The conventional wisdom says that lawyers in private practice make more money than lawyers who work in-house, but that looks to be changing.
In 2015, the median compensation for general counsels rose 6.9 percent and exceeded $1 million, according to a new report that examined more than 1,400 lawyers’ compensation last year. It does not yet have data on 2016.
The 27-page report was conducted by the market research firm Equilar with commentary from the legal recruiting firm BarkerGilmore. It also found:
- At companies with less than $1 billion in revenue, median total direct compensation for GCs was $725,021.
- At companies with between $1 billion and $5 billion in revenue, it was $1.2 million.
- At companies with between $5 billion and $15 billion, it was $1.7 million.
- At companies with revenues above $15 billion, it was $2.5 million.
The data was drawn from 1,139 companies that disclosed their general counsel or top legal officer’s 2015 compensation in an annual proxy report, plus a survey of an additional 289 companies.
Total direct compensation was defined as base salary, incentive awards and equity awards. It does not include pensions, deferred compensation or perquisites. They also used general counsel to refer to the highest ranking lawyer at a company.
The compensation mix varied depending on the size of the firm: As the size of the company increased, salary generally declined as a percentage of total compensation.
The report also looked at 266 companies within the S&P 500 and made comparisons about how general counsel data stacks up in different industries.
Within the S&P, general counsels at healthcare companies experienced the biggest jump in compensation with the median rising about 32.4 percent from $2.24 million in 2014 to $2.96 million in 2015, according to the report.
In other sectors such as technology, the median compensation remained flat or even declined. For instance, at technology companies the median compensation dropped from $2.49 million in 2014 to $2.17 million.
Ben Heineman, the former general counsel of General Electric and a frequent speaker and author on the role of in house counsel, said via email that the overall increasing compensation demonstrates that in house lawyers are more valued in an increasingly complex legal environment. He also pointed out that compensation for lawyers at the largest companies compares favorably to law firm partner compensation, and over time is likely to exceed partners’ take home in many cases.
According to the American Lawyer rankings, a general counsel that earned $2.5 million would fall below the 21st-ranked firm, Paul Hastings at $2.505 million, but above the 22nd-ranked firm, Schulte Roth at $2.33 million.
Bob Barker, of BarkerGilmore, agreed that general counsel’s role is expanding.
“They keep getting things put on their plate,” he said, noting that many have multiple titles such as general counsel, corporate secretary, and chief compliance officer.
“Now, the big trend is we’re projecting that about 30 percent of general counsels are going to be chief risk officers” by 2020, Barker added, explaining that his adds a level of oversight for insurance, and other risk mitigation at a company.
Although it wasn’t included in the report, Barker said he had obtained other information from Equilar’s Top 25 survey on how the second-highest ranked GC at many companies fared in terms of compensation. Across 1,700 public and private companies of all sizes, GC’s total direct median compensation was $1.2 million, while the next highest ranking lawyer in the company received a median total compensation of $585,000, according to Barker.
The full report is available online here.