For the first time in over a decade, compensation for general counsel (GC) and chief legal officers (CLO) has experienced a downturn. According to Major, Lindsey & Africa's 2024 Global In-House Compensation Survey, 2023 marked a significant shift in the compensation trends for top legal executives. This development comes amidst economic uncertainties and evolving corporate priorities, despite an ever-present need for high-quality counsel.

Key Findings from the Survey

The 2024 Global In-House Compensation Survey provides a comprehensive analysis of in-house legal salaries. The survey reveals that the total compensation for GCs and CLOs decreased in 2023, for the first time since Major, Lindsey & Africa began tracking compensation trends in 2012. 

The survey collected data from more than 2,100 lawyers from 46 countries, offering a comprehensive view on compensation data collected for a broad range of in-house lawyer roles, including lawyers serving as Chief Compliance Officers (CCOs).

According to the report, legal executives with either the title general counsel or chief legal officer received average total cash compensation of $556,794 in 2023, down $21,652, or 3.7%, from a year earlier. Additionally, average base pay increased by 0.9%, to $358,931, while average bonuses dropped 14.7%, to $259,230.

The findings underscore that many of the legal chief pay packages making headlines recently, such as the $4 million in cash that former Albertsons General Counsel Juliette Pryor received in her first year at Lowe’s or the $3.9 million in cash that former Wachtell, Lipton, Rosen & Katz partner Sabastian Niles received in his first year at Salesforce, are an anomaly in today’s legal landscape.

The report notes however that even with the drop in compensation, the need for high-quality legal talent has not decreased. “The regulatory environment continues to shift, AI and other technologies are changing the way businesses use data, and organizations are more and more looking to their legal teams to be business-savvy partners in driving success. However, current rates of compensation do not necessarily reflect that need, creating an opportunity for those companies willing to recognize the value of premier legal talent,” the report said.

Compensation by Region

The survey also highlighted regional variations in compensation, with North America (primarily the United States) generally offering higher pay than other regions. 

Asia-Pacific GCs are experiencing a sharp contrast to their counterparts in North America and the Europe-Middle East-Africa region, seeing a significantly lower base and bonus pay. This is primarily due to the overall lower wages, the smaller size of legal teams and the more inflexible hiring market in these regions.

Compensation by Gender

The survey also shed light on gender disparities in compensation, with many companies still being unable to compensate their female lawyers at the same rate as their male colleagues. According to the report, GCs who identify as women received 28% less in total cash on average than GCs identifying as men. While the situation is slightly better at CLO level, women are still earning 14% less than men where total compensation is concerned. 

There are some roles, however, where this gap narrows considerably or even disappears. While men are still receiving higher pay in most mid-level roles, the difference is reduced to single digits and even favors women in Assistant GC positions, the report shows.

Compensation by Industry

A few industries are faring better than others when it comes to compensation, although the figures vary between GCs and CLOs. GCs see the highest payouts in fields such as advertising/publishing/media, financial, medical devices, and real estate, while CLOs generally earn more in restaurant/food service, energy/public utility, entertainment, and travel/leisure/hospitality.

Moreover, CLOs and GCs at publicly traded companies receive significantly more cash compensation than those at privately owned companies, particularly in the form of bonuses. The 2024 bonus targets are 68% higher for CLOs at public companies and 72% higher for GCs.

Legal.io Data: Tech, Financial and Healthcare GCs Among Top Earners

To provide additional context, data from Legal.io offers a comparison of GC compensation across different industries and company sizes. According to Legal.io, the base compensation ranges between $225,000 and $320,000, with some of the highest total earnings seen in the following fields:

• Tech Industry: GCs in the tech sector continue to receive higher compensation compared to other industries, going as high as $475,000.

• Financial Services: Compensation in the financial services sector remained relatively stable, going up to a total of $395,000.

• Healthcare: GCs in healthcare earn up to $372,000 overall, base pay, bonsues and stock included.

Legal.io's data also highlights the ongoing trend of high demand for legal professionals in tech and healthcare, which has helped stabilize compensation in these sectors.

Reactions and Implications

The decrease in compensation for GCs and CLOs has sparked varied reactions within the legal community. Some experts argue that this trend reflects a necessary recalibration of executive pay in response to broader economic conditions. Others, however, express concern about the potential impact on talent retention and recruitment.

The 2024 Global In-House Compensation Survey highlights a significant shift in the compensation landscape for general counsel and chief legal officers. The first decline in a decade underscores the impact of economic uncertainties and changing corporate priorities on executive pay. As companies navigate these challenges, it will be essential to strike a balance between cost management and the need to attract and retain top legal talent.