Counsel to Counsel - January 2008 - (Page 19) Bonuses, Options and Specialization Drive Compensation Gains By John M. Toth T otal cash compensation for in-house lawyer positions in U.S. corporate law departments rose across the board in 2007, according to the new Law Department Compensation Benchmarking Survey published by LexisNexis MartindaleHubbell and Altman Weil, Inc. Bonus compensation was a major driver of that increase, and stock options remained a significant compensation element. Non-cash payments can more than double the value of an in-house lawyer’s total compensation package. “In-house lawyers in management positions saw their total compensation rise between 8 percent and 14 percent this year, while nonmanagement lawyers took home up to 23 percent more,” notes Altman Weil Principal James Wilber. “These increases, even after adjusting for inflation, were very solid. Generally, as in recent years, base salary increases were relatively modest, with bonuses increasing more than salaries,” he adds. Survey results showed total cash compensation increases of 14.3 percent for Chief Legal Officers (driven by a whopping 43 percent increase in bonus dollars, to $157,400), 13.7 percent for Division General Counsel (including a median $104,600 bonus), and 9.6 percent for Deputy CLOs (including an $84,000 median bonus). Total cash compensation gains of nonmanagement lawyers included 5.1 percent for high-level specialists and 23 percent for staff attorneys with one year or more of experience. Stock 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. Stock options for other management positions ranged in value from 79 percent to 92 percent of their total cash compensation. Nonmanagement lawyers reported median option values of between 33 percent and 49 percent of their cash compensation. Size of the law department is a key factor in top officer compensation. Chief Legal Officers in departments with more than 25 lawyers took home $645,000, or 56.6 percent more than the national median in total cash compensation for all CLOs. At the other end of the spectrum, CLOs in one-lawyer departments earned total cash compensation of $201,500, only just over half the national median. In nonmanagement positions, practice specialty is a significant compensation differentiator. High-level securities law specialists earned a median salary that was 21.8 percent greater than the national median, with intellectual property expertise being another strong compensation driver. “In this era of increasing compliance complexity and shareholder activism, it is not surprising that corporations are paying a premium for attorneys with in-demand practice specialties,” comments John Lipsey, vice president of corporate counsel services for Martindale-Hubbell. The strong demand for recent law school graduates was likely another factor supporting the solid increases in compensation for more junior department positions. This is in light of the fact that recent graduates earned 10.8 percent more overall in 2007, reporting a median salary of $70,600, plus $4,000 bonus. “As the survey shows, increases in total cash compensation for nonmanagement 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,” Wilber says. About the Survey: The complete Law Department Compensation Benchmarking Survey, 2007 Edition contains compensation data from 343 law departments for 8,148 lawyers as of March 1, 2007. The Survey reports data on nine in-house positions ranging from Chief Legal Officer to recent law school graduate. Data are analyzed by the size of legal department, geography, industry, specialty and other key parameters. Compensation trend analyses comparing 2006 and 2007 survey results utilize a unique subset of participants. Only companies submitting data in both years are analyzed to determine the percentage change between years. For more information about this survey, please visit altmanweil.com/LDCBS. By the Numbers During the past decade, the constant-dollar total compensation of in-house counsel at U.S. corporations has seen relatively modest across-the-board salary increases. Bonus compensation, encompassing both bonus dollars and stock option awards, played a major role in the total compensation gains. NATIONAL MEDIAN SALARY AND BONUS* $500,000 $400,000 $300,000 $200,000 $100,000 $0 1998 Legend Chief Legal Officer/General Counsel Salary High-Level Specialist Salary Attorney Salary Bonus Bonus Bonus 1999 2000 2001 2002 2003 2004 2005 2006 2007 *All data adjusted to 2007 dollars Source: Altman Weil, Inc. martindale.com/c2c JANUARY 2008 martindale pulse 19 http://www.altmanweil.com/LDCBS http://www.martindale.com/c2c
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