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The hottest issue that US in-house counsel will have grappled with at the start of the New Year is how to deal with the fall-out from last year’s 50% bump in US associate salaries, followed by the inflated year-end bonuses for associates at leading Wall Street firms. Although US in-housers are groaning loudly about the impact that the salary spike will have on their legal budgets, it is unlikely that the increase in costs will be noticed in corporate boardrooms. After all, legal fees are still a small fraction of general and administrative (G&A) costs. It does not take a high IQ to figure out the real driving force behind in-housers’ unhappiness with associate salaries: first-year associates are now making more than most mid-level and many senior corporate law department lawyers. A few in-housers with children fresh out of law school have observed that their kids are making more than they are, with 30 years’ less experience in practising law. This has been a tough pill for mom and pop to swallow.As the magic circle firms decide what to do about the disparity in associate pay across the pond, it is worth a few words to say what the City can expect to see in the way of cost-management efforts, because a very unhappy lot of in-house lawyers veil their revenge on Gundersons’ pay raise and its progeny.

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