In-house lawyer salary summary

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For more detailed analysis of the factors affecting in-house lawyer compensation, please see the following articles:

Moving in-house - a guide for the private practice lawyer

Recruiting in-house lawyers - a guide for HR professionals

Recruiting in-house lawyers - a guide for General Counsel/Legal Directors

2010 and the first part of 2011 saw the in-house legal recruitment market continuing to remain robust. Indeed 2010 saw the numbers of solicitors with practicing certificates in commercial roles increasing by nearly 8% according to The Law Society {1}.  Over the past decade the number of qualified lawyers within commercial organisations and financial institutions in England and Wales, (defined by The Law Society as Commerce & Industry (C&I)), has grown at an astonishing rate. Between 2000 and 2010 the number of solicitors with practicing certificates in C&I grew by 140.5% so that by 2010 nearly 11% of all qualified solicitors were working in-house in commercial roles.  Moreover, whereas 15 years ago the majority of in-house lawyers were sole counsel, today that applies to less than a quarter of all legal departments in C&I.   

In spite of this phenomenal growth in both the size and complexity of commercial in-house legal departments, in-house lawyer compensation, particularly at the senior level, continues to lag behind that of law firms in virtually all sectors. Even lawyers who move in-house from private practice are initially able to secure similar or better compensation will, after a few years, likely fall behind relative to their law firm peers.

2010 saw fairly modest increases in base salary increases (inflation or less) for lawyers in most industry sectors. This is reflective of overall corporate compensation policy rather than legal department specific. There were exceptions to this. For example, early in 2010 many investment banks, largely for regulatory or political reasons, substantially increased base salaries – 15-30% for mid-levels and sometimes much more than 100% at MD level.  These base salary rises were for political/regulatory reasons in order to reduce the proportion of compensation paid in bonuses. However, in most instances where this occurred, total lawyer compensation fell particularly as, in most banks, the proportion of deferred bonus payments increased.       

Surveys of in-house salaries tend to be less accurate than those for law firms. The reason for this is that law firms will generally make salary information public or will have the information to hand to accurately respond in detail to surveys; the same is generally not the case for in-house legal departments unless they are highly localised and "of a type", such as investment banks, whose legal departments tend to be large and comprised of capital markets lawyers based in central London. For this reason any generic in-house lawyer salary survey can only be a guide and organisations wishing to find specific "market rates" for individual lawyers will need to refer to the articles above.

In summary the main factors affecting in-house compensation levels are:

• Industry sector;
• Size of in-house organisation;
• Geography/ location of role;
• Size and seniority of role; and
• Specialisation of lawyer.

In addition, local relative law firm compensation is also an important, indirect contributory factor.

As a guide the table below shows salaries across the various in-house sectors and represents London and the Home Counties in-house teams with 4-10 legal personnel. The base salary figures are inclusive of car allowances and other cash benefits. Bonus payments include non-contingent stock. The figures are intended as a broad guide to be read in conjunction with the commentary in the relevant articles mentioned above.

* Includes investment management houses, private banks, insurance companies, commercial and retail banks

Heads of Legal/"Director" level positions in departments with 4-10 legal personnel

In legal departments of this size a senior level lawyer running the team would typically be styled "Head of Legal". However, in organisations with large legal departments this would equate to a section head, or "Director" level, position in a financial services company or bank.

Heads of Legal/Legal Directors in smaller commercial organisations

Nearly a quarter of in-house departments consist of a sole lawyer who is usually the legal director for the organisation or its UK subsidiary. Compensation will vary according to the factors above, however, in the London and Home Counties environs typical base salaries, inclusive of car allowances and cash benefits, range from £95,000 to £150,000 with typical median of £112,000. "All in" compensation, inclusive of bonus and non-contingent stock, generally ranges between £107,000 and £175,000 with a median of £120,000.

Group General Counsel/Heads of Legal

For companies with larger legal departments than those reviewed above, comparisons for Heads of Legal by industry sector becomes far more difficult owing to a host of variables such as: contingent performance stock grants, board membership, responsibility for compliance, and whether or not the role entails regional or global responsibility. Some would argue that this makes direct quantitative comparisons almost meaningless; however, Edwards Gibson is well placed to provide bespoke information on request.

{1} The Law Society Annual Statistical Report 2010

© Edwards Gibson 2011