Congratulations! You’ve landed the in-house job of your dreams (or at least one that you think will get you out of your law firm and on a better personal and/or career trajectory). Now comes the hard part: negotiating your compensation package. Unfortunately there doesn’t seem to be too much literature out there on how to get to the number you want (at least there wasn’t when I was trying to negotiate.)
I’m on my third in-house job, and I also turned one down along the way, so I have some insights to share on what I think I did well and what, in retrospect, I did poorly when I negotiated my salary and compensation package.
At the very bottom of this article (it’s a long one), I have included a template counteroffer email script that I prepared which you can adapt for your own purposes when you counteroffer. It helped me negotiate a $25K bump in the starting compensation package for my current in-house position, and I hope it helps you too. Good luck!
Try and negotiate with HR and not with your future manager.
Depending on the size of the organization that made you the offer, this might not be possible. And in some circumstances (you are on good terms with the CEO, who has told you your wish is his command) this logic might not hold. But absent such an outlier, at all costs try and avoid negotiating directly with your future manager.
This isn’t because it will be awkward once you start (in my experience managers have short memories when it comes to this sort of thing) but because the manager may control the purse strings, and have a vested interest in keeping your salary as low as possible (i.e., the more he or she pays you, the less there is to pay him or herself).
Negotiating with HR will be more transactional and remove any “weirdness” that talking numbers and brass tacks with your future boss might create. You’ll probably never talk to that HR person again, so be aggressive and stand firm!
Don’t be intimidated – HR expects candidates to negotiate, but most don’t!
If you really want this job, you will never have more leverage than before you accept. And, once you make the jump, nobody will remember that you drove a hard bargain and got the salary you wanted. Most HR managers will tell you that they expect candidates to negotiate, and are willing to negotiate with them, but the majority of candidates do not even counteroffer. Don’t be one of them! Develop a script or talking points beforehand that’s grounded in facts (more on that below) and be assertive when you interact with HR (also more on that below).
If at all possible, let them throw out the first number.
It’s not always possible, but do everything you can to try and get HR to present the initial offer rather than having you ask for your target salary or current compensation. I think this is the hardest part of going in-house. Most companies will not pay their lawyers what you are making as a senior associate or junior partner. So if you are desperate to make the jump, you will need to be willing, and able, to accept a 25 to 30 percent haircut. (If you’re making $250K in the firm, I think $150K to $200K is probably the base salary range you can expect as one of a handful of lawyers, or even the General Counsel, of a small company.)
On the other hand, you might be very happy with your current compensation package and were spurred on to listen when a headhunter called or for other reasons beyond dollars. I think in those cases you shouldn’t hold back your numbers, but make it clear from the very beginning that although you won’t be interested in taking a pay cut, there are other issues (stock options, title, job responsibilities, etc.) that will need to check out in order for you to seriously consider any offer.
Take them with a grain of salt, but be armed with information from industry publications and get your base salary right the first time, or you might end up job hopping.
The Robert Half Legal Survey and other surveys from folks like BarkerGilmore and Special Counsel are great starting points for doing research on what your prospective employer can afford to pay you. But I cannot stress enough how important it is to get your base salary “right” the first time. For example, when I first went in-house, I took a grossly below market salary (essentially as a 7th year associate I took the equivalent of a 1st year associate salary in my market.) In retrospect this was a bad financial move (and why I tell prospective in-house lawyers that they should wait as long as possible before making the move in-house.)
When I left that in-house lawyer job after three years (for a $70K pay increase in base salary, plus restricted stock options), my base salary had only increased $15K during that time. In my experience this is really the only way to turbocharge your base salary – by switching jobs – and after a certain point in your career you just can’t do that anymore (or you might not want to do that anymore once you have children and want to put down some roots.)
Counter with a range where the upper end is at least 25% higher than the initial offer.
Most headhunters will tell you to expect a 30 percent cut in base salary from your law firm salary when you go in-house. But I think that figure really depends on how senior you are and the industry and company that you’ll be joining. For example, if you’re a mid-level associate making around $225K, I think you can expect to go in-house in a junior or mid-level counsel role making around $175K in base compensation. I also think it will be difficult to find a small company looking for their first in-house lawyer that will pay above $200K.
Say you are offered that $175K base salary. I would suggest using my script below to counter with a range between $185K and $215K. Again, this will vary by industry – if you are in NYC, and joining a hedge fund, for example, your compensation will look way different than if you are in a small real estate company in Utah. But I think this is a very general framework that can apply across the board, and even across industries.
Try and understand what it is in play – base salary, cash bonus, stock awards, and titles are all negotiable.
In my experience, just about everything is negotiable. If you get stuck on base salary, try and push for the bonus program or a stock grant. If budget is tight, talk about your title. But always keep in mind that if you don’t ask for it, you won’t get it. So make sure you ask!
Push hard for a signing bonus because, paradoxically, off-cycle bonuses are easier to approve in a corporation.
This has always been a weird one for me. For some reason, it’s easier for most companies to approve off-cycle bonuses than it is to approve year-end bonuses. It has to do with how corporate budgeting works, I guess, but use this to your advantage. You will probably find the company can be more flexible in terms of bumping your signing bonus or awarding you more restricted stock grants than they will be once you accept the offer. If you are relocating, and that is part of the package, lean on that too in terms of start date or other benefits.
Do what’s comfortable for you – either phone or email negotiations are fine. But in either case, prepare a script like this one.
If you’re more comfortable talking on the phone, or just don’t want to put pen to paper, I think it’s fine to call HR or your future manager. But make sure you have talking points. I am more comfortable collecting my thoughts and negotiating over email – I just don’t like the phone – but everyone is different. Here is a sample format I would suggest if you plan on submitting a written counteroffer. I would also recommend filling this out and using it to craft talking points if you’re going to negotiate by phone.
I am thrilled at the possibility of joining [name of company] and very excited about the offer you extended on April 22, 2016. I am confident that my [details about your background, skills, experience, etc.] will help me make an immediate and significant contribution to the growth and reach of [name of company]’s legal team over the short and long term. I have some questions about the offer that are set forth below. In addition, and respectfully, I ask that you consider the following proposed changes to your offer. I am confident that we can work together to find a balance that works for [name of company], me, and my family.
– Base salary. My current base salary is $[insert]. While I appreciate your salary offer of $[insert], [good reasons why you think the offer is low, or combine this clause with the following sentence]. In addition, the research I have done on comparable salaries for attorneys with more than [insert] years of experience in large, in-house legal departments (from the 2016 Robert Half Legal Salary Guide, for companies with more than $250M/year in revenue) shows that a base salary range of $[insert] to [insert] is current market value in the [insert city/metro area] area. (According to the Guide, that range is higher in the [insert city/metro area] area, from $[insert] to $[insert). In light of my current base compensation, and that I will be relocating back to a higher cost of living location, I ask that you consider a compromise base salary of $[insert]. I would also like confirmation that I will be eligible for a merit-based raise for the [insert] calendar year.
– Title. I will be reporting directly to a Senior Vice President. Given the global, cross-functional scope of this role, I think that the appropriate title should be [insert]. I believe the weight behind this title will also help me be a more effective advocate on behalf of [name of company] and the legal team.
– Annual Bonus Program. I appreciate the offer to be part of the [name of company] annual bonus program. Is the bonus typically targeted at a certain percentage of salary? If so, can you tell me what that percentage is? Also, in addition to cash, does this program also include the potential to earn grants of [name of company] stock? I ask because [insert reasons why you are asking for stock] So, in addition to the signing bonus proposed in the offer letter, will [name of company] consider an up-front stock grant to partially compensate me for [insert reasons why] and committing to the company and this role right now?
– Benefits. I would like to review the current employee pay-period benefit costs for [year]. Otherwise, I am pleased with the benefits you have offered and appreciate the company’s generosity in this regard.
– Other questions. Finally, I would like additional information about the [insert anything else from the offer letter you’d like more information about] referred to in the offer letter.
If you can make these modest improvements to the offer, I am confident that my performance will show [name of company] a handsome return. I know that my passion for [describe company’s industry or things that attract you to the company] and commitment to high-caliber legal work will also be a significant value-add for the Legal Department, the [describe the name of the team you’re joining] team, and [name of company] at large.
Thank you again, and I look forward to hearing from you soon!
Of course you’ll need to tweak much of this script depending on your individual circumstances, but I think it should serve as a useful starting point for any negotiation – whether you are an aspiring in-house lawyer or other type of professional.
What do you think? Would you suggest any other best practices for negotiating compensation packages, whether as an in-house lawyer or in another industry?