By Melissa Maleske
The reaction to the recent wave of law firm associate salary raises was swift among the cohort of corporate legal departments that have been most active in pushing back against law firm rates and billing practices.
On the Corporate Legal Operations Consortium's website, message board traffic skyrocketed as the legal ops directors charged with reining in outside legal costs expressed renewed disbelief and frustration. To them, the flurry of announced law firm associate raises that began with Cravath Swaine & Moore LLP on June 6 was salt in a long-festering wound, another reminder that law firms and their clients live on different planets.
Eliza Stoker, the executive director of search firm Major, Lindsey & Africa's in-house practice group for the eastern U.S., says until very recently it was accurate to tell law firm associates eyeing a law department position that they should expect a 30 percent pay cut. In light of "astronomical" bonuses, however, the differential has grown, she says, and associate raises will only make it larger. As law firm raises hit the headlines, many associates who had been seeking in-house positions contacted MLA about their potential asking salary.
"We've had a harder time negotiating," Stoker says. "We play middleman when we get to negotiations, and we want to close it and close it fairly, with the right compensation for the right candidate. And we've had a lot more aggressive behavior from candidates who are taking the view that they'll just wait for another opportunity to come along that pays better."
On the other hand, she says, law department salaries have been on the rise for a while as in-house counsel have become viewed as strategic business partners — and as they have taken on more and more work rather than sending it all out to firms in response to growing cost pressure within corporations.
That cost pressure also places limitations on in-house salaries. With the exception of the most senior corporate counsel at large companies, there are very few in-house attorneys who pull in the kind of pay they could make as a law firm partner and, often, as a law firm associate. Corporations use their own pay scales, Stoker says, and in-house salaries are heavily dependent on individual factors, including the way CEOs view the inside legal function.
Read more of this feature at Law360.