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Legal Compensation Trends in Financial Services

Posted on January 2022

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​2022 is shaping out to be one of the most active job markets we have seen in a decade. While we witnessed a sharp decline in hiring from the onset of the global pandemic, activity has markedly increased this year.

​Many businesses ramped up their hiring efforts to coincide with the economic bounce back, and to
accelerate the pace of their own growth by bringing in highly skilled talent. For the legal market this is no different. Against this backdrop, it’s no surprise that the market this year is candidate-driven, with many typically having multiple job offers on the table at once. Compensation, as always, is playing a large factor in career decisions.

The Legal Talent Team at Larson Maddox is highly specialized – not only do we focus on in-house
placements, but we have a team of expert consultants dedicated to placing high-caliber attorneys solely in the Finance industry. We work with companies of all specialties and sizes – ranging from start-up Fintech firms, Investment Funds, Insurance Companies, Investment Banks, and everything in between. This high level of specialization not only allows us to establish deep relationships and candidate pools, but also enables us to deliver our dynamic market expertise to candidates and
clients alike. At Larson Maddox, we have a footprint that spans across 7 offices in the U.S. – from New York, Boston, Chicago, Dallas, Charlotte, Los Angeles, to San Francisco – and cover Legal roles nationwide. Our reach and market intelligence provide us with unique insight into compensation trends across the industry, and we wanted to share this update to help companies navigate a new
playing field.

This report provides a high-level summary into in-house and Big Law compensation trends within the finance industry and salary surveys across multiple geographies. While we try to be as accurate and granular in this report as possible, compensation packages may vary widely depending on the size and type of companies. For total compensation, we are accounting for potential equity offerings, stock options, and long-term incentives. We’ve organized our scales by years of experience rather than title, as titles can mean different things at different firms. For example – “Associate General Counsels” at some companies can be quite senior individuals leading large, global teams while at others it can mean a mid-level individual contributor. “Median” is the middle 50% of our data collection.

Higher Cost of Living Areas

NEW YORK / NEW JERSEY / SAN FRANCISCO BAY AREA / CHICAGO / DC METRO AREA / BOSTON / SOUTHERN CALIFORNIA / SEATTLE

While the cost of living does differ slightly between locations in this category, we do not feel there is enough of a distinction between these areas to group them separately. Additionally, companies with multiple offices across these areas pay at a similar rate regardless of location.

Lower Cost of Living Areas

DALLAS / HOUSTON / AUSTIN / CHARLOTTE / ATLANTA / OHIO / MINNEAPOLIS / PHOENIX / MIAMI / TAMPA / SALT LAKE CITY

Big Law Pay Scales

Due to exceptionally high activity across many practice areas, talent retention and attraction is of critical importance to law firms. Compensation is a key mechanism used to drive this. As mentioned in Bloomberg Law, Davis Polk led the charge to accelerate Associate pay scales to its current levels in June – and other prominent law firms followed up to match shortly after. Associate base salaries climbed $15k-$25k more depending on class year. We have also seen law firms offer sign-on bonuses ranging from $50k-$200k for Associates making lateral moves.

Most Big Law firms now pay their Associates at the above scale, and many prominent mid-sized law firms outside of Big Law pay similarly or slightly behind. Candidates looking to leave law firms and move in-house are usually willing to take a pay cut. However, that is not the case for all and we felt it important to provide some perspective if you are seeking candidates with Big Law experience, as they typically have higher expectations than those solely with in-house experience. These salary scales also apply to all geographies. If a law firm is paying their Associates at this scale in New York, it is likely they will pay their Associates at this scale in Dallas. Some firms do pay less in lower-cost areas, however that difference is very small.

A new component of Big Law compensation packages has arisen over the past year; many law firms are issuing ‘special bonuses’ on top of their traditional base and bonus structure. These bonuses are essentially a reward for a busy 2021, which saw many law firms generate record amounts of revenues due to strong demand in the second half of the year. The bonus schemes have also continued
into 2022 to keep up with the greater demand witnessed thus far. These bonuses vary from firm to firm, and are typically paid out between the Spring and the Fall (as late as November). This might present another hurdle for in-house firms looking to secure law firm talent. We have seen some Associates that are willing to leave bonuses behind (albeit a small percentage), whilst others have asked for delayed start dates to resign after receiving a bonus, or have used this to negotiate higher compensation packages or sign-on bonuses from in-house opportunities.

Has the increase in law firm compensation had an impact on the market? Yes, it undoubtedly has. Across the sector, we have observed a significant number of individuals switch from in-house roles to law firms. Candidates moving from law firms have also had much higher compensation expectations than in previous years. We have seen buy-side firms specifically seek to compete with Big Law compensation bands to entice the best Associates to choose their firms. While they may offer lower base salaries than law firms, their bonuses can be much larger leading to total compensation packages matching or exceeding Big Law pay. Compensation is not always a driving force for Associates seeking to make a move, as we still see a high interest in candidates looking to transfer inhouse for other reasons (work-life balance, being closer to the business, etc.). However, this is certainly an additional factor driving the competitiveness of the current hiring market.

If you would like to discover more compensation trends that are characterizing the industry, please reach out to the Larson Maddox team: financelegal@larsonmaddox.com.

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