Big Law Salary War Throws Cold Water on In-House Recruiting

As Big Law showers associates with cash, corporate legal departments are going to have to get more creative about luring in-house legal talent from the most prestigious law firms—or wave the white flag and start looking elsewhere for recruits. 

This development was coming long before the latest salvo in the Big Law salary wars, which Milbank triggered with $10,000 to $20,000 salary raises for associates. The pay hike set off an all-too-familiar matching game among other top-tier law firms, while corporate legal departments once again watched from the sidelines. 

And just like that, the Big Law money wall dividing general counsels from potential in-house recruits grew taller. 

“A few years ago, if we had an opening in legal, we could have our pick from a number of outstanding candidates,” said Archer Daniels Midland Co. legal chief, secretary and senior vice president Cameron Findlay. “Today, lawyers seem to be more content staying in law firms, likely because the compensation has increased so dramatically.” 

The widening pay gap between Big Law and the in-house realm has already prompted some general counsel to give up on recruiting top law firm associates and instead look for legal talent at smaller, regional law firms and other corporate legal departments, according to legal search consultant Stacy Humphries of the Pye Legal Group in Houston. 

Humphries and another recruiter, Amy Goldstein of Grayson Allen Inc. in New York, reported that in-house lawyers with four to six years of experience in a wide range of industries typically have base salaries in the mid- to upper $100,000s, with some breaking into the low $200s—compared with $325,000 to $370,000 for equally experienced Big Law  associates.

“The reality from where I sit as a recruiter is that when we approach in-house candidates with great opportunities, they often stop listening once they find out it could be a 30-50% pay cut,” Humphries said. 

Salary War Might Alter ‘Doomsday Clock’

General counsel tend to prefer hiring lawyers with Big Law experience, because those GCs often have Big Law backgrounds themselves. Big Law lawyers also boast that coveted “stamp of approval” from a highly selective top law firm, which can be an ideal training ground for in-house lawyers—assuming they haven’t lingered at the firm for too long. 

Recruiters have noted that Big Law associates are best positioned to move in-house after about four to six years at a firm, because at that point they’re seasoned enough to work in a corporate legal department but aren’t earning so much at the firm that taking an in-house pay cut will be unbearable. 

After six years at the firm, the so-called Doomsday Clock begins ticking, making it increasingly difficult for Big Law attorneys to move in-house as they rake in more money and settle into specialized practice areas. 

That has been the traditional thought. Now, though, the escalating Big Law salary war threatens to move the hands on the Doomsday Clock.

“That’s a danger,” Humphries said. “When an associate hears that a company is paying less than a first-year lawyer makes, it’s difficult for them to swallow. There starts to be a tipping point. So it’s possible that the Doomsday Clock will roll back a year or two.”

Humphries first raised alarms about the escalating Big Law salary war in a LinkedIn post, writing that she felt “flattened” when she learned about Milbank throwing more money at associates, and not only because she believed it would chill in-house recruiting. 

“It’s not good for big firm lawyers who won’t have as many in-house options available to them or will have to work hard to convince companies that they sincerely want to go in-house and will stay,” she warned. 

“These salary wars are not good,” Humphries wrote. “Change my mind.” 

No one did. 

“Some good counterpoints were made, in particular that inflation is rising quickly and it may not be as shocking of an increase if you take that into account,” she said. “But the bottom line is the salary disparity between large law firms and in-house is wider than it has ever been before and it’s creating challenges for both sides.” 

’2022 Is Not the Year to Be Passive’

While corporate legal departments and top law firms exist in alternate pay universes, recruiters say in-house leaders shouldn’t let money woes dash their Big Law recruiting dreams, not just yet anyway. 

Most companies aren’t going to start matching Big Law money—in-house compensation hasn’t been competitive with Big Law salaries for a while now, if ever. But legal departments can offer top law firm talent more manageable schedules, remote working, the opportunity to be part of a team building a business and, perhaps most importantly, a clear path for advancement. 

“I have a lot of associates who, when presented with an in-house opportunity, want to know how long the GC has been there and if he or she is looking for a replacement,” said Houston-based legal recruiter Kenton Oates of Gibson Arnold & Associates Inc.

“If you’re telling a Big Law associate that they’re going to have to take a $150,000 haircut for this role, you’re going to have to offer upward mobility,” he added.  

Mary Rosenfeld D’Eramo, vice president of operations at Boston-based legal recruiting firm Mestel & Co., noted that in-house searches are taking longer now, but she stressed that talent is out there and can be enticed to go in-house. First, though, legal chiefs need to do a “little recruitment soul-searching.”

“2022 is not the year to be passive or opportunistic. Gone are the days a company can just post an ad and get a flock of qualified candidates submitting,” D’Eramo said. “This market absolutely requires a little more elbow grease and targeted searches.” 

General counsel also should keep this in mind: Big money makes Big Law more attractive, but the pay won’t change the demands of the Big Law lifestyle. In fact, law firms might expect more out of their associates now that they’re collecting those fat checks. 

“There are always going to be associates who want to leave, no matter how high the salaries get,” Oates said. 

“Either there’s a logjam with access to partnership or they’ve paid off their law school loans and it’s no longer worth being up there 80 hours a week, tied to your email, doing closing calls at 4 a.m. for overseas clients,” he added. “They get tired of it.”

https://www.law.com/corpcounsel/2022/01/31/big-law-salary-war-throws-cold-water-on-in-house-recruiting/

Zubair Q Britania

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