Legal Business Blogs

Quarter of in-house lawyers’ salaries frozen in past 12 months as average increase falls

Almost a quarter of in-house lawyers suffered pay freezes in the last 12 months, double the 10% who had their pay frozen the previous year, according to recent research from Thomson Reuters.

The Incomes Data Services executive compensation review found that the impact on the most senior in-house counsel was the most dramatic, with 30% of employers freezing basic salaries for their heads of legal, up from 13% in 2012.

The review also finds that this is the third consecutive year that in-house lawyers have seen below-inflation salary rises, and concludes that the increased number of pay freezes is having a ‘dampening effect’ on salary rises generally.The average pay increase for all in-house lawyers fell from 2.7% to 2.4% this year.

At the senior end, the average salary for heads of legal increased by 2.3% in the last year to £138,000. However, in-house lawyers at the top of their profession are commanding far higher salaries, with ‘one company paying its top in-house lawyer close to half a million.’

Bonuses varied by seniority and sector, with average bonus payments ranging from £26,825 for heads of legal down to £3,318 for solicitors. By sector, the average bonus in finance is £152,485, which dwarfs the £44,568 paid in the transport, distribution and leisure sector; £32,159 in retail; £31,988 in business services; £12,500 in manufacturing and £3,750 in the not-for-profit sector.

Brian Littleton, head of in-house for London and the South at Chadwick Nott, says: ‘It largely depends on the activity of the company. If you’re seeing an upturn in construction then it’s unlikely you’ll freeze in-house lawyers’ pay because you will want to retain your staff. But if you’re in a less buoyant sector where there are supply and demand issues then there is no need to uplift your salaries.’

The results come as a large number of in-house teams are growing and largely report a ready availability of high quality talent, although the General Counsel of one large financial institution recently remarked to Legal Business that it was surprising how few suitable applicants had applied for a now-filled in-house legal position.

For further recent analysis of the in-house market see The in-house survey: Buy-side stories