Breaking Down a Gnarly Interview Question: “What Are Your Compensation Expectations?”

When Albert Einstein was recruited to join Princeton’s Institute for Advanced Study in 1932, the salary negotiation took an unusual turn. While discussing compensation, Einstein reportedly suggested an annual salary of $3,000. The Institute, recognizing his extraordinary value, insisted on paying him significantly more ($10,000 to $15,000).

Although that’s unlikely to happen in your job search, being prepared to handle this question is critical when dealing with most law firms. (BigLaw firms are generally lockstep based on class year, and this question is not typically relevant there.)

Firms often used to ask the following, and they still do in many jurisdictions: “What is your salary?” That’s banned in many jurisdictions. So now they ask for salary expectations or compensation expectations.

It’s important for candidates to have a sense of their minimum expectations in terms of salary and total likely compensation package. I say likely because bonuses are often discretionary, but firms vary greatly in terms of their bonus structures and policies. They also vary regarding benefits plans, including health insurance coverage and retirement/pension benefits. (In the company context, stock options can be a major part of compensation.)

Many jurisdictions also require employers to divulge salary ranges. But even assuming a firm does provide a salary range for a position, a range can be big, and there may be wiggle room on the edges.

Let’s break the approach to answering the question about compensation expectations into two major buckets and some sub-buckets:

1. Salary/Compensation range is known. In this scenario, it is best to be specific and use dollar ranges or specific dollar figures. (See, e.g., Negotiation Genius by Deepak Malhotra.) But it depends on your current compensation:
   1. If you earn more than what is offered, say that you make more (or significantly more) and that you understand it would be lower, but that you are comfortable with a cut (or significant cut) because you are very interested in the opportunity. Or you can be more specific and provide a number within the pay range. The benefit of mentioning a number above their current range is based on the anchoring effect, the heuristic in which providing a specific number provides a benchmark that draws people close to it. For example, if you earn $300,000, but the position pays less, by saying that you earn $300,000 but are comfortable with a pay cut, you are likely to pull up a potential offer closer to your $300,000 salary.
   2. If you make less than what is offered, you can say that you ideally seek [$X] if it is consistent with the firm’s pay scale and what other attorneys within the firm with your skillset would earn. You are telling the firm that you respect their current pay structure and trust them to make an offer based on that and the skills you offer. By saying “ideally,” you allow for some flexibility in case the firm sees your request as too high.

2. Salary/compensation range is unknown.
   If you don’t know the range, it is best not to make the first offer and to be more general because making the first offer without knowing the range could anchor you too low or mark you as unreasonably expensive and a poor fit. (See, e.g., Getting More: How You Can Negotiate to Succeed in Work and Life by Stuart Diamond and Negotiation Genius by Deepak Malhotra.) In this situation, you can offer a vague response to a salary expectation question. Here is a possible response: “I would seek a salary that is consistent with your pay scale and the experience that I offer. I am sure that if I were fortunate enough to receive an offer, it would be fair and reasonable.” If pressed for a specific figure or range, you could do so but note that it would depend on what you learn about the firm’s total compensation package and expectations within the role.

While the approaches above provide a framework for responding to compensation questions, a few additional factors can strengthen your negotiation position and help you evaluate offers more comprehensively:

• Interest Level: How much you request should be based not only on how much you need for the position to be financially viable, but also based on your interest level. If you are genuinely interested, then show greater flexibility with your request. If you are less interested, then go for more because you will be comfortable walking away from the position if the firm cannot match your demands or is put off by them.
• Total Package/Guaranteed vs. Discretionary: As mentioned above, distinguish between salary and total package, which includes bonus (sometimes more than salary), health benefits, and 401(k)/profit share (and stock options, etc. in corporate settings). Another important distinction is between total guaranteed compensation package, including guaranteed bonus and other benefits, and total likely compensation package, which can include discretionary bonuses or other discretionary compensation. Although discretionary compensation is unknown, many firms are willing to provide candidates with a range of historical bonus amounts. But as prelude is not always prologue regarding discretionary compensation, a candidate should focus primarily on the total guaranteed compensation package when assessing whether a position is viable.
• Unknown Compensation: When compensation is unknown before an interview, you can research possible levels by looking for salary surveys; having confidential discussions with colleagues at peer firms, legal recruiters, and mentors within the market; looking at Glassdoor and LinkedIn Salary Insights; and reviewing historical job postings that may reveal compensation information. Even if such efforts are unsuccessful or inconclusive, they may yield other valuable insights about the firm.

Navigating the compensation expectation question can be tricky. Consult with a friend or advisor to help prepare you for it. While few of us will experience Einstein’s dramatic salary bump, being prepared with these strategies will help you maximize your compensation potential.