ALMResearchBlog

Law Firm GCs Earning More—But Is The Position Here To Stay?

These two stories made an interesting juxtaposition, as they appeared within days of each other. On the one hand, we learned that Law Firm GCs Are Earning More. The report of an Altman Weil survey appeared in Legal Times and noted that general counsel at top law firms have seen a significant pay hike over the last year, with the average full-time general counsel at Am Law 200 law firms earning more than $750,000 in 2007. Those lawyers who worked in the law firm GC role part-time saw a 9 percent increase from 2006, raising their compensation to about $665,000 a year. Altman Weil also found that 85% of responding firms have a designated general counsel, the same percentage as in 2006.

And then came this story from The American Lawyer: Shearman Eliminates General Counsel Post. Shearman & Sterling, ranked 19^th in this year’s Am Law 100, has eliminated the job of its full-time general counsel, John Shutkin, in 2004 from KPMG International, where he had been general counsel for five years. Shutkin was one of the few law firm GCs brought in from outside the law firm world, part of a wave of hirings of in-house lawyers at that time. Though a Shearman spokesperson was quoted as saying they were “restructuring” and “returning to the more traditional structure of partner oversight over risk management,” the article also noted that the move seemed to go against the grain of the business model most large firms had adopted.

Survey: GCs Like Their Job, Plan to Hire More In-House Help

According to a recent survey report by the Association of Corporate Counsel, 85% of chief legal officers and general counsel find their careers rewarding, despite increased corporate governance demands and sometimes tense relationships with independent auditors. A report of the eighth annual survey of CLOs and GCs by ACA,  appeared in National Law Journal, which noted that nearly a third of the respondents expected to add staff over the next year and that records management would be an emerging issue for in-house attorneys this year. NLJ also reported that, while 59% of CLOs and general counsel revealed that increased monitoring by law enforcement and regulators had only a modest influence on their career satisfaction, 30.6% said it would make a "considerable impact" on their future decisions, such as looking for a new CLO job or retiring.

Salaries and Compensation: Corporate Counsel

A new survey report in the March 2008 issue of Inside Counsel says that, “as starting salaries for law firm associates continue to skyrocket, law departments are hard-pressed to keep up.” Inside Counsel’s 2008 Comp Report uses Hildebrandt’s Law Dept. Survey and Altman Weil’s Law Dept. Compensation Benchmarking Survey to offer a sampling of compensation at in-house legal departments.

CLOs/GCs in departments with more than 25 attorneys earned $645,000 in median total cash compensation in 2007, though there seems to be a huge variance between public and private companies and NGOs. Extra incentives such as bonuses and stock options are an important element of in-house compensation packages, according to the report, and the percentage of total cash compensation that comes from bonus is greater the higher one is in the department. Though billed as a “sampling,” there is a lot of useful information in the report, which can be accessed by clicking here.

For those interested in more information about in-house compensation, ALM Research offers the 2007 GC Compensation Survey (as well as data for the same from 1993 – 2006), which includes the 100 highest-paid General Counsels at major corporations, rank in the Fortune 500, salary, bonus, and where applicable, other forms of remuneration for each of the GCs ranked.

Survey: GCs in Large Depts Earn More; In-House Counsel Salary Climbed 7% in the U.K.

According to a recent survey by Altman Weil and reported in The Daily Report, to earn top dollar—more than $600,000—GCs need to supervise legal departments of more than 25 lawyers. For GCs in one-lawyer departments, the average cash compensation was $200,000. The AW Law Dept. Compensation Benchmarking Survey shows GC median pay climbed to $300,000 for two- to five-lawyer departments, $400,000 for six to 10 lawyers, about $500,000 for 11 to 25 lawyers and more than $600,000 for more than 25 lawyers. According to the report, GC pay stood fairly close to law firm pay for most categories, according to another Altman Weil survey. The one notable exception was the biggest star at the biggest firms. The highest-paid partners at the biggest law firms generally earn substantially more than their own managing partners or the general counsel of their biggest clients. Managing partners in the biggest firms—130 lawyers plus—averaged $700,000.

Meanwhile, In-house lawyers in the U.K are earning more than ever before, according to new research from Incomes Data Services that reveals salaries for corporate counsel in the U.K. are rising at an inflation-busting average of almost 7 percent. The average salary for in-house lawyers in the U.K. is £114,658 (US$228,138), representing an increase of 6.8 percent on the year before. The highest salary referred to in the poll was £277,000 (US$551,173).

Survey: In-House Counsel Require More of Their Outside Counsel

According to an Associated Press report about the 2007 ACC/Serengeti Managing Outside Counsel Survey counsel have become more systematic in the ways that they manage their work with outside counsel and are applying basic vendor management practices in their evaluations.” Another major change during the past three years, according to the report, has been the increase in resources spent on compliance issues, “including periodic reporting on legal spending and developments.” Benchmarks from the survey available free through SerengetiLaw.com. The full report is $500 for ACC members, and $750 for non-members.

In-House Law Departments: Salaries, Spending

According to Altman Weil’s  2007 Law Department Compensation Benchmarking Survey, total compensation for in-house lawyers in management jumped 8% to 14% this year, and 4.5% to 23% for non-management lawyers. A report of the survey appeared in the National Law Journal. For chief legal officers, salaries rose 5.8% to a median $300,000 in 2007, while bonus dollars spiked 43% to $157,400. Division general counsel collected a 10.2% salary increase for a median of $232,000, plus a median $104,600 bonus. The survey includes data from 343 law departments with 8,148 lawyers and 72 one-lawyer departments.

Another recent NLJ article (In-house costs outpace outside counsel spending) reported on Hildebrandt International’s 2007 Law Department Survey and said that corporate legal spending increased 6% over the past year, with increases in internal spending (8%) outpacing external expenditures (3%). Total cash compensation for in-house attorneys, including salaries and bonus, climbed 10% last year, compared with 7.5% during the previous year, according to Hildebrandt’s study, which included 202 companies employing an average of 4.2 lawyers. They also surveyed companies' U.S. and international operations, and found that the median company has global revenue of $10 billion, spends nearly $30 million on legal matters and staff and has a U.S. law department with almost 30 layers and 60 staffers. The median company also shells out 58% of its U.S. legal spending on outside counsel and 40% on inside legal costs. Chief Legal Officer's total cash compensation rose $50,000 to nearly $900,000, with the median total at $800,000. General counsel's average cash compensation spiked 19% to $700,000.

2007 GC Compensation Survey: Just Released!

Just released! Corporate Counsel Magazine's salary survey of the 100 highest paid General Counsel at major corporations, the 2007 GC Compensation Survey. This year there were 193 GCs listed among the top five earners at Fortune 500 companies, four less than the previous year. The top 100 are ranked according to cash compensation, which includes salary and bonus. Data in the spreadsheet also includes stock grants, option grants, and stock cash-outs. Download the searchable, sortable, electronic spreadsheet directly from the ALM Research Store.

Salaries: What CEOs and General Counsel Make

According to an Associated Press report, half of the Standard & Poor 500 CEOs earned more than $8.3 million last year - and some earned far, far more than that. Salary, cash bonuses are a small portion of total compensation, the report said, and the increasing payout from stock options looks to have no end in sight. The most highly-compensated CEOs were named in the report. 

Information about the highest-paid GCs is available in the annual General Counsel Compensation Survey, published by Corporate Counsel magazine, and archived in the ALM Research Online database.

CEO Compensation: Forbes Report and Other Sources

Forbes magazine has issued its annual report on CEO compensation, noting that “The chief executives of America’s 500 biggest companies got a collective 38% pay raise last year … an average of $15.2 million apiece.”

We’ve posted several other blog items recently about sources for CEO compensation analyses and searchable databases, including a chart from the Wall Street Journal and the searchable database AFL-CIO’s Executive Pay Watch . And by the way, you can access our blog by clicking on this link: ALM Research Blog

ALM Research also offers data having to do with CEO compensation, the GC Compensation Survey, available as a searchable spreadsheet and (for subscribers) a searchable online database (years available include 1993-2006). The GC compensation data, like CEO compensation data in other reports, is based on the 10k (proxy) filings of public companies. Data available for each year is for the 100 best-paid GCs at the Fortune 500. The most current data available right now is for fiscal year 200. The new GC Compensation Survey will be available August 1st. To place an order now, email almresearch@alm.com.

General Electric’s Winning Legal Department

For its second Best Legal Department competition, Corporate Counsel magazine asked corporate legal departments about everything from budgets to staffing to litigation strategy. Point values were assigned to key areas, such as outside counsel management, diversity and pro bono efforts. This year's winner stood out, according to CC editor Anthony Paonita. “The whole was greater than the sum of its parts. From using technology creatively, to managing its litigation proactively, to overseeing a select group of law firms, General Electric does it all.”

GC’s Likely to Spend More on Outside Counsel This Year

According to a survey report by the Association of Corporate Counsel and reported in ALM’s newspaper in San Francisco, The Recorder, in-house attorneys across the country report that they'll be giving more work to outside firms this year. The survey found that 25 percent of in-house counsel plan to increase their use of outside counsel, up from 16 percent last year. There's speculation that SOX is the central reason. 

Compensation: General Counsel

ALM’s online venue, Law.com carried a report the other day from the Associate Press about Merck & Co. raising their GC’s salary, from $689,400 to $780,000, while noting that the New Jersey-based drug manufactuer has been the target of numerous lawsuits from consumers claiming that Merck's Vioxx painkiller caused heart attacks. It took the drug off the market in 2004. The company said in a filing with the Securities and Exchange Commission that Chief Executive Richard T. Clark recommended increasing Frazier's salary because of his "significant contributions to Merck, as well as his highly valuable experience and exceptional leadership abilities." Frazier has been with the company since 1999, according to Monday's filing, the report said.

Each year, ALM’s editorial research editors cull through current SEC filings to find the five highest-paid executives at the largest companies (required by law to be listed on the proxy statement each year), because very frequently the General Counsel or Chief Legal Advisor is among those five highest-paid executives. ALM Research then archives the information (published each year in Corporate Counsel magazine), making it available in a spreadsheet report, the GC Compensation Survey. The report includes the name, rank, salary, bonus, and where applicable, other forms of remuneration for each of the GCs ranked. (As always, the information is available for no extra cost to subscribers, and on a pay-per-view basis to non-subscribers.)

This year, ALM’s newspaper in Atlanta, Daily Report, built a database to archive the same types of information about compensation for GCs and CLOs in Southeastern states. The most current published list, GC Pay in the Southeast is available online for free, and covers 197 GCs/CLOs in 11 Southeastern states.

Survey Results: The European Mid-Tier Corporate Market

A third major study of the European legal services market has just been released by LexisNexis Martindale-Hubble and written by Silvia Hodges, this one focusing on European mid-tier corporations, and what matters most in the delivery of legal services by outside counsel. According to the report, the survey establishes that, while few of these companies have formal annual legal budgets, they require the same full range of legal services as their larger competitors, and a significant number intend to increase their external legal spending in the next year.

   

Both qualitative and quantitative methods were used in the study, with 194 companies responding to a questionnaire, and 31 companies participating in in-depth face-to-face interviews. Of importance to marketers and business development professionals were the findings that selections of new firms were made mostly through referrals, that decision-makers took a dim view of marketing “gimmicks,” and that most decisions were made based on the reputation of an individual practitioner, rather than the firm’s reputation. In addition, respondents emphasized that their outside counsel were expected to display an in-depth knowledge of the client’s own business and industry, to the point of matching the expertise of the in-house counsel.

   

Request for copies of the survey may be addressed to Silvia Hodges (hodges@silviahodges.com).

GC Compensation Info for Southeastern GCs

ALM’s Atlanta-based magazine GC South has developed a new database into which they have compiled information about compensation for 197 General Counsel from public companies in 11 Southeastern states (Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee and Virginia). And from that database they have just published a list, GC Pay in the Southeast, available free to subscribers of the Atlanta newspaper Daily Report, or by free registration.

General Counsel Compensation: Southeastern GC’s Pay Soars

ALM magazine GC South published their third annual GC South Compensation Survey recently. The report notes that “A quick look at GC salaries across the Southeast might give the impression that nobody's getting any raises -- but don't be fooled. Though base pay and bonuses may be flat, the value of restricted stock awards has soared.” This trend follows the general trend across corporate America, “where executive pay is being more closely tied to performance.”

Find out more about GC Salaries from ALM Research Online.