General counsel at smaller firms see sharper pay rises

General counsel at smaller companies got better pay rises last year than their colleagues at larger firms, but they continue to lag far behind overall, according to new research.

Median total direct compensation (TDC) for all general counsel included in the Equilar and BarkerGilmore study increased by 4 percent between fiscal year 2015 and fiscal 2016. Within that group, the top lawyers at companies with revenues between $1 billion and $5 billion saw their pay increase by 8.1 percent, while those at companies with less than $1 billion in revenues got a median 6.6 percent bump.

Over the same period, general counsel at companies with revenues between $5 billion and $15 billion got a raise of 3.3 percent, while their peers at firms with revenues above $15 billion had a small (0.6 percent) cut in pay.

John Gilmore, managing partner with recruitment firm BarkerGilmore, tells Corporate Secretary that the sharp pay increases for lawyers at small and mid-cap companies stem from a growing recognition of the evolving leadership role general counsel can play at companies – and the need to hire top talent to fulfill these growing demands. Chief legal officials are increasingly taking on a more strategic role in co-ordination with the board, and are being tasked with responsibilities such as government relations and human resources.

These changes have been taking place over the past few years and general counsel at those companies are now starting to see higher pay as they secure performance-related bonuses, Gilmore adds.

He cautions, however, that the slight drop in median pay for general counsel at the largest companies doesn’t mean those companies are placing less value on the position. Rather, he says, it reflects a changing of the guard. Many general counsel at large firms who have been in place for a long time and have been receiving hefty bonuses over the past couple of years are retiring, and their replacements are lower on the pay scale, he explains.

Despite the different pay rises, top legal officers at smaller companies still lag far behind their colleagues, according to the survey. Median TDC for general counsel at companies with revenues of less than $1 billion was $917,600 last year, compared with $3.8 million for their peers at companies with more than $15 billion in revenue.

General counsel at companies with revenues between $1 billion and $5 billion had a median TDC of $1.5 million. For those at firms with revenues of between $5 billion and $15 billion it was $2.4 million.

The variations in TDC between different-sized companies is largely a function of stock grants, according to the report. Median salary was $326,800 for those in the smallest category and $650,000 for those in the largest. Stock grants varied from a median $234,500 for general counsel at the smallest companies to $1.6 million for those at the largest companies.

Looking at the general counsel population by industry, those in services (21.8 percent) and utilities (15.3 percent) companies saw the steepest rises in median TDC between 2015 and 2016. Their colleagues in the industrial goods (18.7 percent) and healthcare (12.8 percent) sectors saw the sharpest falls in pay over the same period, the research finds. Gilmore attributes these differences to the performance of businesses in certain industries, rather than to the value placed on general counsel. 

The survey covered more than 1,100 companies.