Company lawyers are getting restless over the widening pay gap with advisers, but the majority still believe corporate counsel are well paid. Michelle Madsen reports on the latest findings of The Verdict survey

More than half of general counsel concede they have considered moving back into private practice in the light of recent massive salary rises at law firms, according to Legal Week research.

The results of this month's The Verdict survey, conducted in association with Davies Arnold Cooper, suggest that the growing disparity between in-house and private practice salaries is causing corporate counsel to weigh up their options, with 42% saying that they were evaluating their career and a further 16% saying that they were reassessing their situation to a 'considerable degree'. Only 40% said that rises in private practice pay had no impact on their career path.

The findings come after a summer of sharp rises in associate pays and partner profits at leading City law firms that has put clear blue water between in-house and private practice compensation.

However, despite the growing gap in pay, only 44% of respondents said that they considered compensation for corporate counsel to be low, while a further 2% said that pay levels were 'very low'. Forty-six percent of respondents said compensation was 'about right' while a further 8% said it was either 'high' or 'very high'.

According to the results, 36% of senior in-house lawyers take home a basic salary of £80,000-£100,000 a year. A further 29% of company lawyers are earning between £100,000 and £200,000 in base salary, with a further 8% receive more than £200,000.

However, many senior company lawyers can count on substantial non-salary compensation, with 26% of respondents reporting that their benefits nearly doubled their basic pay (see table).

Other types of compensation include individual discretionary cash bonuses, which 38% of respondents said they received, and company-wide cash bonuses, which 26% said they received. Stock options and share grants, on the other hand, are popular forms of compensation for in-house counsel in the US, which only a handful (12%) of UK corporate counsel receive.

Counting all compensation, total earnings in the survey found that one in four respondents earned upwards of £200,000 a year, including 12% who earned more than £250,000 (see table).

Financial incentives were not the only forms of compensation named by respondents as salary considerations. Car allowances and final salary pensions were also cited as important aspects of compensation by in-house lawyers, alongside flexibility and more challenging work.

Anthony Armitage, head of the In-house Lawyers' Association, said that the widening gap between in-house pay and private practice compensation could lead to strained relationships between external lawyers and their in-house counterparts.

"What I sense is that it irritates general counsel when there is a big discrepancy for similar levels of responsibilities," said Armitage. "That sort of irritation can fuel a need in corporate counsel to drive down external legal costs."

"The plateau effect of salaries in-house is more marked than in private practice," said one respondent. "The divide can appear to simply get bigger the more senior you get, and yet the more senior you get in-house, the greater the workload and the pressure. I am not sure how a corporate can attract good junior talent from City firms with the increasing gulf in salaries."

National Grid general counsel Helen Mahy conceded that lawyers who are genuinely driven by money may not find what they are looking for in-house.

"There are lots of other benefits besides salary to working in-house," said Mahy. "Some in-house lawyers who are particularly money-motivated may think about going back in to private practice, but I am not aware of any. Associates are expected to work very hard for the money they earn. I personally do not think that clients are going to bear their rate hikes."

Rachael Monaghan, in-house recruitment consultant at Garfield Robbins, said: "While top general counsel might not consider the widening pay gap to matter too much, to those lawyers who really want to go in-house who are further down the ladder it makes more of a difference. Bright lawyers who are in the formative stages of their career may well be wavering in such circumstances, I just do not think that corporates and industry has decided to listen to them yet."

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