Elite Biglaw Partners Or Top General Counsel: Who’s Getting Paid More?
September 22, 2022
Who gets paid more at the end of the day: The elite partners of Elite Biglaw, or the top General Counsel at publicly traded companies? This may seem like an easy question to answer, but it’s not as clear-cut as you might think, and it can help us learn a lot about how lawyers value themselves and their careers. While I will do my best to break down the data in this article, all this information is based on publicly available information, so please feel free to see the sources below if you want to see all of the underlying data yourself.
Why general counsels are better compensated than elite biglaw partners
Law firms’ fall from the top may finally be over. Major law firms have seen their profit margins grow steadily in recent years and appear to be on track for a long period of slow but steady growth, The American Lawyer reports. But despite this, general counsels are still often compensated better than elite partners–an emerging trend as law firms try to shift more risk off of their partners and onto themselves.
Plus, while law firms’ leverage has been coming back in recent years (the degree to which they take on debt compared with equity), general counsels still have the edge (general counsels are compensated better because they’re mostly equity partners). On average, it takes about 20 years for an associate at a major firm to become a partner.
How compensation packages differ between in-house and law firm roles
In-house lawyers are paid significantly more than their private-sector counterparts. The pay gap between elite private practice and general counsel can be up to a million dollars a year.
A general counsel can earn as much as $5 million annually, but it is unusual because the job pays poorly relative to its responsibilities. Furthermore, while in-house lawyers command salaries that are at or above the top earners in law firms, they tend to receive benefits that law firm partners do not get such as pensions and life insurance packages.
How law firms structure compensation for partners
Big law firms offer partners many benefits like higher salaries, shares in profits, reduced hours, and better work-life balance. They typically promote associates to partner at a younger age than firms that are not as prestigious.
Partner promotions can be tough to come by and firms are much more selective when handing out these titles. Even if an associate is passed over for promotion they will have a strong resume’ with them, making it easier for them to find employment elsewhere. The largest law firms in the world (amongst others) include Skadden Arps, Davis Polk & Wardwell LLP, Latham & Watkins LLP, and Wachtell Lipton Rosen & Katz, PC.
Which industries pay their GCs the best
Salaries for top general counsels can range from $350,000 to $500,000 with the average salary coming in at about $450,000. That’s a whole lot more than what an elite partner in a law firm earns. We can’t say that GC salaries are higher due to lower risk; all lawyers have to take significant risks when they make a career choice.
One thing we do know is that GCs often make between five and 10 times more than the national average income of $43,122 and their companies are better able to compensate them because they’re often partnered with some of the world’s most prestigious institutions.
How long it takes to make a partner at a top law firm
It can take up to a decade for an associate at a top law firm to make a partner. Associates work around 80 hours per week, putting in longer hours than almost any other profession in the United States, according to data from the American Bar Association. Associates usually put in 1,800 hours every year. These associates may also face significant layoffs if their firms are struggling financially.
Overall compensation picture
Combining base compensation with bonuses, non-equity incentive plan earnings, and ownership stakes yield a much more complete picture of total pay for elite law firm partners. One surprising finding is that equity earners in high-wage professions are less likely to make partners at elite law firms because the cost of living for the greater metropolitan area necessitates higher base salaries (such as those paid in Silicon Valley).
Law firms may need to re-evaluate their hiring practices and assess whether promoting from within has enough potential benefits over relying on lateral hiring from other law firms. Regardless, both general counsel and law firm partners enjoy a significant income that can only be fully appreciated by looking at the whole compensation picture.
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