Law firms tend to keep their cards close to the vest. But every so often, information comes out that gives us a bit of a peek behind the curtain, and that allows law firms to benchmark themselves against their peers and competitors.
The Thomson Reuters Legal Executive Institute, in partnership with Towers Watson Data Services, recently released its 2015 Am Law Professional Staff Compensation Survey, which fits the bill as one of those reports that gives an important benchmark for the business health of a law firm.
This report provides several important and interesting tidbits. (If you are are interested in purchasing this report please contact Jennifer Roberts at Jennifer.Roberts@ThomsonReuters.com.)
Comparing it to the 2014 report, average Annual Gross Revenue at the law firms surveyed increased nearly 10% according to the 2015 report. These firms also saw very healthy growth in headcount, with the average number of attorneys increasing from 977 in 2014 to 1087 in 2015. (The report’s findings were based on data provided by 51 firms in response to questions about compensation for the Chief Operating Officer. Please note that some of the comparisons in the analyses are to prior reports where participating firms vary.)
There are other notable findings of the survey as well, particularly related to some emerging roles at Am Law firms. It is no secret that the role of Pricing Director has been growing rapidly at large law firms.
This growth within the firms was not necessarily reflected in the compensation of some of the executives, however. In terms of Total Cash Compensation, C-Suites among the Am Law 100 saw the following results:
- Chief Operating Officers saw 6% growth in compensation, to an average of $1.2 million;
- Chief Financial Officers stayed effectively flat, year-over-year, at $590,000 (compared to $592,000 the prior year);
- Chief Human Resources Officers saw a modest 2% increase to $450,000;
- Chief Information Officers similarly saw a 2% increase to $543,000; and
- Finally, Chief Marketing Officers also saw a slight decrease to $552,000, a drop of about 2%.
It must also be noted, though, that with the exception of the Chief Administrative Officer, the 2015 Total Cash Compensation for all of these positions represents a healthy increase from the compensation for these positions as seen in the 2013 Professional Staff Compensation Survey.
Also, for each of these positions, much of the variation in Total Cash Compensation was due to variation in Base Salary, while the Bonus/Incentive Percentage for each of these positions remained fairly steady and relatively flat.
There are other notable findings of the survey as well, particularly related to some emerging roles at Am Law firms. It is no secret that the role of Pricing Director has been growing rapidly at large law firms. That growth is reflected in the Staff Compensation Survey.
The role of Director of Pricing was only added to the Staff Compensation Survey in 2014, which showed 15 participating firms answering that they employed a Director of Pricing.
In 2015, nearly twice as many firms, 29, reported having a Pricing Director. It will be fascinating to watch this role as it becomes more prevalent in more firms.
As other alternative roles begin to flourish at law firms, this survey will need to evolve as well. One area in particular is the position of Chief Strategy Officer (CSO). Seyfarth Shaw’s recent hire of a CSO solidifies this position within the market. While a new role within the firm, it is integral given the competitive legal landscape. As this role takes root, it will be interesting to examine these types of positions within future iterations of the study.