000 (median: $439,300). Bonuses made up over 44.5 percent of the average total cash compensation for Chief Legal Officers.

· The average cash bonus for all attorney levels was $62,500 (median: $46,300). The 2011 Survey reported an average of $66,700 and a median of $45,000.

“Among this year’s survey participants, 78% indicated that they are moving more base compensation to variable pay, such as cash bonus and other incentive pay,” remarked Ms. Chung. “The emphasis on variable pay has been a growing consideration as many law departments continue to adopt a pay-for-performance model.”

Total Cash Compensation

This year’s survey reports the average increase in total cash compensation (base salary plus cash bonus) for all attorney levels as 1 percent (median: 1 percent). The 2011 Survey showed an average growth of 7.5 percent (median: 4.4 percent).

· The average total cash compensation for Chief Legal Officers was $1 million (median: $942,200).

· The average total cash compensation was $247,000 (median: $222,400) across all attorney levels. The 2011 Survey reported an average of $245,400 and a median of $215,600.

About HBR CONSULTING

HBR Consulting—previously Hildebrandt Baker Robbins and the former consulting arm of Thomson Reuters—is internationally recognized as the leading business and technology operations consultancy in the legal industry. Since being taken private in 2011, HBR Consulting continues to expand on its foundation as a leading provider of consulting services to the legal industry. With more than three decades of experience, we help law firms and law departments plan, implement and measure business, information and technology initiatives.

HBR Consulting helps clients holistically address their needs in the areas of Core Infrastructure, Strategic Sourcing and Business Operations, IT Strategy & Planning, Information Lifecycle Management and Law Department Consulting. For more information, visit www.hbrconsulting.com.