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Great advice from The Lawyer Whisperer

February 23, 2016

What is market compensation for a Director of Legal Affairs (a company’s first lawyer) at a private technology company?

Julie Q. Brush

When a mature or late stage private company seeks to add its first lawyer, it will often hire a General Counsel to take the helm of the legal ship and help ready the company for a potential IPO or other liquidity event. But companies earlier in their stages of existence…or revenue will hire a lawyer who serves at a lower executive level: A Director of Legal Affairs.

These lawyers are brought in to get the company’s legal house in order and to serve as the point person for all primary legal matters – which tend to be sales and commercial driven. So, the Director of Legal Affairs is almost always a commercial lawyer – as opposed to a corporate securities specialist or a pure generalist. In addition, they possess in house experience, but likely have never held a prior General Counsel position. Seniority for these roles falls between 10-18 years out of law school and comes standard with a CFO reporting structure. And while company execs still hang on tightly to outside counsel, these in house lawyers do most of the internal heavy lifting while mitigating outside counsel costs.

So what do these lawyers make in today’s legal market? The compensation range for a Director of Legal Affairs of a private technology company is as follows:

The Cash.

The market base compensation in the highest paying markets is $185k to $220k – give or take $5k on the high and low end. In secondary markets, the base salary can run 15%-20% lower. Private companies are often cash strapped so if execs want to sweeten their offer, but cannot…or will not move higher on the base salary, they will often offer a signing bonus. The average range for a signing bonus is $5k to $10k.

The Bonus. 

I often see private tech companies (usually in the early-mid stage) lacking a formal bonus plan for non C-level executives. When this is the case, there will be no target bonus offered for a Director of Legal Affairs role. But as the company matures, a bonus program will be established and offered to all employees who qualify. If a bonus program already exists, the target bonus for this legal profile is between 15%-20%.

The Stock. 

There isn’t a uniform range on the stock grant. This is because internal compensation grids vary from company to company. And executives strongly prefer to keep all employees within their own company grids. They do not like compensation outliers. The makeup of the stock grant itself will likely consist of options only (rather than RSUs or a mix of RSUs and options). The grant will be somewhat attractive, but won’t knock your socks off or touch the type of grant received at the GC level. So manage your expectations accordingly. Finally, when presenting an offer, employers will have more flexibility on the size of the options grant than they do with the cash. So bear this in mind when assessing a proposal and a counteroffer.

As the economy has improved and private companies have grown and thrived, the need for top legal talent in the house has increased. And as appreciation for the value a lawyer can offer increases, this specialty will be added earlier in a company’s life. Compensation for the Director of Legal Affairs role encompasses a fairly standard range that defines today’s market. There are some outliers, but those deviations when they occur, are slight.

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