Bonuses, In-House Counsel, Job Searches, Money

Inside Straight: In-House Compensation

Ed. note: This is the latest installment of Inside Straight, Above the Law’s new column for in-house counsel, written by Mark Herrmann.

I really don’t care much about compensation.

Let the abuse begin.

If you hate your job, then no one can pay you enough to make going to work every day worthwhile. And if you love your job, you won’t be sitting around fretting about your pay. I understand that this is America and all that, but within very broad limits, you’re nuts to accept one job over another because of a small difference in compensation.

(I understand that you may be trapped in a job, because of student loans, or kids in college, or the like. I understand; trapped is trapped. And I understand that I personally have been awfully lucky, because I’ve never had to worry about finding money to pay next month’s rent, so I speak from a particular point of view. Despite all that, I stand by what I said — if job A and job B are meaningfully different from each other in ways that matter to you, and you’re not trapped, you’re nuts to take one job over the other just to earn a few extra grand each year. Period.)

Naturally, since I’m not interested in the subject, you can guess the question I’ve been asked most often since Above the Law anointed me an in-house counsel guru:

How does in-house compensation work, and what questions should I ask about compensation if I’m interviewing for an in-house job?

I was clueless. So I cobbled together a recent post (from links elsewhere on the web) about bonuses paid to in-house counsel. And now I’ve talked to a co-worker who deals with compensation issues and has an office nearby, and I reached out to folks at other corporations. Here’s what I learned.

First, several industry-wide compensation surveys exist. They include the Hildebrandt Law Department Benchmarking Survey, Inside Counsel’s annual compensation survey, and Altman Weil’s Law Department Compensation Benchmarking Survey. If you look there, you’ll get a general sense of what to expect.

Second, compensation for companies tends to track company sales. Companies with more revenue tend to pay more compensation for similar jobs.

Third, extra incentives such as bonuses and stock are an important part of in-house compensation packages. (I actually knew that before the guy down the hall told me so.) Your compensation will probably consist of a base salary, a bonus, and (depending on your position in the company) an award of stock or options.

Fourth, at many law firms, you receive a certain amount of compensation and then pay for many other things on your own nickel. Depending on the firm, that may include some items that are pretty significant (such as paying for some or all of your health insurance) and others that are less important (such as paying for your BlackBerry, continuing education programs, certain business development expenses, and so on). Corporations vary in this regard, but some will provide a basic compensation package and also pick up some of the extras, which raises your overall remuneration.

Fifth, compensation will naturally be affected by your level of experience and area of legal expertise.

Finally, many corporations are today making increased use of discretionary (rather than fixed) compensation. You may thus have a base salary that more or less tracks the rate of inflation, coupled with discretionary bonuses that reward you for individual or corporate performance.

In addition to pestering folks for that general information about in-house compensation, I also asked for suggestions about questions one might pose to potential employers. (I must say that I asked none of the following questions before I accepted my in-house job, and you’d have to have much better interpersonal skills than I do to get away with asking some of these puppies during a job interview. But this is what people suggested to me, and who am I to censor?)

  • How are incentives calculated? Are they based on company revenue, department performance, individual performance, or a combination of all three? How is individual performance measured?
  • Are there midyear reviews that allow you to track your performance against specified goals?
  • What will your career path be within the law department? Are there career paths that will let you develop your skills and move up in the ranks?
  • What has been the corporate culture about cost cutting? Have there recently been cuts in the company’s shared services functions (such as the law department)? If so, what has the effect been on salary increases, career progression, and bonus payouts during the last few years?
  • What is the range of bonus targets for employees at different levels within the law department, and how are those ranges determined?
  • When you receive a bonus, are you allowed to take the full bonus in cash or are you required to defer some of your bonus in the form of a stock award? If a stock award, what is the vesting period?
  • What type of market analysis does the company do to set lawyer compensation, and how often does the company adjust compensation to the market?

Frankly, and apparently unlike many folks who visit Above the Law, I don’t find compensation to be a fascinating topic. But you asked, and I’ve done what I can to help. I hope that serves a purpose.

But I didn’t take much joy in it. Please don’t expect me to return to this subject for a good long time.

Earlier: Prior installments of Inside Straight

Mark Herrmann is the Vice President and Chief Counsel – Litigation at Aon, the world’s leading provider of risk management services, insurance and reinsurance brokerage, and human capital and management consulting. He is the author of The Curmudgeon’s Guide to Practicing Law.

You can reach him by email at

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