In-house salaries compete head-on with private practice

Lawyers fare better financially by moving in-house than staying in private practice six years into their career, according to a new survey by recruitment consultants Garfield Robbins.

Traditionally, lawyers have moved in-house as a lifestyle choice and because they want to pursue a more business-oriented role. However, salaries for in-house lawyers are escalating.

In-house lawyers are now reaping £80,000 salaries just five years after qualification in the banking sector and after seven years in other sectors.

In private practice, on the other hand, salaries do not tend to reach beyond about £80,000 for the two-thirds of solicitors who do not make partnership.

According to Garfield Robbins partner Nick Robbins, one top 10 City firm has even imposed an £80,000 salary ceiling this year for associates and assistants.

The survey also reveals good news for lawyers who are at an earlier stage in their careers.

It shows that a lawyer who has been qualified for four years can now command a £70,000 salary as an in-house lawyer in the banking sector, and about £50,000 in the other sectors.

This compares to an average salary of between £50,000 and £65,000 at a large City firm and between £41,000 and £57,000 at a medium sized London firm.

While an ambitious assistant will be unable to reach the lucrative salaries offered by US firms by moving in-house, it is now an option which he or she cannot afford to ignore.

Robbins says the report marks a sea-change in the way the profession now views in-house lawyers.

“Industry lawyers are no longer the second cousins of private practice lawyers and I would advise any solicitors who don't feel they are in line for partnership after four years that it is definitely worth going in-house,” he says.

In-house legal departments have a new image and a new pulling power.

Just two weeks ago, for instance, City firm Eversheds lost associate solicitor Ian Carey to international courier company DHL.

Julian Stone, manager of Garfield Robbins' in-house legal department, advises that the best time for a move in-house is between two and four years after qualifying in order to be in place to reap maximum benefits when salaries begin to rise above those offered by private practice.

He adds that academic background is increasingly important and there is a feeling among company departments that “if Clifford Chance didn't want you then neither do we”.

Like their colleagues at US firms, in-house lawyers receive bonuses, usually in the form of company cars and share options, which can be particularly attractive for those lawyers working in IT companies that are likely to boom in value.

Certain companies in the pharmaceuticals and banking sectors are now introducing new schemes, offering in-house lawyers a lump sum instead of the package of car and pension.

However, while in-house salaries, particularly in the pharmaceutical and banking sectors, are rising, the once lucrative energy sector is in a slump owing to falling oil prices.

Consequently, energy lawyers are better paid in private practice than in-house.

For example, last month senior in-house energy lawyer at Marathon Oil & Gas John Southworth moved back to private practice to head Nabarro Nathanson's oil and gas practice.

Shell UK legal director Richard Wiseman says: “The senior partner of Clifford Chance probably earns more than the chairman of Shell. I think in-house salaries are struggling to keep up.”

The Garfield Robbins survey appears at a time when other research shows a downturn in salary expectations for those in private practice.

In a survey carried out among the top 100 law firms last week, Longbridge legal recruitment consultants predicts that private practice will not be able to sustain the “unprecedented profitability” which has led to salary increases of between 10 and 20 per cent.

And regardless of what City firms are paying, it is still only half the amount on offer from US firms in London, according to a survey by recruitment consultancy QD Legal, as reported in The Lawyer (14 June 1999).

Garfield Robbins surveyed 700 lawyers across 200 companies.