One of the most frequently asked questions from our candidates is whether they are paid fairly and not below my peers in the space. That’s something even the great Shaq O’Neal had to face. For most Am Law 200 associates, the answer is easy to find given the information readily available about lockstep compensation and bonuses compiled on sites such as AboveTheLaw. From my perspective, most big law associates are handsomely paid for their contribution to their firm’s profits. For in-house counsel and law firm partners, the answer isn’t all that clear. At the end of the day, if you are asking yourself this question, you probably feel you deserve a bump in compensation. Here are the top six ways to determine if you’re the Shaq of the legal world or the Montrezl Harrell.
1) Orlando Shaq As a starting point, you should probably have an understanding of what is reasonable. For Shaq, reasonable was always top dollar. When you instantly become the most dominant force in the league, you expect nothing less. Reasonable depends on a variety of factors. If you want to get to the level of Shaq, I recommend starting with compensation surveys. For law firm partners, take a look at the Am Law 200 (which we can provide for you – just give us a call). For example, if you are at a big firm with a profit margin close to 25%, then I suggest you should make around 25% on your originations and serviceable hours. The general range for major Am Law firms varies between 20% – 60%. As a starting point, you should fall somewhere within this range albeit a wide one. For General Counsels, take a look at compensation surveys (again, which we can provide for you – just give us a call). From my experience, most General Counsels earn less than $1mm all-in compensation annually (although most candidates have higher expectations). That said, there exist the outliers, and the outliers are who we oftentimes set as our imaginary peers, who make 20x this amount. That said, you need to compare like for like here.
2) Los Angeles Shaq When Shaq decided to leave Orlando, he had to make sure he was going to get the best offer from Los Angeles. For an attorney, after confirming your suspicion that you are paid somewhere in the realm of not insulting, the next question is how you are compensated compared to your colleagues. For example, as a law firm partner, if I have the same sized practice as my neighbor down the hall along with the same staffing resources, leverage, and rates, I would hope that we are compensated around the same. That, unfortunately, isn’t always the case. For a variety of reasons outside your control, politics may play a part in your under or overcompensation when comparing two similarly situated partners. As for General Counsels, you can assume you will most likely make less than your CEO, CFO, COO and possibly other c-suite counterparts in most companies. The good news is that you’re likely making more than others in your legal department.
3) Miami Shaq Before Shaq met with Dr. Buss and demanded a trade, he had to ask himself if leaving Los Angeles was worth it. For a lawyer, you have to ask yourself, if I moved to another employer, would I make more money given the same practice and role (no new business and same rates and profit margin)? The answer is probably. For law firm partners, you should expect to receive a bump in compensation should you move your practice assuming you are trending upward in your career trajectory. Unfortunately, law firms are less eager to reward their folks internally until they are about to lose them and are more keen to match the competitive landscape for talent by offering an incentive to join their platform. As for General Counsels, the same story applies if you are happily employed with a long runway in site. If you are on the market and out of work, you won’t experience the same necessity to lure you away from a comfortable position.
4) Phoenix Shaq After accomplishing everything Shaq did in Miami, he wanted to test his value on the market again. Welcome, the arrival of the Big Shaqtus. The only way to know whether you are compensated fairly is to put yourself on the market, not by staying put and wondering what you are worth. Although you can have a general sense by reading surveys, stalking your colleagues’ compensation, and knowing you could likely get a small bump by moving your practice (or waiting for another company to lure you away from your cushy position), you never really know until there is an offer on the table. The market for attorney talent is no less competitive than the online dating market. There is a fixed supply of attorneys who fit the very strict set of parameters desired by their suitors, and if lucky enough to fall within the select few, there is always a suitor who may value you more for your practice. Unfortunately, attorneys oftentimes are risk averse and do not put themselves out there to realize their value for a variety of reasons (outside general happiness).
5) Cleveland Shaq Toward the end of his career, Shaq had to weigh the pros and cons of moving to another location. Joining forces with LeBron in Cleveland made sense financially and physically. Most of our discussions with decision makers, at least in the law firm space, tend to focus on metrics, such as bill rates, leverage, realizations, and the like. I would say, however, that happiness has a premium, at least at certain times in your life it matters more than other times. For some partners I personally know who have job flexibility and can spend time as they please with their family, they would not trade this premium for cash. It’s priceless. Same goes for General Counsels. Once you create and maintain your political capital, life is good. You are at the top, and why upset a good thing for a bit more money with the uncertainty for what’s to materialize. That said, money oftentimes isn’t really the issue. Money is a proxy for value. If your employer is not paying you enough, you feel you are not being valued. If you receive value in other measurable ways, then I suggest putting a number that amounts and pretend it’s a bonus. However, in such a fluid market for talent, how can one employer pay you half of what another employer would pay you and not take it as a hit on how you are currently valued?
6) Boston Shaq If you are able to squeeze in one more jump in salary, do it. Shaq was able to cash in a couple more checks by becoming the Big Leprechaun in Boston. Given where the legal profession is today – somewhat a business based on hours and profits – attorneys should maximize their value (since their employers are doing the same thing and oftentimes have short attention spans coupled with decision makers moving up and down the ladder or elsewhere altogether). How many times have you worked countless hours and gave something your all for a partner who is no longer in a position to sing your praises to decision makers? Or even worse, your group left for another firm and you were not brought along because it just didn’t make financial sense. There are certain deltas in compensation that are too much to ignore. We have seen partners double their compensation by moving platforms. That is something you cannot ignore. As for me personally, I love my job, but I also love my family and kids, and a doubling in compensation is a meaningful amount for what is most important in life. Although I’m told legal employers were more akin to large extended families with loyalties thirty years ago, in these times today, I don’t see it. In short, like with sports franchises, the market for talent is all about the talent, and you control your destiny, and at some point, the delta is too much to ignore. The fact is you will likely wear several jerseys during your career, so make the most of it, as the times have changed.
I am the founder/CEO of Mainspring Legal, which consists of three divisions: 1) Lateral Link (our law firm division); 2) Cadence Counsel (our in-house division); and 3) Bridgeline Solutions (our compliance and staffing division). For law firm and in-house placement, and temporary staffing needs, top law firms and corporate legal departments worldwide partner with us as their go-to legal recruiter for attorney placement and staffing. With offices in over a dozen cities across the United States and Asia, our best-in-class recruiting team of former practicing attorneys and our established relationships and reputation position us to attract and deliver the best legal talent for you. Over the past dozen years, we have completed thousands of successful placements as a best-in-class legal recruitment agency.