Life After Lockstep: Understanding In-House Counsel Compensation

Law firm associates are often surprised at the lack of compensation transparency for in-house positions — particularly in states like Texas where disclosure is not required. These lawyers have spent their careers in a lockstep compensation scheme. Most associates know they will receive less cash compensation at a company than at a law firm, but their knowledge often ends there. Understanding a typical in-house counsel compensation package is a crucial part of considering a transition from a law firm to a corporate legal department.It can be helpful to think of compensation in four potential buckets. The first is base salary. Big Law firms typically have a very public and competitive salary/bonus scale that is directly related to the attorney’s class year. Companies’ salary information is not readily available. Unless required for SEC disclosure, base compensation within a legal department is opaque. The base salary for in-house positions can be substantially lower than the base salary offered by law firms. For example, last year we placed a 2018 M&A associate from a top firm (which means this person was making $370,000 base on the Big Law salary scale at a small public energy company with a base of $205,000. Given this individual’s…