“To the basic question, “What do I have to pay?” my typical response is that there are two answers. The first answer is “market rate,” meaning what a lawyer meeting the client’s specifications will expect and accept, given the years of experience required for the job, the pedigree expectations, the scarcity of that lawyer’s expertise (for example, IP lawyers often command higher pay than other lawyers), and cost-of-living considerations. My second response is “internal equity,” meaning what similarly situated people in the company receive as compensation. For example, suppose we are handling a search for a General Counsel (GC). I can probably find a lawyer who is so interested in the role that he/she is willing to take a compensation package of $200,000 (which is modest by lawyer and GC standards). This is, in a sense, market rate. But suppose that new GC arrives on the job and discovers that a peer executive, say the VP-Sales & Marketing, makes twice that much. Needless to say, you’re going to have a very unhappy GC on your hands. So, in most cases, the client needs to consider more than “market rate” by also considering “internal equity.””
Read: Making Sense of In-House Lawyers’ Compensation at MLA Global.