Lawyer Transitions: What's on the Negotiating Table?
When you receive a job offer, you first must determine what is or is not negotiable. Many organizations have established salary schemes and benefits plans that do not leave much room for movement. Pushing for concessions that are impossible for the employer to make will only damage your relationship or may terminate the discussions. You also must consider the entire compensation package, not just the salary component. If salary is on the low end and is not negotiable, other items in the package may make up the difference.
COMPONENTS OF AN OFFER
Make sure you understand all parts of the offer and how they work. The components of a typical offer break down as follows and will vary depending upon whether you are at the associate or partnership level, and whether you are interviewing for an in-house or law firm position:
- Salary is the "hard money" component of the offer.
- Bonuses (for signing, hours over a stated minimum, performance, etc.), profit sharing, a percentage of business generation, stock options/employee stock purchase plans, a stake in the client investment fund, an employer matching program and the like make up the "soft money" component.
- Benefits include insurance (health, life, long- and short-term disability, vision, dental and dependants' coverage), 401(k) or other retirement plans and employer matching programs, "cafeteria" plans, paid vacation or personal days, paid/reserved parking, continuing education or other professional training expenses, relocation plans, loans/forgivable loans, and bar exam stipends (if applicable).
- Perks might include business development allowances, bar and other professional organization dues, country club/health club memberships, travel expenses, marketing budgets, cars or transportation allowances, cell phones, laptop computers, particulars about an office, and office furnishings.
- Other, less quantifiable but still important terms of an offer may include the title, timing of partnership consideration, start date, flex time/telecommuting, billable hours requirements, timing and frequency of performance and compensation reviews, duties/responsibilities, assurances that you will be working on particular types of matters or with certain partners or clients, office size and location, etc.
For associates, find out whether your target employer has a lockstep compensation system or a merit-based scheme. Some law firms have established a range of compensation for each class year or "compensation bands" based on "core competencies" within their associate ranks. Likewise, many in-house law departments and governmental entities have pay grades and ranges based on title or position. If any part of the salary calculation is merit-based, you may have some room to negotiate your placement within the salary structure. If there is a range, aim for the middle; you believe that you deserve more than the bottom, but want room to grow and progress.
There are almost as many compensation schemes for of counsel and partner-level attorneys as there are law firms. Most firms consider some combination of business generation/origination, personal production, hours billed, business development and cross-marketing activities, training and mentoring of associates, firm management, quality of work, pro bono or community work, and stature in the profession. It is important to understand how your prospective employer's compensation system works. You may be able to negotiate your position within the partnership structure.
Note: Partner-level attorneys also must be sure to understand the firm's terminology when setting out expectations for origination credit, working attorney hours, billing attorney hours, responsible attorney hours, and so forth, as each firm has its own scheme for attribution, which can directly affect compensation and progress up the ladder.
If you really want the job but the offer is low, let the employer know that you are hesitating only because of the compensation package. Then, pause and see how they respond. If you remain quiet, they might come up with a better offer just to break the silence. If that does not work, you might say something like, "I am very flattered and excited about receiving your offer but I was hoping to see something more in the range of $X-Y based on my understanding of the market and, especially, since I can make a valuable contribution to the firm in light of [sell yourself]. How much room do we have for negotiation here?"
If compensation is negotiable, ask for a little more than you want so you have room to move, but don't make an outrageous request. Similarly, ask for a few benefits that are expendable, as this will allow you to give up some of them in return for others.
SWEETENING THE OFFER
If you find that the salary is non-negotiable or, even after negotiation, it remains below your target, move to your next level of negotiation: "Although the salary component of your offer is not as high as I had anticipated based upon my market research, I am still very interested. Is there anything else here that is negotiable in order to sweeten the package?" Consider the "soft money," perks and subjective categories set out above.
Determine, for example, whether there is any wiggle room in your title or classification, which might affect your compensation. That way, you can get an increase without violating the prospective employer's established compensation system. Alternatively, perhaps you can ask for a performance and salary review in three to six months, rather than the standard 12 months. If you agree to take less money now in return for re-evaluation or reconsideration later, however, make sure you get this promise in writing and preferably with specific, measurable goals and rewards.
You want to negotiate the best deal you can when you are walking in the door, as it will serve as a baseline for your compensation adjustments down the road. Remember, however, if you do your job well and continually seek to grow professionally while adding value to your organization, there will be opportunities for you to negotiate even better compensation in the future.
Read articles in the "Lawyer Transitions" series:
- Lawyer Transitions: Money Isn't Everything
- Lawyer Transitions: The Art of Negotiation
- Lawyer Transitions: Talking About Compensation
- Lawyer Transitions: What's on the Negotiating Table?
- Lawyer Transitions: Figuring Out Multiple Offers
- Lawyer Transitions: Giving Notice Without Burning Bridges
- Lawyer Transitions: Encountering Counteroffers
- Lawyer Transitions: It's Time to Go
- Lawyer Transitions: How to Succeed in Your New Job