Lawyer compensation… Look at the forest, not just the trees.


More musings from me on lawyer compensation!
TL; DR: Look at the forest, not just the trees.

Law firm bonus season is winding down, and more and more law firms are launching their return-to-the-office plans. Despite the continued salary wars, we expect many BigLaw lawyers will explore in-house opportunities. It’s a great time to do so — the in-house job market is hoppin’!

Inevitably, we’ll be having The Compensation Conversation (*trademark pending, ok not really).

The different compensation structures of firms vs. companies completely befuddles many law firm lawyers.

Big firms pay a high base salary and the potential of earning a bonus (which can be very generous) for those who bill a [insert expletive adjective here] of hours.

Companies pay a lower base salary with the opportunity to earn an annual bonus that is typically tied to personal performance and company performance. Most companies set a bonus target (typically 20-40%) and allow for the the possibility that the bonus could pay anywhere from 0% of the target to 200% of the target. So, for example, if your target is 25%, and both you and the company have a banner year you might get a 50% bonus! [📌TIP: When interviewing for an in-house job, it can be useful to ask for some history of whether the company has been hitting, exceeding, or falling short on bonus targets.] Some companies also offer long-term incentives that may be paid in shares of the company stock or in cash. This LTI compensation typically vests over multiple years (most commonly 3 years), meaning you receive 1/3 of the bonus for three years in a row. By year 3 of your employment, you would receive 1/3 of Year 1, 1/3 of Year 2, and 1/3 of Year 3, all in one payment!

Many companies also offer much more generous employee benefits than law firms. [📌TIP: Ask for a summary of benefits document. You may find that the 401(k) matching program, employee stock purchase plans, health/vision benefits, insurance plans, and/or other retirement savings programs exceed those offered by your law firm.]

Law firm lawyers need to consider the whole compensation picture. Don’t stop in your tracks when you hear the base salary or draw an arbitrary line in the sand that you refuse to take a base salary less than what your law firm is paying a first-year lawyer. That’s just short-sighted.

Objectively consider your household expenses and needs, your financial goals, and of course your lifestyle and career goals before saying “no” to an in-house role.


Stacy Humphries is President of Pye Legal Group, an executive search firm that specializes in recruiting and placing legal and compliance professionals with corporations and law firms. Before her recruiting career, she was a lawyer with Vinson & Elkins and the Vice President of Legal Affairs for the Houston Rockets and Toyota Center.

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