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Navigating Compensation Trends in 2023: Ensuring Fair Pay in the Legal Sector

Over the past decade, the legal industry has undergone substantial transformations, prompting law firms and in-house legal departments to continually adjust their compensation strategies to attract and retain top talent. In 2023, evaluating whether you are underpaid is more crucial than ever, given the salary increments, shifts in bonus structures, and the emergence of new compensation models. This article delves into the prevailing compensation trends in the legal sector and offers insights on how to ascertain if your remuneration aligns with current market standards.

Grasp the Compensation Landscape

To accurately assess whether you are underpaid, it is imperative to comprehend the existing compensation landscape for legal professionals. In 2023, Biglaw firms have persistently elevated associate salaries, with first-year associates now receiving a market standard of $215,000. This rising trend encompasses all seniority levels, with eighth-year associates earning up to $375,000.

Partner compensation has also witnessed a surge, with average profits per partner surpassing $2 million at several distinguished law firms. In-house general counsel roles have experienced considerable salary growth, with chief legal officers at Fortune 500 companies earning between $700,000 and $3 million, contingent on the company’s size and complexity.

Benchmark Your Compensation Against Industry Averages

A practical approach to determining whether you are underpaid is to juxtapose your current compensation with industry averages. Resources such as the National Association for Law Placement (NALP) and legal industry publications furnish extensive salary data for diverse legal roles and practice areas. Bear in mind that compensation can vary considerably based on factors like firm size, location, and practice area specialization.

Evaluate the Significance of Bonuses and Benefits

Beyond base salaries, bonuses and benefits are instrumental in ascertaining total compensation. In 2023, Biglaw firms have consistently offered substantial bonuses, with year-end and special bonuses frequently reaching six figures for high-performing senior associates. Moreover, law firms and in-house legal departments have broadened their benefits packages, encompassing health insurance, retirement plans, and flexible work arrangements. To precisely assess your compensation, take into account the worth of these supplementary factors.

While examining your compensation, it is vital to recognize that base salary constitutes just one aspect of a comprehensive compensation package. Bonuses and benefits, such as health insurance, retirement plans, and vacation time, can substantially influence your overall earnings. Ensure that you incorporate these components when comparing your compensation to market standards, as they can significantly impact your total income.

It is important to note that not all Am Law firms adhere to the market standard for compensation, with some underpaying their associates. For instance, Gibson Dunn has faced scrutiny in recent years for not aligning with the industry’s compensation trends. Despite the firm’s renown for its high-profile cases and robust practice groups, reports indicate that its associate compensation packages have not paralleled the rapid salary growth observed at other Am Law firms. This disparity underscores the necessity of researching and contrasting compensation packages across firms, even those with esteemed reputations, to guarantee that you are justly compensated for your skills and expertise.

To accurately determine if you are underpaid, gather information on comparable positions within your specific practice area, location, and experience level. This data can often be sourced from salary surveys, legal industry publications, or through conversations with colleagues and recruiters.

Examine Your Compensation in Relation to Your Peers

Another valuable tactic is to compare your compensation with that of your peers. Networking and candid discussions with colleagues or alumni can yield invaluable insights into the compensation landscape within your practice area or region. Approach these conversations with tact and professionalism.

Consult an Expert for Guidance

If you are uncertain about whether your compensation aligns with the market, consider seeking advice from a legal recruiter. Knowledgeable legal recruiters, like those at Lateral Link, possess an in-depth understanding of the legal market and can offer tailored guidance based on your distinct background and career aspirations.

Discerning if you are underpaid in 2023 entails comprehending the current compensation landscape, contrasting your salary with industry averages, taking into account bonuses and benefits, appraising your pay in relation to your peers, and seeking expert guidance when necessary. As the legal industry continues to evolve, staying informed about compensation trends and engaging in open dialogues can help ensure your pay corresponds with your skills and experience.

If you suspect that your compensation is not commensurate with the market, or if you are exploring new opportunities with competitive compensation packages, contact Lateral Link today. Our adept legal recruiters can assist you in navigating the intricate legal market and discovering the right position that aligns with your professional objectives and financial expectations. Don’t leave your career and financial success to chance – let Lateral Link help you seize the opportunities you deserve.

Featured, Market News, Tips

The Great (Law Firm) Resignation – How to Resign (Part I)

We’ve all heard a lot this year about “The Great Resignation.” As is the case in many industries, law firms are contending with an unusual volume of resignations. In our role as recruiters, we at Lateral Link have a front row seat into both the mechanics of the resignation process and also the emotional angst that it sometimes entails. From uncertainty over the decision to resign to a lack of knowledge of how to give notice in a professional manner to anxiety over how to respond to a counter-offer, lawyers who are considering leaving their jobs have a lot on their mind.

This week we’re taking a look at some of these issues, in two parts. Today we address how to prepare for and execute a smooth resignation, while managing the emotions accompanying this process. On Thursday, we will discuss counter-offers.

Managing doubts about the decision to leave

For some people, the decision to resign is an easy one, but others really struggle with it. Perhaps it’s fear of the unknown, fear of burning bridges or disappointing people, or self-doubt about one’s ability to succeed elsewhere. If you experience this anxiety, keep in mind that it’s normal, and it doesn’t mean you’re making a bad decision. At the end of the day, you have to trust your gut. You’ve weighed the pros and cons and made a thoughtful determination about what’s best for you and your career. Be confident and comfortable in this choice and know that you are doing the right thing, even if the process isn’t a fun one.

Resigning is like ripping off a band aid — the fear is generally worse than the act itself. Nine times out of ten, your manager is an experienced professional and will have been in this situation before, so it will only be awkward if you make it that way. If you commit to leaving in the most professional and ethical way possible, the knowledge that you’re going about the process in the right way should help to calm your nerves.

Timing your resignation

Start by getting your ducks in a row prior to resigning. Do your best to tie up loose ends and stay on top of your workload to avoid a scramble when your last day comes.

Try to arrange it so that immediately before resigning, you have time to do whatever it is that helps you de-stress: meditation, deep breaths, exercise, or yoga can set you in the right frame of mind. Give notice first thing in the morning when your mind is clear, stress level is lower, and your boss is more likely to be around. If you wait until the end of the day, you may find your boss is distracted or busy with other matters.

Give at least two-weeks’ notice. Not offering any notice at all is completely unprofessional. Even if you think your employer will want you to leave immediately, it is customary to at least offer to stay on for two weeks to help transition your matters. Once you resign, leave promptly after your notice period ends. Each of us is fungible, so there is no good reason to stick around for an extra week or two.

Who to tell?

You should resign to just one person, preferably your direct supervisor or department head — even if you don’t like that person. There’s no need to reach out to several members of management, and you shouldn’t tip off your resignation to other colleagues beforehand.

Resign in person (or if necessary, via video). Don’t resign by e-mail, voice mail, or letter (unless a written resignation is also required). You must put your big kid pants on and summon up the courage to resign face-to-face.

What to say?

Keep it simple: “Karen, I want to let you know that I will be leaving Adam & Brown to join Cox & Smith. This was a very difficult decision to make. I’ve had a good experience here but I believe this is the right decision for me at this point in my career. I hope we can stay in touch.” Leave it at that.

You should be prepared for any reaction. Your boss may be supportive and collegial, cool and dismissive, skeptical, angry, or disinterested. Questions may range from “where are you going?” to “why are you leaving?” to “why didn’t you tell me you were unhappy?” Whatever the reaction, don’t take it personally. Be mindful that your boss has other matters to tend to besides your career plans.

Whatever you do, resist the urge to “send a message” with a proverbial mic drop. You can’t control your employer’s reaction, but you can control how you comport yourself. Don’t be petty or childish — keep things mature, professional, and courteous. Realize that you are likely to cross paths with these people again in the future. Passive-aggressive (or in some cases, just plain aggressive) actions may give you short-term satisfaction, but there’s a good chance you will regret them later. There is no upside to criticizing colleagues or the experience you’ve had. Take the high road and be complimentary — even if you don’t mean it.

What to do after you have given notice

Just as you should approach the resignation conversation professionally, you should behave in a professional manner during your notice period. Don’t gossip with colleagues who stop by for the blow by blow. Tell them you’d be pleased to stay in touch after you leave. Wind down, transition your matters, and move on.

Be sure to follow your firm’s guidelines on resignation and departure. Don’t be cute about files, forms, hard drive contents or anything else — it’s not worth the risk.

***

What if your firm tries to convince you to reconsider and makes you a counter-offer? How should you think through a potential decision to reverse course? We’ll talk about that in Part II of this series.

If you need help navigating this “unprecedented” (yes, I said it) lateral hiring market, please feel free to contact me or any of my Lateral Link colleagues.

Featured, Team

International Lateral Moves

You might expect Biglaw firms to be reluctant to hire associates from one country for roles in a different country. Cross-border moves are inherently more complicated than hiring an associate from across the street. There are visa considerations, bar admission hurdles, even cultural challenges.

But in fact, despite the possible obstacles, the market for cross-border hiring is booming. In particular, Biglaw offices in the United States are increasingly open to bringing on foreign candidates. And lawyers from other common law countries are realizing the advantages of gaining experience in the American market. Building a professional network while working on the highest-value, most complex deals in the world pays dividends throughout one’s career, whether the lawyer stays in the United States permanently or moves back home. Lucrative American Biglaw salaries are also a plus (though you’ll need to tolerate high hours expectations in exchange).

If you are a well-credentialed attorney working in Canada, Australia, London, Asia, or the United States, now is a great time to consider an overseas move. And Lateral Link can help.

Growing demand for cross-border hires

International lateral hiring is not a new phenomenon. We have previously written about it in the context of moves between Canada and the United States. But relative to prior years, the level of interest among firms in hiring from overseas has escalated dramatically in 2021. Firms that have made these hires in the past are looking to bring in candidates in larger numbers. And firms that previously ruled out such hires are suddenly embracing the overseas model.

What explains firms’ growing openness to foreign lawyers? The biggest factor is that local candidates are in short supply. Many firms instituted hiring freezes or layoffs last spring, only to see unexpectedly strong demand for their services in the second half of 2020. All at once, firms have found themselves playing catch-up in a highly competitive market.

The talent squeeze is especially acute in the most expensive cities, such as New York and San Francisco. As with professionals more generally, the pandemic has caused many lawyers to reevaluate their circumstances and in some cases make major life changes. One of the most common has been to move away from high-priced urban centers. That has left firms with slots to fill in the largest markets facing a reduced talent pool. As a result, many are exploring creative solutions like hiring from abroad.

Another important factor is that cross-border hiring is working well for the early adopters. Firms have seen their peers succeed with this model, and that has given them confidence to jump on the bandwagon. The trend is catching on broadly: Lateral Link has worked with dozens of firms this year on international lateral searches.

There are some caveats to keep in mind. First, even in this tight market, firms still expect solid academic credentials, as well as strong and relevant substantive experience. Second, visa restrictions can be an obstacle. On the visa front, Canadians and Australians looking to move to the United States have an advantage. Canadians are eligible for the automatic 3-year TN visa issued at the port of entry; Australians can obtain an automatic E-3 visa prior to traveling to the United States. Candidates moving to the United States from other countries require employer sponsorship, which can be more challenging.

But for candidates who can surmount those hurdles, opportunities abound. There is demand for lawyers at various seniority levels, ranging from second-year associates up to senior associates and counsel. Firms are especially eager to hire in transactional practices such as M&A and finance. Capital markets demand is also growing. Tax and litigation opportunities are more limited, as these practices don’t cross borders as easily. Local bar admission is not necessarily a prerequisite, though of course candidates who already have it are especially desirable.

Lateral Link has specialized capabilities for cross-border lateral moves

If the prospect of a cross-border move is intriguing to you, please note that Lateral Link has a team of experienced recruiters specializing in international lateral hiring. Our primary markets are Canada, Australia, London, Asia and the United States. We work with candidates moving between any of these geographies. Firms specifically reach out to Lateral Link asking for candidates from these markets because they know our team has local expertise. We are constantly sitting down with partners to learn more about their hiring needs.

I lead our international group and bring particular knowledge of the Canadian and Australian markets. I have specialized in international moves for the past six years, and as a result, I’ve gained a strong understanding of which firms and practice groups are open to foreign candidates. I strongly advise candidates considering an international move to seek out recruiters who understand both the origin and destination markets. Real knowledge of both markets is critical to finding the right fit and ensuring a smooth transition. Lateral Link brings the necessary depth of expertise to navigate these moves successfully.

Canada

Firms considering a hire from the Canadian market frequently call me even if I am not working with the candidate because they trust my assessment of Canadian legal backgrounds. Lateral Link primarily places Canadians into the United States or London. We also place American associates into the Canadian market. Candidates interested in moving to or from Canada should contact Elizabeth Soderberg or Andrew Clyne.

Australia

As with Canada, we mainly place Australians into the United States or London. We also assist Australians with moves to Asian markets such as Hong Kong and Singapore. Australian candidates should contact Zach Sandberg.

London

In the London market, we mainly assist U.S.-qualified associates with moves to London and UK-qualified associates with moves to Asia. We sometimes place UK nationals into the United States, but this is more challenging due to the need for visa sponsorship. Our experts on the London market are Abby Gordon and Andrew Clyne.

Asia

The majority of our Asia work involves placements of Americans into Hong Kong or Singapore. One notable feature of Asian markets is that lateral opportunities are available for litigators who have local language skills. For transactional associates, language skills are highly valued, but they are not an absolute requirement. As with London, placements of Asian nationals into the United States are less common, due to visa requirements. Candidates interested in Asia moves should contact Justin Flowers or Andrew Ng.