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Lawyers who opt to go work for a company often make a trade-off, accepting more modest annual pay for the promise of stock wealth. But some are finding that the terms of the deal have changed, as they watch the value of their options plummet. “I made a bet and lost,” laments a lawyer at Santa Clara, Calif.’s Intel Corporation. He joined the computer chip maker when its stock was high, and now his options are, as he puts it, “massively underwater.” He has discovered a basic truth: “The market is proving that the wild card is not only wild up, but wild down,” he says ruefully. All of the 32 Intel attorneys who responded to Corporate Counsel‘s 2001 Quality of Life Survey (out of a total of 120 in the department) said they have stock options. Only 59 percent of those said they were satisfied with their equity stakes. The company has since worked to make employees happier with a special grant of low-priced stock scheduled to vest in only a few years. Even so, the Intel lawyers were far more satisfied than their colleagues elsewhere. In the survey, nearly three-quarters of the 499 respondents at 28 companies had stock options. But just 40 percent were satisfied with them. Only a slightly higher number, 44 percent, reported above average satisfaction with their overall compensation. The average salary reported was $125,820, with an average bonus of $38,483. “People want it all: a very competitive base, a cash bonus program, but then they also want options,” says Joyce Talmadge, executive vice president of Howard-Sloan Legal Search. “They don’t want the options in lieu of a competitive base or cash.” It’s human nature, reasons Altman Weil Inc. principal Daniel DiLucchi “People are more willing to gamble when the odds look good.” Altman Weil has included stock options in its annual compensation benchmarking surveys only for the last two years, after it became clear that companies were expanding the number of employees who could get stock options. Altman Weil’s 2001 survey of 414 corporate law departments found 33 percent of staff attorneys eligible for equity, with the percentages climbing to a high of 59 for chief legal officers. Discontent about wages was a common theme when the Corporate Counselsurvey asked company lawyers what they liked least about their work. “The pay, the pay, the pay,” complained an attorney at UAL Corporation’s United Airlines. The airline, headquartered in Elk Grove Township, Ill., vied with Plano, Texas-based retailer J.C. Penney Company Inc. for last place on lawyers’ satisfaction with their compensation. The UAL lawyer, in written comments added to the survey, said: “Base salaries should be brought up to at least what first-year associates make at law firms.” Indeed, the previous winter’s associate salary wars gave many corporate counsel something to gripe about. Salaries for new graduates at the top law firms across the country have skyrocketed to $125,000 with, in some cases, bonuses of $40,000. Lawyers at Penney, UAL, and a few of the other companies surveyed were well past their first year practicing law, but, they told Corporate Counsel, they earned base salaries just above $100,000, with some bonuses not even rising to $10,000. This is slightly below the median cash compensation (salary plus bonus) of $147,325 found by The PricewaterhouseCoopers 2000 U.S. Law Department Spending Survey of 216 law departments in 16 industries. The disparity between law firm and corporate pay might go down more easily if the hours worked in-house were proportionately less. But some survey respondents say that difference isn’t so dramatic. At the Deerfield, Ill., health-care supplier Baxter International Inc. — another low scorer in happiness with pay (only 32 percent gave their compensation high marks) — a lawyer complained about “working almost as many hours as at a law firm for a lot less money.” While half of the survey-wide respondents said they work 46-55 hours a week, 23 percent reported toiling 56-65 hours. A corporate counsel position is “not just a nine-to-five job,” observes Kathryn Parker, a director in the PricewaterhouseCoopers group that consults law firms and law departments. Still, the company lawyers’ hours may pale in comparison to law firm associates’ 60-to-80-hour workweeks. “Originally, quality-of-life issues were viewed more as an hours-of-work comparison,” says Parker. But apparently necessity is the mother of appreciation. “More recently,” Parker observes, “people look at the total package: opportunities to work with corporate clients or to get stock options.” A senior lawyer at a major California utility hit hard by the state’s energy crisis estimates that he is “only working 10 percent less hard than at [his former] firm, but not making 10 percent less.” While tempted to return to private practice, this attorney admits, “I like not having the same pressure to make partner. I don’t have to go out there and hunt what’s going to be for dinner for the next few years — so that’s one of the relief measures.” With no need to hustle for business, in-house lawyers often can rely on a more consistent workload. Says Abby Bried, a managing attorney at Houston’s Continental Airlines Inc.: “It’s not always fair to compare [compensation in-house] to a law firm.” Bried has suffered, and profited, along with the ups and downs of the airline industry. But regular hours and travel benefits have won her loyalty. While compensation at Continental was not the highest in the Quality of Life Survey, satisfaction levels were tops, with 92 percent giving their company the highest marks. Bried says, “It boils down to this: The company is very open and direct and fair with all of its employees.” Case in point: Continental, like many companies, recently conducted a salary review to raise its lawyers’ pay up to a level comparable with that of in-house counsel at other corporations. But the airline went a step further than some corporations might: It considered staff reaction to the findings, and then expanded the study to include area law firms. Company lawyers’ pay is unlikely to match their brethren’s in private practice any time soon, if ever. And these days, stock options are less able to help paper over the gap. So GCs, if you want to keep attracting top-notch lawyers, your staffs’ quality of life is the key. Related Chart: What They Earn

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