We are often faced with the problem of attempting to explain to law firm managing partners why compensation surveys for administrative positions give salary levels that are substantially below what seems to be required to recruit in the marketplace. For example, we recently handled a search for a large firm where the COO had been in the position for 15 years and was paid $300,000 plus about a 10 percent bonus. Based on survey data, the position was paid above market. But when the firm started interviewing candidates, they found they would likely have to pay $450,000 or more for a successor. In another recent search for a firm where the position had paid $148,000, the firm ended up paying $225,000. 

The differences are based on two facts. The first is that incumbent law firm staff members have, on average, received annual merit increases averaging 3.9 percent over the past five years. During the same period, the market for administrative positions has more closely mirrored associate salary increases and risen at a rate of 10 to 12 percent per year. The surveys measure the salaries of the incumbents who may be paid well below the market rate. The second reason is that the risks and non-reimbursed costs of changing jobs for most candidates necessitate at least a 20 percent salary increase to justify moving to a new position. Since firms rarely recruit for a candidate who is less qualified than the person who is leaving, there is a built-in increase necessary to attract candidates.