To have or to have not?
The Legal Director Benchmarker Survey questioned more than 100 senior in-house lawyers about pay. The survey found significant levels of dissatisfaction among heads of legal and a widening gap with private practice, writes Philip Hoult
Heads of legal at UK companies are paid on average just £74,000, and a large number are not happy about it.According to the Legal Director Benchmarker survey of in-house pay, almost a quarter (23%) of heads of legal are dissatisfied with their remuneration package. And 6% go as far as to describe themselves as ‘not at all satisfied’. One in three (34%) heads of legal also feel their pay is not comparable to that enjoyed by other heads of legal in similar companies.When asked to explain the discrepancy, one-third say that they have a general feeling their package was low, while one-fifth said it is below what they believed were the relevant industry levels. Others put the discrepancies down to internal politics (17%) – with general counsel saying that non-lawyer heads of department earned more money – or to being in a small company with low pay (11%). “Over the years I have had the definite sense that we are losing ground,” one head of legal, who asked not to be identified, says. “The trouble is, you have be careful about how you benchmark yourself,” he told the survey, which was conducted in association with Hays ZMB.Although the average salary for a head of legal is £74,000, the amount can vary widely, with 3% earning more than £200,000, but just over a quarter (26%) taking home less than £50,000.This is substantially less than the average profits per partner at nearly every top 100 firm in the UK.Unsurprisingly, the dissatisfaction is at its greatest among the lowest-paid heads of legal. Nearly half of those earning less than £50,000 say they are unhappy. These heads of legal tend to work for small companies (those with a turnover of less than £200m) and are either the only lawyer in their firm or part of a small team. Nearly half (48%) of those who said they are dissatisfied with their pay are the only lawyer at their company’s UK head office.There was also greater discontent among heads of legal in the regions, who suffer considerably compared to London-based general counsel, and among female heads of legal, who are paid on average 26% less than their male counterparts.Apart from the high levels of discontent, the other key finding of the survey is that the gap between remuneration in private practice and in-house is wider than ever at all levels, not just in senior positions.The average salary for in-house lawyers with up to three years’ post-qualification experience (PQE) is £36,000, while for those with between three and six years it is £48,600. This is well below the new benchmark starting salary of £50,000 for newly qualified lawyers at top City firms and the across-the-board salary increases for most senior assistants.What the City firms and top regional practices choose to pay their most junior lawyers is not considered to be a major problem for some senior in-house lawyers.“The media will hype those salaries that will create the most reaction,” says Geoff Atkinson, senior legal adviser at Monarch Airlines. “In any field, you will get extremes,” he adds. Of more concern to heads of legal and senior in-house lawyers is the widening gap at more senior levels – traditionally a happy hunting ground for potential recruits.After all, in the past, companies have shied away from recruiting junior lawyers who require supervision and lack experience, preferring those with more than three years’ PQE and a wider range of skills.The average salary for an in-house lawyer with between six and 10 years’ PQE – the time when most private practice lawyers will be up for partnership – is just £65,500. Just 26% are paid more than £80,000, while 9% are paid more than £100,000.Broadly speaking, this is substantially less than a junior partner at a major practice, whether in the City or in the regions, would expect to earn.The gap is set to widen even further, the survey reveals, with few in-house lawyers enjoying the 20%-plus salary increases their counterparts in private practice received last year.Many had to make do with pay rises close to inflation, with more than half (52%) being awarded increases of less than 5%. A further quarter (24%) were awarded an increase of between 6% and 10%, while only 4% had rises of more than 20%.It does not look as if companies this year will do anything to address the disparity. Although a quarter of heads of legal expect bigger salary increases this year, a majority (55%) expect them to remain the same and a small, but significant, number (12%) think they will decrease.Pearson’s group general counsel, Gary Rinck, is one head of legal who expresses concern at these developments. “There is a connection between private practice and in-house remuneration,” Rinck says. “People recruit for in-house positions from outside lawyers. If there is a great disparity, companies will not get the quality lawyers they are looking for.”Rinck’s view is shared by Murray Fairclough, director of legal services at legal expenses insurer Abbey Legal. “Every time the gap widens,” he says, “the more difficult it is to justify the differential.”The Benchmarker survey reveals that heads of legal continue to place significant emphasis on the role benefits can play in attracting staff to in-house legal positions, with some 86% rating them as “very important” or “quite important”.More than half (51%) believe that the overall value of benefits was increasing when compared to wages and salary, with only 15% saying they believe their value was decreasing.These benefits can be substantial. The average level of pension in terms of percentage of salary is 8.3%, although this can vary significantly. More than a quarter of lawyers with five years’ PQE receive a pension of more than 10%, with about one in five (21%) getting between 6% and 10%. A similar number receive a pension of 5% or less of salary.A higher contribution to remuneration are bonuses, which form part of the pay package of 68% of in-house lawyers. Share options also continue to be a widely used part of the package, with 26% of in-house lawyers able to take advantage.But heads of legal are sanguine about the potential to make significant amounts of money, following the recent volatility in the financial markets. Many who were sitting on large paper profits a year ago will have seen the value of their options plummet.Heads of legal are also able to offer potential recruits an array of additional benefits. The most common are: private healthcare (81%); holidays above the statutory minimum (80%); life assurance (70%); and a car allowance (68%). In approximately half of cases, lawyers are allowed flexible start and finish times (50%) and also allowed to work from home for part of the week (46%). These benefits are seen as key to attempts to win potential recruits.When all is said and done, it is the overall package – including traditional in-house attractions such as the chance to work closer to the decision-making process – that continues to matter.“I take a holistic approach,” says Simon O’Hara, legal adviser at electricals to precious metals company, The Cookson Group. This involves looking at the demands and challenges of the job, the lifestyle it provides and other issues on top of the overall level of remuneration. “On that basis, I am satisfied with my job,” he adds. “If I was less satisfied, there would be more pressure on my salary.”
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