When you are interviewing for a new legal position, you will most certainly be questioned at some point about compensation. We completely understand the push-back that lawyers have when they are asked in an interview (and sometimes asked multiple times by various interviewers) to describe in detail their current compensation. Often lawyers will tell us that they are concerned that providing their compensation details will adversely affect their chances of getting a new job. This concern can operate in two ways: (1) if you are currently earning what you feel is an “under-market” salary and you wish to get a sizeable increase, you may believe that sharing your current compensation will undercut your chances at getting that increase; or (2) if you are currently earning more than what the new job pays, which is often the case with law firm attorneys seeking to land their first in-house job, you may be afraid that you will price yourself out. Both concerns are valid but the reality is there is no way to avoid it.
We consistently negotiate great offers for our candidates, particularly when they are open and honest about their compensation parameters. Here are some tips to help you navigate the compensation conversation.
HOW TO HANDLE THE COMPENSATION QUESTION
1. OVERCOME YOUR OWN INTERNAL PUSH-BACK ABOUT THIS QUESTION. If you are reticent to share your current compensation, you need to deal with that reticence before embarking on a job search. If you appear defensive or put off by the compensation question, it can be a deal-breaker for you. The company that is thinking about hiring you does not have time to cajole the information out of you – they are screening many candidates and are drilling down to really find the right lawyer for their team. Think of it this way – if you are at the point where the company is asking specific questions about your compensation level, then they like you and you have a really good chance at getting the job! Instead of being offended or annoyed by the question, you need to deal with it with complete candor and transparency. Being upfront and straightforward about your compensation shows the company/law firm that you are trustworthy and will operate in that candid manner professionally. It is imperative to understand that you can be transparent about your current compensation and at the same time be effective in negotiating your future compensation.
2. KNOW YOUR CURRENT COMPENSATION. We are frequently surprised by how many of our lawyer-candidates are not entirely certain of their current compensation. Current compensation includes guaranteed base salary, annual bonus, and any short-term and long-term equity incentives. The formula for these equity incentives are detailed and at times intricate to understand, so you need to get a handle on how your own compensation is actually determined. Further, you need to consider 401(k) matching and/or pension plan aspects of your compensation. For law firm attorneys at the partner level, you need to know the additional “perks” that you may receive such as car allowances, marketing budgets, and other benefits.
An additional element to be aware of is your company’s fiscal year and how that affects the timing of your bonus payout. This seemingly minor factor can actually play a large role in evaluating another company’s compensation package, if indeed that company operates on a different fiscal year.
3. KNOW WHAT YOU ARE POTENTIALLY “LEAVING ON THE TABLE”. Understand and appreciate the distinction between your current compensation and what you stand to lose financially if you decide to make a move at this point in time. This distinction is a fairly easy calculation for law firm attorneys – they stand to lose their bonus if they leave at a certain time in the year. Again, you need to know what type of bonus you could be walking away from, how the bonus is calculated and when said bonus is typically paid out. You need to be clear on the calculation of your anticipated bonus in terms of whether it is based on your billable hours, originations, and/or some other subjective formula. With respect to in-house compensation, this “leaving money on the table” concept is more layered. As an in-house attorney, you need to know how your equity and long-term incentive compensation are calculated: when does your equity interest vest; what is the vesting schedule; how has your equity typically paid out over the last three years?
Companies and law firms need to know what you are potentially walking away from at your current employer so that they can evaluate what the appropriate offer will be for you, and whether they can “make you whole” or partially whole for that potential loss in compensation. If, for example, the company recognizes that you currently receive 6% matching for your 401(k) plan, and they only offer 3% matching, perhaps they can offset the differential with a sign-on bonus of some sort. It is helpful for the prospective employer to be armed with your compensation information because it often leads to a better, more informed offer.
4. BE CONSISTENT ABOUT YOUR COMPENSATION. Interviewing for a new position can involve several rounds of meetings with various individuals. Invariably, it is often difficult to recall how you answered a question to individual A, when being asked the same question by individual D hours later. Part of our interview preparation with our candidates is to impart to them the importance of being able to recollect your answers and remain consistent with your messaging. This concept dovetails with the notion of being candid and transparent about your current compensation – it is much easier to be consistent in your answers when you know your current compensation package and are open to sharing the details of it. Again, remember that you are not opining on your current compensation and whether it is what you want, but rather clearly and consistently explaining it to the interviewer(s).
Consistency in an interview can be hard to maintain when your fatigue factor kicks in! After three hours of smiling and answering questions, you can find yourself giving shorter answers without specifics. Frequently, you will meet with someone from Human Resources at the end of a long interview day, and that person will seek specific details about your compensation — that is your time to deliver those specifics clearly. It does not bode well for you if you give a partial explanation and then later on in the process, you start explaining other elements of your compensation that you previously neglected to mention.
5. DO NOT NEGOTIATE AGAINST YOURSELF. Many lawyers believe that sharing their current compensation will somehow work against them in getting a great offer. In my experience as a legal recruiter, that is just not true! Indeed, the reverse is frequently accurate – companies are often prompted to give a better offer to a candidate when they have a real understanding of that candidate’s current compensation. When they know exactly how a candidate is compensated and what that candidate might be walking away from, the company/firm is better equipped to put forth an offer that addresses those factors. That being said, I am not suggesting that the first offer ends the conversation. Negotiating for yourself and improving the offer is often part of this process, but the time to do that is after you have been clear about your current compensation parameters.
When you are asked that dreaded question of “what compensation level are you looking for” in early interviews, do not negotiate against yourself. You do not have to provide a magic number to the interviewer. At that point in the interview process, you just have to be clear about your current level of compensation and that you are obviously not looking to take a step back, if that is the case. (One major exception to this is when a law firm candidate is amenable to taking a reduction in his/her base salary for the opportunity to transition in-house to a company with a strong, overall compensation package). Negotiating the offer is not game-playing without transparency. You are not attempting to “get one over” on the company for whom you are seeking to work. To the contrary, you are looking to get a great offer because you bring the right skill set and personality to the table. Show that you are the right candidate by continuing to be upfront and candid, when confronted with the compensation conversation.
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