Factors That Influence Attorney Compensation
Attorney compensation varies significantly across the industry, depending on a number of different factors. Chiefly, however, the overall attorney compensation scheme flows from the particular industry in which you practice. Biglaw and in-house compensation schemes are quite different, for example, with Biglaw firms generally paying more for their attorneys than equivalent in-house departments.
Curious about what factors might affect your compensation? Let’s take a brief look. Consider the following.
Implementation of Performance-based Compensation Systems
Compensation for attorneys can be either lockstep (in other words, compensation advances at a predetermined rate every year) or performance-based. Performance-based compensation schemes are sometimes intermingled with lockstep compensation, particularly in Biglaw, where attorneys will be paid a minimum salary on the basis of their experience and position, and may thereafter qualify for additional compensation incentives on the basis of various performance-based metrics, such as billing hours logged.
Legal Practice Area May Affect Compensation
The legal practice area and industry in which an attorney practices can significantly affect their overall compensation. For example, an attorney working with healthcare institutions is likely to earn less, on average, than an attorney working with financial institutions. Similarly, attorneys working in intellectual property law earn more, on average, than attorneys working in compliance matters. If you would like to earn greater compensation for your work-product, your best bet is to simply transition over to a position in a legal practice area (or industry) which pays more, on average.
Experience and Position Can Set Hard Limits
Bear in mind that many firms and in-house departments set a soft cap on compensation on the basis of an attorney’s experience and actual career position. For example, if you are a third-year attorney at a firm, you may be limited in terms of your potential compensation, even if you work much harder than your colleagues and have better performance metrics.
Many attorneys find that there are advantages and disadvantages to these “hard limits” on compensation. Generally speaking, hard limits and a clear ceiling on compensation means that attorneys don’t have to be concerned about leaving money on the table — by working at a sufficient level of competence, they can rest assured that they will be given proper compensation that is roughly equivalent to that of their peers. On the other hand, it also means that extremely high performers are not rewarded for their efforts (as much as they would be in a firm with a more meritocratic compensation structure).
To understand whether your target firm or in-house department is excessively formalistic in its compensation structure, or is willing to consider performance-based metrics, make sure to speak with a qualified legal recruiter who has insider access to the compensation structure of the target firm or in-house department. If you’re the sort of attorney who is interested in moving to a particular type of compensation structure, this can be a make-or-break matter.
Stagnation Before Career Transition
In the legal industry, as in many other industries across the United States and California, waiting too long in a given position can put a damper on your compensation. Generally speaking, the more frequently that an attorney moves to a new firm/in-house department, and a new position, the higher they are paid. For example, given a four year period, an attorney who moves twice (once every two years) to new positions is much more likely to be better compensated than an attorney who does not move at all, and remains in the same position as he or she started.
To avoid stagnation of pay, it may be necessary to move to another legal position with a new firm or in-house department, even if your current position is comfortable and satisfying. By moving, you ensure that your credentials will be given a proper re-assessment by a third-party. Further, with the aid of a skilled legal recruiter, you can improve the perception of your value such that the hiring company will be more inclined to put you in a position at a greater level of compensation than you initially had when you entered.
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If you are a California attorney looking to make a career move, contact the legal recruiters here at Garb Jaffe & Associates. Our experienced legal recruiters understand the industry and how to maximize your potential compensation, and will work with you to develop an effective recruitment profile to improve your chances during the hiring process.
Call (310) 207-0727 to setup a consultation with one of our San Francisco Bay Area legal recruiters. We look forward to helping you on your recruitment journey!