While not as contentious and high profile as the remuneration of bankers, the topic of remuneration for in-house lawyers in the banking sector has attracted a good deal of interest and debate over the last couple of years. As the manager of an in-house banking and financial services team, I am frequently contacted by both clients and candidates seeking guidance on what direction the market has moved, who’s doing what on bonuses and so on.
The most noticeable trend in the banking market over the last two years has been a significant ‘re-basing’ of salaries. While this has been neither ubiquitous nor consistently applied, the vast majority of the major global investment banks have made some adjustments to the fixed element(s) of their compensation packages. However, due to variations as to how different banks have approached this, the effect has been to create broader salary ranges than existed previously.
Needless to say, the general reaction from the banking lawyer population to increased base salary levels has been positive. The majority prefer the certainty of a fixed salary over the uncertainty of a discretionary bonus – the benefits in respect of life’s essentials such as pensions and mortgages are obvious. Of greater interest, perhaps, is the question of how appropriate the remuneration structure is for the roles that lawyers perform in banks. I’ve had the view expressed to me on many occasions that conceptually, it makes more sense for the bulk of lawyers’ remuneration to be fixed and independent of the profitability of the businesses they support.
Effective in-house lawyers need to be able to strike the right balance between the managing of risk and the facilitation of business. Many are of the view that the shift that has taken place in remuneration structures now more accurately reflects that balance, reducing any conflict of interest that might arise from a bonus culture that regularly produces bonuses for lawyers well in excess of their salary.
Correspondingly, looking at what has happened to bonuses, the overall trend has been downwards. Whilst not unheard of, bonuses approaching or exceeding 100% are much rarer than they used to be. Nonetheless, in many cases bonuses are obviously still a significant element of a lawyer’s total compensation. As reflected in our most recent salary guide bonus (as opposed to salary) is also the means by which most banks will seek to differentiate between different skill-sets/product areas. As has always been the case, it tends to be derivatives and structured finance lawyers who receive the highest bonuses. Conversely, lawyers covering areas such as litigation and employment tend to command lower bonus levels.
Richard Hanks
Richard specialises in recruiting qualified lawyers into the corporate and investment banking sector. He has over 10 years' experience of recruiting lawyers across a range of different specialisms, including derivatives and structured products, capital markets and structured finance, and all areas of general banking including acquisition/leveraged finance. Richard trained as a solicitor with Travers Smith, qualifying into the Corporate Department where he was a member of the Private Equity team. He joined Taylor Root in late 1999, and heads up the In-house Banking and Financial Services team.
We have seen a lowering in the salary levels of in-house lawyers in the banking and finance sectors over the past couple of years, including the bonus element. In spite of this, in-house still offers an attractive alternative for City lawyers, with less emphasis on meeting targets and more work-life balance friendly hours. One area we think salaries should be rising is in the financial regulatory and risk management fields, and the unfolding saga at UBS supports this view. See our Blog on this: http://www.careerbalance.co.uk/blog/banking/proper-pay-for-fsa-regulators.php
Posted by: Simon Broomer | Monday, 19 September 2011 at 02:36 PM