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Great advice from The Lawyer Whisperer

July 10, 2016

I’m the #2 lawyer in my company and am being promoted to GC. Should I ask for a GC “market” compensation or just leave it and be grateful for the promotion? If I do ask, what should I say?

Julie Q. Brush

Congratulations on your promotion to General Counsel! This is a difficult achievement so it is important to acknowledge and celebrate your success…and be grateful. But is asking for more money pushing it? Is it appropriate to request to be lifted to a “market” compensation that reflects your new GC status?

In the overwhelming majority of situations when a lawyer has been internally promoted to Head of This or VP of That, the compensation accompanying the new title will not reflect a “market” rate for the position. Why? Two reasons: (1) Because market compensation is generally reserved for those lawyers who already possess GC experience and who have already operated in this role for a period of time; and (2) The executives don’t have to. The promotion itself is a big career opportunity that a lawyer won’t likely turn down regardless of compensation – and executives know it.

In your situation, you do not possess prior GC experience and this will be your first time in such a role. So your background and skillset are not as developed as other seasoned GCs in the market…yet. While you have worked at the company for some time, there will be much to learn about being the top legal executive and you will need to develop new skills in order to succeed in the function. Because of these issues, there is an element of risk the executives are taking by promoting you. Finally, the promotion to GC is a career break that is not easy to come by. So that factor should carry a great deal of weight in your overall assessment of the situation.

With this said, this is a promotion to a bigger role with a bigger title at the executive level. It carries with it more responsibilities…and more risk for you as the company’s top Legal Eagle. You will also provide greater value to the organization by virtue of your new position. So, it is reasonable to want your compensation to reflect these changes. And it’s reasonable to ask. But an increase to equal “market” GC compensation is highly unlikely. So it would be wise to manage your expectations accordingly.

When discussing the topic with your new boss it will be important to use the right tone and the right message. Below is a sample:

“Hi Chris, I am so excited about the opportunity you have provided for me to become the company’s General Counsel. I couldn’t be more grateful and look forward to doing a great job. When we initially discussed the promotion, we did not talk about compensation and whether there would be an adjustment to reflect the increased responsibilities and new executive position within the company. I’ve given it some thought and believe it would be a reasonable to make an adjustment. Since I don’t have prior GC experience, I don’t think “market” GC compensation makes sense, but I wanted to get your thoughts on increasing it to $_______ (fill in the blank). I think this number is fair and hope you do as well.”

You have just gained membership to the exclusive General Counsel Club – and it will be a wonderful new chapter in your career. The promotion itself is significant and you should be most grateful. But your desire to discuss a compensation increase is also reasonable…and appropriate given your newly elevated status. So have the conversation…and make the request. By explaining your rationale and doing so graciously, you will maximize your chances of receiving an adjustment that will reflect the new executive leader you have become.

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It depends on the performance/success criteria you got defined, and the degree to which you've over-performed. You'll need data that establishes that your responsibilities and performance are at "market" levels. Finally, you have to have concrete data about your impact on the company, i.e., strategically, financially, operationally. Did you resolve quickly, or avoid, a lawsuit that would have affected the company strategically, or in huge financial terms? Did you come up with a creative solution to an impasse on an IP licensing issue that enabled the company to enter a new market advantageously? Did you arrange innovative ways to improve outside counsel performance and reduce legal expense? How well have you aligned yourself with the company's line-of-business executives, who recognize your impact and value and will go to bat for you? A lawyer I trained while he was in private practice is now GC of an energy company. He said that every $1 million he spends equals a penny per share, and that 3 cents a share causes market movement, so he doesn't view his legal budget as his to spend, but his to manage for value. When you're making a difference, and there's evidence to back that up, that's when you want to be evaluated, whether it's in 18 months, 5 years, or whatever. The final consideration is timing. If your company's share prices are being gutted and the CEO is on the hot seat for the financials, or you just lost a major customer, or a competitor just released a market-changing product, that's not an optimal time to ask for money, no matter how justified it might otherwise be. You can't expect to do better than your company'd doing.

Whisperer, I like your reasoning, and tone. However, as you point out, GC jobs are rare, this lawyer has no GC experience, so he has no leverage. When you have no leverage, you never want to negotiate. Don't risk compromising the honeymoon that you'll need to make good. Instead, first learn the relative strength of your position. Instead, to preserve today's optimism on the company's part, I'd position the conversation to give yourself a chance for Chris to volunteer an appropriate increase without you having to justify anything. Something more along these lines: “I am so excited and appreciative about the opportunity to become the company’s General Counsel. I can't wait to begin justifying your confidence in my ability to succeed in my increased responsibilities. So, tell me: What enabled you to choose me despite my not having any GC experience?" Now, Chris is telling you your value, eliminating "no experience" from any further discussion. "Thanks for that, Chris. When we initially discussed the promotion, we didn't talk about how my compensation should be adjusted to reflect my new executive position. Given our shared confidence about my new role, and my trust in your innate fairness, I'm not concerned. What are your thoughts?" You're assuming that it's reasonable for you to get an increase, even if it's only a gesture amount. However, you don't know how much capital Chris already expended on your behalf to convince others to appoint a rookie GC, especially if those others had experienced candidates they tried to advance. What if they agreed only reluctantly, and there's a "make good" component that's all on Chris? Maybe getting you the job was the limit, that more money was a deal-breaker. You always want to discuss the foundation for any number before either party quotes one. If Chris points out that he has every confidence in you, but that you have no GC experience, you'll agree. You want to get all the factors on the table, then ask him to be fair. The bottom line is that you're not going to decline, so maintain perspective. The best you can do it appeal to Chris's stated confidence in you, and his essential fairness. "OK, Chris. We're both looking at the situation the same way. Given what you've explained, what do think is fair compensation?" Because it's grounded in objective criteria, the number Chris offers you is going to be the right one unless he's fundamentally unfair. If that's the case, you need to know that now. If he's fair, and it still feels low to you, request an accelerated review. "OK, Chris. I hear you, and I understand your reasoning. However, I'd like a chance to outperform our expectations. Under what conditions would you be comfortable giving me a salary review in six months instead of a year?" Chris will give you your performance criteria. Now, go perform.

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