It’s no secret that if you’re looking to max out your earning capacity as an attorney, a legal department isn’t the place to do it. In-house compensation has never matched law firm pay. But legal departments have been narrowing the compensation gap. According to data compiled by staffing firm Robert Half Legal, for example, between 2005 and 2006, salaries at large law firms grew only .4 percent on average, while in-house salaries grew nearly 10 percent.

However, by this time next year, law firms will have blown the differential wide open once again. Major New York law firm starting salaries jumped from $125,000 to $145,000 this year. The rest of the nations’ major firms will soon follow suit. While this will broaden the compensation gap between firms and legal departments, the good news is that the in-house salaries will continue their incremental climb.

“The huge increases at law firms will put pressure on legal departments to start narrowing that gap again,” says Mike Evers, president of Evers Legal Search in Chicago. Although catching up to law firm compensation remains a pipe dream, you should take heart in the data InsideCounsel’s 2006 compensation report reveals.

“The big picture is that we are starting to see a movement back toward a seller’s market for legal employment,” says James Wilber, principal at Altman Weil.

Download the 2006 Compensation Report