mahlab report 2016 private practice · 2016-07-25 · mahlab report 2016 private practice 1 we are...

MAHLAB REPORT 2016 PRIVATE PRACTICEAUSTRALIA INTERNATIONAL

INTRODUCTION .....................................................................1PARTNERS .................................................................................. 7PRIVATE PRACTICE LAWYERS ....................... 10INTERNATIONAL ...............................................................16

All artwork reproduced with the kind permission of the artist, Bill Sampson www.billsampson.net

Figures contained within tables in this survey have been rounded to the nearest $500 and are quoted in local currency.

© Mahlab Recruitment (Vic) Pty Ltd 2016 © Mahlab Recruitment (NSW) Pty Ltd 2016

www.mahlab.com.au

1Mahlab Report 2016 Private Practice

We are pleased to present the Mahlab Report 2016. The report provides an in-depth overview of the legal profession, from market trends to remuneration and employment experiences.

The Mahlab Report is informed by a mix of industry knowledge and qualitative research, with the aim of providing an accessible guide for lawyers and employers. We aim to provide the most useful and accurate commentary on the Australian legal market, with invaluable insights from our networks and our consultation process with the industry.

The Mahlab Roundtables, introduced in 2014, are key to this strategy. The Roundtables bring together a cross section of senior legal professionals. Discussions are interactive and focus on the challenges they face as leaders in this highly dynamic and competitive industry.

We thank all contributors for sharing their information, perspectives and experiences and hope you find the Mahlab Report a valuable resource.

Join the conversation

Do you have an opinion about the profession you’d like to share? Join the social media conversation about #MahlabReport2016 by following @MahlabLegal on twitter or connecting with us on LinkedIn.

Key findings

2016 has delivered positive and pleasing results. In this constantly changing environment legal employers have demonstrated they are able to adapt, innovate and exploit opportunities both within and outside their business. Increased business activity has also fuelled the need for legal services, albeit services which are now being delivered in a variety of forms and in the most efficient manner. This activity and optimism has led to the increased hiring of lawyers in law firms and corporations.

Competition to hire and retain the best lawyers is now critical to business success. Those legal employers and service providers who are embracing change and adapting are reaping benefits from this dynamic environment. All indications are that the time is ripe for growth and opportunity amidst the challenges.

Salary and bonuses on the rise

The majority of employers are reporting the end of salary freezes, although there is strong consensus that increases are still conservative at the more senior level with greater salary increases at the junior levels up to senior associate.

The average national salary increase in private practice was around 3.8%.

MAHLAB REPORT 2016


INTRODUCTION

While salary rises appear somewhat conservative when compared to pre-global financial crisis (GFC) levels, the salary reviews reflect a marked return of confidence and a steady upward swing. In the law firm sector, 2016 has also seen more bonuses paid, with the average bonus between 5 and 10% of salary and a reported maximum of 20%.

In-house lawyers are reporting salary increases and higher incidences of bonus payment. The average national salary increase was 3.4%. Salary increases remained conservative for company secretaries: the average national increase was around 3.2% with 70% of company secretaries reporting receipt of a bonus.

Increased hiring activity

The corporate market has shown a positive upswing in 2016 with increased hiring activity in both the permanent and contract sectors. While most roles have been for junior and senior legal counsel, a few ‘greenfield’ roles, as well as more opportunities at general counsel level have emerged.

In-house teams continue to grow. Most hiring has been in compliance and financial services, with some companies expanding their teams by up to a third. Specialities most in demand were corporate and commercial law, infrastructure and public private partnerships (PPP) and employment.

The greatest demand in private practice has been for lawyers with a specialisation in mergers and acquisitions (M&A), banking and finance, employment, infrastructure and projects and property law. M&A remains a key area, particularly for most law firm employers as it brings high fees and enhances the firm’s brand. Law firms and corporate teams have also reported an increase in demand for lawyers with IT and competition experience.

Hiring activity is strongest in Sydney and Melbourne followed by Perth, Brisbane and then Adelaide. Most interestingly, there has been a focus on having a flexible, agile workforce as employers seek to adapt to the changing nature of workflow. They also face staff demands for flexibility in work and the opportunity to experience the global market through work in other jurisdictions and offices.

The increasingly challenging regulatory environment guarantees more roles for secretarial professionals. In 2016 the steady demand for company secretaries matched last year. Most roles were for senior professionals to join teams and manage part of a company portfolio. The market for the most senior company secretaries remains tight, with noticeably fewer opportunities to lead the company secretarial function than at the more junior levels.

Market overview

The 2015/16 year has seen an increasingly client driven market, where clients want their lawyers to be facilitators. A dynamic, competitive market has seen law firms moving away from siloed work and instead focusing on taking a holistic approach to their clients’ needs and delivering a full range of services. The increasing accountability of lawyers to their clients has impacted the profession’s value proposition and fee structuring.

New roles and flexible skill sets

The increasingly regulated and complex domestic and global environment, together with more activity and greater business confidence, is driving demand for legal services and this is reflected in recruitment trends. Of those firms contacted, approximately 35% reported active recruitment efforts in the last 12 months for newly created roles, rather than replacements. This trend is expected to continue.

THE CORPORATE MARKET HAS SHOWN A POSITIVE UPSWING IN 2016 WITH INCREASED HIRING ACTIVITY IN BOTH THE PERMANENT AND CONTRACT SECTORS.


Firms are now shifting to a new recruitment focus, looking not just for strong technical and academic abilities but also for lawyers who can bring a multiplicity of expertise and innovation to their teams and, for the major and international firms, lawyers who are comfortable working across jurisdictions and who are also globally mobile. Cross-border transactions in developed and emerging markets are now a key growth area.

International firms do well

International firms in Australia survived well in a challenging environment. They face more international competitors and must grapple with a far less buoyant and lucrative resources industry – not to mention a much lower Australian dollar – than when they first established here. Notwithstanding these challenges, revenue and profitability was maintained, albeit at lower levels than recent years as business activity increased and there was more efficient utilisation of staff. Outsourcing and technology also contributed to managing costs.

A renewed confidence in the Australian market was also evident in the international firms that strengthened their presence in the Asia-Pacific region. Allen & Overy significantly increased its offerings by hiring a team from Skadden Arps when the US firm exited the Australian market. Major UK player Dentons announced a merger with Gadens, formalising their referral relationship.

Following this trend, firms previously viewed as ‘domestic’ are actively expanding their global reach in order to deliver better value to clients. This shift involves the development of international networks or relationships of referral. Law firms are increasingly hesitant to restrict themselves to domestic work and are intent on building global networks and broader practices. These relationships are facilitated by referrals, technology and international secondments, information-sharing and other initiatives.

The international law firms continue to remain highly attractive employers for younger lawyers: some 65% of lawyers with two to four years’ experience indicated an international law firm brand would be their preferred option if moving to another law firm. While these figures dropped to 30% for partners considering a move to an international firm, this has more to do with a perception by many partners that they would not be able to achieve the requisite fee thresholds to be attractive to these firms, or that they do not have a suitably aligned client base.

Partnership queues move forward (slowly)

Independent Australian major and mid tier firms and boutiques remain successful in the market and are increasingly attractive choices for senior lawyers seeking a new home. Those mid tier and boutique firms that can offer quality work, rapid progression and international networks have been able to present a compelling proposition to lawyers considering career moves.

Whilst partnership queues moved forward for some, partnership continues to be elusive to achieve and challenging to maintain. Many senior lawyers at top tier practices report shedding of partners and reduced partnership numbers, bottlenecks for partnership, onerous benchmarks to progress and a general lack of prospects. Many of these lawyers have landed in mid sized law firms as salaried partners, with a mandate to build a practice in supportive firms wanting high calibre expertise and seeking growth.

It was a positive year for existing partners, many of whom reported a good year in terms of work, revenue generated and personal reward in the form of bonuses. Partners who are agile and confident working across jurisdictions did particularly well, with exposure to high quality complex transactional work and stronger fee generation. Partners and senior lawyers who have a strong and lucrative client base face no shortage of options, as all firms are eager to hire practitioners with a practice as a key part of their growth strategy. Higher level equity partners can typically earn around AUD $1.4–1.5 million.

Global market drives agility and mobility

In a global market, employers value agile lawyers. The competitive nature of the Australian market and the strength of its lawyers is recognised internationally. Legal professionals are increasingly mobile, with a demand in the past 12 months for Australian lawyers in London and the Asia Pacific region. Further opportunities exist across Europe, the Middle East and the USA, although recruitment in New York remains tight.

The UK’s decision to leave the European Union has created uncertainty throughout Europe and globally. This decision may initially result in some reduced job opportunities for Australian lawyers seeking a move to the UK as some businesses in the UK are adversely impacted.

INTRODUCTION


Notwithstanding a possible initial downturn in demand, there will be opportunities for Australian lawyers to assist businesses in navigating the changes that will occur in the next two years and into the future. We also anticipate increased opportunities for international, policy and regulatory lawyers to work in the UK and other parts of Europe in formulating new laws, regulations and policy to reflect the new relationship between the United Kingdom and the European Union.

In-house teams continue to grow and innovate

Corporate clients continue to build up in-house teams and to develop new ways of providing legal services to the business. This is evidenced by the HR and hiring practices of many corporations which now resemble those of law firms. Namely, the hiring of specialist lawyers, secondments and training and development opportunities. In-house professionals now account for almost 30% of all legal service providers1. This trend is reflected in hiring patterns with more lawyers leaving private practice for in-house positions: the work is not disappearing, but rather spreading more evenly across the market.

The impact on major firms is significant and ongoing. The big law firms are meeting these challenges by reshaping their services to offer more flexible fee structures and increase efficiency, and relying on outsourcing (usually offshore) to provide more streamlined and cost-effective offerings. However, there has been a circa 30% decrease in briefs to private law firms, with the average individual external legal spend by Australian corporations now sitting well below AUD $2 million. External lawyers are generally sought for specialist advice on key projects or for the firepower required for a multi-million or billion dollar transaction. Even then, corporations are flexing muscle, hiring specialists in order to keep the work in-house.

Technology shakes up work and fee models

The strength and development of the technology sector has also impacted the delivery of legal services and traditional fee structures within law firms. The proliferation of ‘start-up’ companies and small businesses has helped further fuel the demand for fixed-fee advice rather than billable hours.

1 Source: Association of Corporate Counsel (ACC) Australia

While some firms continue to retain older business models, many are beginning to adapt. The establishment of contractor services by some firms shows they are relying more on outsourcing services and a flexible workforce.

Law firms operating on a virtual model or e-firms are actively responding to the demand from customers for upfront, fixed-term fees, which has a trickle-down effect for those at mid sized firms whose customers expect a similar price modelling. While these new law firms account for less than 5% of the Australian legal landscape, they are expected to take a larger share of the market in the coming years.

Technological advancement is also fuelling efficiencies such as the trend to more outsourcing – not just to people in cheaper offshore jurisdictions, but to IT systems and processes. Artificial Intelligence (AI) is being used in areas such as disputes and corporate transactional work including due diligence for mergers and acquisitions. Blockchain technology for digital asset transactions will soon add to these innovations. In an already overcrowded market for graduates and lawyers, losing traditional legal work to a computer program makes the landscape even tougher.

All in all, 2016 has been a good year for the legal profession. While law firms and corporations continue to face challenges through competition, disruption, scarcity of quality people, and a dynamic market economy, law firms and corporate legal teams have shown that they can adapt and respond. The best is yet to come.

Katherine Sampson Lisa Gazis

INTRODUCTION

PRIVATE PRACTICE

CORPORATE

HIRING ACTIVITY MORE LAWYERS ARE MOVING IN-HOUSE

Bonuses for

75%of employees

Average bonus between

5-10%



National average salary increase

3.8%End of salary

freezes

Increased use of outsourced

providers


National average salary increase

3.4%

STATE OF THE MARKET

more in-house lawyers

3 out of 10 lawyers now work in-house*

*Source: Association of Corporate Counsel Australia

BRISBANE

PERTH

ADELAIDE

SYDNEY

MELBOURNE

USA NEW YORK

GLOBAL MOVEMENTSAREAS IN DEMAND

Mergers and acquisitions

Employment

Property

Banking and finance

Infrastructure/Projects

IT


INCREASED FLEXIBILITY AT WORK

Working from home more, hot desking,

etc.

EMPLOYERSadapt to new

workflows

STAFFdemands for

flexibility

STATE OF THE MARKET

UK LONDON

ASIA PACIFIC

MIDDLE EAST

EUROPE

USA NEW YORK


Market

Partners in major and mid sized firms have enjoyed a better year in terms of billings and practice growth:

• Many partners reported a record billings year since the GFC

• There has been positive talk about healthier draws and bonuses

• While a few firms reported a drop in partner remuneration, these falls were not considered significant or a cause for major concern

Despite this success, partners reported feeling highly stressed and continue to feel constrained by management, budgetary pressures and demanding clients. The falling Australian dollar and the mining downturn has had a negative impact on certain practice groups and affected partners are looking to broaden their practices to maintain their position in the market and in their firms.

Partners reported stressors such as:

• demanding management

• competition

• technology and other disruptors

• a decline in work across the mining industry

• the falling Australian dollar (for those in global firms)

Many partners have reported disillusionment that the partnership hurdles and performance benchmarks are onerous and never-ending. As one partner remarked, “I have had a great year and was pleased. Just as quickly as I was congratulated I was told, ‘next year we will expect more’. I can’t give more”. This is a genuine and pressing issue for law firms seeking to retain valuable contributors. Many partners have decided to opt out to other firms, in-house, or out of law all together.

Partnerships in 2016 continued to reduce in size as many firms responded to market conditions. For example, Allens, HWL Ebsworth, Ashurst, Clayton Utz, Norton Rose Fulbright, Herbert Smith Freehills, King & Wood Mallesons and Corrs Chambers Westgarth all reduced partner numbers. This downsizing has been a consistent pattern in recent years.

Partnership opportunities for those with a viable and transportable practice in the current market are seemingly infinite. The global, major, mid, small and boutique firms are all looking for partners who can help their firms grow. A client base is critical to a lateral partner achieving the best offer.

As well as money, other incentives may be offered including:

• the firm’s strong client base and brand

• autonomy to run a practice

• flexibility in terms of billing rates

• support in growing and promoting the partner and their practice

• resources

• a collegiate environment with strong leadership and management

These generally translate to strong profitability and financial reward. Not surprisingly, partner moves are now the norm and law firm growth by acquisition is an accepted and a critical part of a firm’s strategy.

Remuneration

Partnership profitability improved this year in line with stronger firm performance. Profitability has been healthy and increased efficiency and leaner teams have played a part in maintaining and improving results.

Once again, mid sized firms are boasting stand out results with one firm reporting figures as high as AUD $4 million for a full equity partner. Typically, equity partners are earning closer to the AUD $1.4–1.5 million at the high end.

Recruitment

Independent Australian major and mid sized firms have all reported a solid year for recruitment, and many firms are positive about the year ahead. Successful players have been able to attract quality senior lawyers with strong brands who can integrate successfully with teams and help drive the firm forward. Team moves remain popular and junior lawyers are following their partners in pursuit of career development and advancement, attracted not only to the partner’s client base but their strong personal brand.

Loyalty takes a back seat to flexibility and opportunity

Though the queues for promotion at the big end of town are starting to move, the career goals of strong senior lawyers are increasingly defined by flexibility and opportunity rather than firm loyalty.

PARTNERS


Equity partnership is no longer the Holy Grail that it once was: the shift from lock-step to meritocracy promotion models and the pressures of globalisation are stimulating both salaried partnerships and mobility at the senior end of practice. The internal promotion path is longer and far more competitive than it once was, and as a result many lawyers now see downsizing as the most attractive means to advance their career.

National and mid sized firms in particular have continued to attract partners from major and international law firms who are feeling the pressure of competition, a lower Australian dollar, conflicts and disgruntled clients who perceive a lack of commitment and loyalty from the firm. These moves are particularly attractive to partners who possess a client base that is more compatible with independent Australian firms and that doesn’t require a global network of offices.

The moves from larger to smaller firms also reflect the growing realisation among senior lawyers that status in the market is no longer defined by the tier system but by efficiency and performance. Many smaller firms consistently outperform the Big Six in a number of niche areas of law and in overall profitability.

International boutiques an attractive option

The past 12 months has also been a bumper year for the international boutiques despite the challenges they face with a market no longer booming and increased competition from newcomers. These smaller international firms continue to be seen as attractive options by high performing senior lawyers at partner, special counsel and senior associate level. Their flexible work style, strong international deal flow and promotion prospects are attracting lawyers from top heavy major domestic players.

Whether the rapid increase in international firms entering the Australian market will translate into strong performance in that sector is yet to be seen. It is clear that more and more clients are attracted to the efficiency and entrepreneurialism on offer – strong lawyers are sure to follow them.

Retention

In 2016 law firms, particularly the major firms, promoted more senior associates to salaried partnership roles than in the previous year reflecting a better year and optimism. While this is positive, partnership remains restricted to a few and driven by benchmarks and business considerations.

Partnership promotions and opportunities will continue to be tight. The mid firms, boutiques and new players will remain eager to snap up senior lawyers unable to achieve promotion in the major firms. This will secure them high calibre talent wanting to grow a practice within the infrastructure and framework of a more supportive, albeit smaller, practice.

Partners who move are generally frustrated with:

• culture

• management and reward

• the reality of what partnership in their firm means for them

• high competition

• scarce opportunities for high level decision making

They may appreciate the financial and personal rewards the role brings but disengagement with their culture is the final break in the relationship. Partners reliant on large institutional clients and panel appointments are more entrenched than their colleagues with large flexible practices. Even if they want to move they may be locked into their firm by the relative immovability of their clients.

Firms are now working more closely with partners to address these issues and regularly provide opportunities for further training and development, marketing and leadership training and support, opportunities for secondments, sabbaticals and mentoring.

Partner movement, whether it’s partners electing to move or being poached by firms, is a point of concern for firms looking to retain star players. In the current market, which is highly dynamic and highly competitive, rivals are eager to snap up senior lawyers with a strong, portable practice and the drivers to move can be strong and compelling.

Those partners who remain loyal are usually those who:

• are secure in their client base

• are confident of their pipeline of work

• have a sense of cultural alignment to the firm and management

• have a sense of belonging

PARTNERS


PARTNERS’ REMUNERATION


Sydney

Mode

Major Firms $1,250,000

Mid Firms $890,000

Small Firms $465,000

Melbourne

Mode


Mid Firms $780,000


Brisbane

Mode

Major Firms $980,000

Mid Firms $623,000


Perth

Mode


Mid Firms $687,000


Adelaide

Mode

Major Firms $700,000

Mid Firms $450,000


The defining criteria of what is a major, mid and small commercial CBD firm includes: size, locations, reputation, quality of work, expectations of employer as well as pay, desirability of employment and training and development.


PRIVATE PRACTICE LAWYERS

Market

Private practice enjoyed a strong year, with overall activity and revenue above recent year levels and more job opportunities for lawyers in search of a change.

The challenges that emerged after the GFC still impact revenue and brand:

• Intense competition within and outside Australia

• Pressure on fee levels from savvy consumers

• Increased use of technology

• The need to adapt to a more agile workforce

• Partner movement

• A shortage of well trained lawyers due to reduction of hiring during the GFC

Firms are now navigating these challenges in a more stable and predictable market, an improved economic climate and, for many practice areas, a viable pipeline of activity.

Firms are finding it difficult to source the calibre of talent they require for specialist roles. Much of this shortage can be traced to the minimal hiring and training of graduates and juniors immediately after the GFC. At the same time, movement of partners between firms continues and the appetite of the mid sized firms for partner acquisition remains steady. Sign on bonuses re-emerged as firms fought to secure hard to find lawyers.

External pressures drive resourcing and technology changes

Amid these moves, market disruption continues. The year was marked by developments to ensure competitiveness including the introduction of alternative legal resourcing providers that give firms and their clients a flexible resource of lawyers on call.

Increasingly, we are seeing international firms embracing technology in the office with the use of smart technology, algorithms and AI. For example, Linklaters have incorporated AI services in their contract and discovery processes and in the US, BakerHostetler uses AI for legal research. At a recent Robots and Lawyers Conference in London it was found that 48% of UK firms use a form of AI.

Despite some concerns that this trend will lead to a displacement of entry level lawyers, overall firms remain positive that the growth of professional technology has increased efficiency and improved the client experience without endangering jobs.

It is too early to predict the outcome, but prospects for graduates in an already overcrowded market will no doubt be affected.

Remuneration

On the plus side, lawyers have reported a lift of salary freezes and satisfactory increases this year. Uplifts ranged from 2 to 22%. The national average increase this year was 3.8% in contrast to last year’s 3.4% and bands again moved marginally around 3%. Increases of above 10% were uncommon but not unheard of for star performers.

Salary rises were more generous in the major firms and the strongest increases were recorded in Sydney and Melbourne with Perth, Brisbane and Adelaide following. Remuneration in the mid tiers continues to be very competitive even if increases lagged their peers in the majors. Overall, we are seeing a market correction in Melbourne and Sydney in particular, with junior to senior associate level candidates receiving healthier salary increases than in previous years.

Bonus payments featured more strongly than last year, although most bonuses are discretionary. Bonuses ranged from 5 to 10% of total salary and were paid to those who performed above expectations. Those who greatly exceeded expectations were able to achieve as high as 20%. These figures remain similar to those of last year although this year more lawyers received a bonus.

The trade-off for more money (and perhaps a bonus) was longer hours and higher budgets reported at most of the major firms and some mid firms.

Lawyers in corporate M&A, infrastructure and projects practice groups were the most highly remunerated and rewarded. This no doubt reflects the long hours required from the team as well as the high fees generated by large, complex transactions.

In Sydney significantly higher salaries were offered by some of the top tier and particularly the international UK Magic Circle firms to attract candidates from major Australian practices. A rise in sign on bonuses of up to AUD $20,000 were offered to secure lateral hires with expertise in specialist area.


Recruitment

Recruitment in law firms is on the up and higher job mobility remains. In 2015/16 hiring of permanent, fixed term and contract staff continued to rise. Firms are focused on creating agile workforces to reduce overheads in times of lower demand and to reflect the changing way that many lawyers seek to work.

Sydney and Melbourne continued to show signs of employment growth followed by Perth, Brisbane and Adelaide.

The strict graduate hiring practices at the height of the GFC and immediately thereafter mean there is a shortage of trained lawyers with five to eight years’ experience. Overall, there is strong demand for lawyers of three to eight years’ post qualification experience (PQE) in the major and mid sized firms. This includes areas such as corporate M&A, infrastructure, property and projects, employment, competition, banking and finance, and IT.

The competitive nature of the market means firms are fighting harder to hold onto their staff, leading to creative solutions when work is slow to keep lawyers engaged. Lawyers are increasingly being seconded to client businesses or moved between offices and teams in a bid to keep work fresh and lawyers agile.

Senior level lawyers from major and mid sized firms report feeling stifled by a lack of partnership prospects. Those with a demonstrated ability to develop a business and strong client contacts are in demand as smaller and mid sized firms seek to bolster their practices with high quality lawyers who can assist the firm in growing and achieving their strategic objectives. There has been a number of increased appointments from these ranks by mid sized law firms as well as high growth firms (among them the accounting firms aggressively boosting their legal service offerings) who value the potential, energy and opportunities that such recruits bring.

Retention

Firms have continued to focus on retention, with the needs of employers and employees converging in new ways:

• Employees increasingly want to work in ways other than the traditional full time permanent role to accommodate their personal needs

• Firms are being forced to build an agile workforce that reflects how work is done and responds to volatile markets

By offering a myriad of arrangements and services such as full time, part time, flexible work, contracts, independent contract arrangements and opportunities to work flexibly in outsourcing centres, firms are able to retain quality staff while responding to market demands.

Flexible work a perennial draw card

Policies regarding flexible work, parental leave arrangements and diversity continue to be developed and refined. The firms that have best promoted and articulated these policies to the legal talent market have scored highly in terms of preferred employer status among lawyers seeking to join firms that demonstrate their values and that they believe will offer a culture aligned with their values.

To help lawyers meet their work responsibilities in a more efficient and flexible way, there has been a greater reliance on technology. IPhones, iPads, personal computers, remote access to databases and office systems, and Skype are offered by many firms and are being used more than ever.

For junior staff predominantly focused on training and development and career advancement, factors like these are extremely important:

• Opportunities for secondment – locally and overseas

• Involvement in projects and key initiatives

• Conference attendance

• Working with more senior professionals on quality matters with high profile clients

• Having responsibility for and genuine involvement with clients in transactions

2016 brought an increase in all these offerings as firms invested even more in these strategies than in previous years.

Long hours and elusive partnerships drive lawyers in-house

Despite many of the retention efforts, the majority of lawyers at all levels complained of long hours and a lack of work-life balance in frenetic environments where they believe advancement to partnership is elusive. This remains a key reason why lawyers pursue roles outside private practice, instead looking at in- house and other environments once they near or reach senior associate level.

Senior associates and special counsel in particular expressed a high level of frustration with the lack of work-life balance, as well as the hurdles required to create a sustainable business case for partnership and a general lack of partnership opportunities.

All lawyers shared a disillusionment with benchmarks for career progression increasing each year and the feeling of being driven to unsustainable levels. This is a key challenge the firms must address if they wish to retain valued staff and remain sustainable in this highly competitive market for clients and for talent.

PRIVATE PRACTICE LAWYERS


PRIVATE PRACTICE LAWYERS’ SALARIES

MAJOR FIRMSSydney

Year Level Range Mode

1 $75,000 – $90,000 $83,000

2 $83,000 – $110,000 $92,000

3 $87,000 – $125,000 $100,000

4 $95,000 – $140,000 $120,000

5 $110,000 – $158,000 $138,000

SA 1 $135,000 – $165,000 $147,000

SA 2 $148,000 – $185,000 $165,000

SA 3 $160,000 – $200,000 $185,000

SA 4 $170,000 – $230,000 $210,000

SA 5/SC $200,000 – $340,000 $250,000

Melbourne


1 $70,000 – $85,000 $77,500

2 $75,000 – $90,000 $82,000

3 $82,000 – $100,000 $91,000

4 $85,000 – $130,000 $110,000

5 $100,000 – $140,000 $120,000

SA 1 $120,000 – $150,000 $136,000

SA 2 $130,000 – $170,000 $150,000

SA 3 $137,000 – $175,000 $162,000

SA 4 $155,000 – $200,000 $180,000

SA 5/SC $170,000 – $310,000 $225,000


Given that firms take into account a range of factors when determining remuneration, an individual’s position within a band will vary based on their background,experience and performance. Lawyers paid at the higher end of the bands are usually top performers and/or employees who bring with them an additional skillthat is over and above the general requirements of the role. For tailored advice please contact our consultants.


Figures include superannuation but do not includebonuses or other benefits.


MAJOR FIRMSBrisbane


1 $67,500 – $79,000 $72,500

2 $70,000 – $95,000 $82,000

3 $80,500 – $104,500 $87,000

4 $90,000 – $123,000 $98,000

5 $97,000 – $145,000 $113,000

SA 1 $117,000 – $160,000 $128,000

SA 2 $130,000 – $182,000 $153,000

Perth


1 $75,000 – $87,000 $75,000

2 $80,000 – $95,000 $85,000

3 $87,000 – $105,000 $96,000

4 $91,000 – $130,000 $110,000

5 $100,000 – $143,000 $120,000

SA 1 $120,000 – $168,000 $135,000

SA 2 $130,000 – $190,000 $155,000

Adelaide


1 $55,000 – $68,000 $59,000

2 $60,000 – $78,000 $66,000

3 $65,000 – $85,000 $72,500

4 $75,000 – $110,000 $85,000

5 $80,000 – $125,000 $90,000

SA 1 $90,000 – $155,000 $115,000

SA 2 $96,000 – $200,000 $130,000







MID FIRMSSydney


1 $65,000 – $80,000 $75,000

2 $78,000 – $90,000 $85,000

3 $88,000 – $105,000 $90,000

4 $90,000 – $125,000 $105,000

5 $95,000 – $145,000 $120,000

SA 1 $110,000 – $155,000 $135,000

SA 2 $125,000 – $165,000 $140,000

SA 3 $135,000 – $177,000 $155,000

SA 4 $147,000 – $180,000 $170,000

SA 5/SC $165,000 – $285,000 $205,000

Melbourne


1 $65,000 – $79,000 $74,000

2 $68,000 – $88,000 $77,000

3 $75,000 – $95,000 $88,000

4 $80,000 – $115,000 $98,000

5 $90,000 – $130,000 $115,000

SA 1 $105,000 – $143,000 $128,000

SA 2 $115,000 – $150,000 $138,000

SA 3 $125,000 – $161,000 $148,000

SA 4 $140,000 – $175,000 $160,000

SA 5/SC $150,000 – $280,000 $185,000







SMALL COMMERCIAL CBD FIRMSSydney


1 $50,000 – $75,000 $55,000

2 $62,000 – $88,000 $68,000

3 $70,000 – $95,000 $80,000

4 $77,000 – $115,000 $88,000

5 $89,000 – $130,000 $105,000

SA 1 $96,000 – $155,000 $120,000

SA 2 $115,000 – $170,000 $126,000

SA 3 $130,000 – $185,000 $140,000

SA 4 $140,000 – $195,000 $152,000

SA 5/SC $160,000 – $210,000 $170,000

Melbourne


1 $50,000 – $75,000 $50,000

2 $55,000 – $85,000 $60,000

3 $57,000 – $90,000 $69,500

4 $60,000 – $105,000 $78,000

5 $73,500 – $120,000 $98,000

SA 1 $78,500 – $135,000 $105,500

SA 2 $105,000 – $145,000 $115,000

SA 3 $110,000 – $150,000 $125,000

SA 4 $120,000 – $170,000 $135,500

SA 5/SC $135,500 – $205,000 $165,000







United Kingdom

The London market picked up considerably in 2015/16. There are now more opportunities for suitably qualified lawyers with expertise in banking and finance, M&A, capital markets, financial services, dispute resolution and funds management. There are also openings for construction and projects lawyers.

Despite significant growth in relocation to Asia and the Middle East, London remains the destination of choice for top Australian lawyers for now, although competition with local talent remains fierce.

Salaries have remained highly competitive at the Magic Circle, Silver Circle, US firms and major international practices. Firms have continued to offer bonuses to retain and reward their exceptional performers.

The UK economy is beginning to regather strength. However, law firms continue to critically assess their needs to restrict recruitment to profitable areas of long-term growth. For example, junior lawyer cohorts are shrinking throughout the Magic Circle firms.

The impact of Brexit

The impact of the Brexit referendum on legal recruitment is yet to be seen. It is expected to result in significant work for lawyers guiding clients through the new business environment and regulatory changes. However, firms are exercising caution at this early stage until there is greater certainty. It is anticipated that, in the course of time, hiring will gradually resume after a post-EU UK repositions itself in the global economy.

For Australian and New Zealand lawyers looking to enter the UK market, the entry of major UK firms in Australia presents a viable alternative for a London move through internal transfers and secondments.

Associate salaries have increased in the past year. One year PQE associates at some Magic Circle firms can expect salaries of around GBP £90,000, and up to GBP £130,000 for a three year PQE associate. US White Shoe firms in London have also increased salaries, bringing them on par with or close to their New York offices. Salaries for these firms start at GBP £130,000 for a one year PQE associate.

Australian lawyers looking to secure a role in the UK will have their experience discounted by up to two years to equalise with local lawyers completing a two year training contract.

INTERNATIONAL

DESPITE SIGNIFICANT GROWTH IN RELOCATION TO ASIA AND THE MIDDLE EAST, LONDON REMAINS THE DESTINATION OF CHOICE FOR TOP AUSTRALIAN LAWYERS FOR NOW.


Asia

Recruitment in Asia has continued to increase, especially in the Asian financial hubs where demand for lawyers with cross-border transaction experience is high.

Foreign lawyers are typically interested in the fast-paced environment that Singapore, Hong Kong, Tokyo and Shanghai offer, along with working across cultures on high value transactions. The areas in greatest demand were banking and finance, M&A, capital markets, funds, financial services/regulatory litigation, and commercial arbitration. Interestingly, US law firms in Asia have enjoyed a steady increase in recruitment on the back of growing confidence of mainland investors in the US economy.

Lawyers with business level Chinese language skills are strongly preferred, particularly in Hong Kong and mainland China. Lawyers with business level Mandarin (Putonghua) language skills were particularly highly sought after.

More opportunities have come up in Singapore and this has proven a popular choice on the back of a rising prominence of international law firms, greater cross-border activity, and relatively high salaries.

Salaries remain competitive. In Hong Kong, newly qualified lawyers can expect salaries of circa HKD $80,000 per month (AUD $175,000 per annum). A lawyer with three years’ PQE can expect circa HKD $110,000 per month (AUD $240,000 per annum). Similar figures can be expected in Singapore, and relatively low tax rates render these jurisdictions particularly desirable for Australian and New Zealand lawyers.

Middle East

Opportunities continue to arise in Dubai, Abu Dhabi and Doha. Foreign lawyers are attracted to these destinations for the competitive salaries, tax benefits and the quality of work on offer.

There continues to be a strong demand for suitably qualified lawyers in the areas of banking and finance, M&A, construction and dispute resolution.

Despite strong demand in the region, the transient nature of the location means that the quality of lawyers sought is consistent with that of the UK and competition is high. Competitive Australian and New Zealand candidates will have large firm training, strong academic skills and superior technical skills.

The increase in corporate and finance transactions has resulted in demand for lawyers with Islamic finance experience. Overall, Arabic language skills and some regional experience will make a candidate far more competitive for local opportunities.

Due to the strong presence of UK firms in the Middle East, Australian and New Zealand lawyers with a minimum of two years’ PQE are treated as newly qualified lawyers. Salaries for newly qualified lawyers at UK firms based in the Middle East start at AUD $100,000. Residency and work permits are relatively straightforward to obtain, particularly in the United Arab Emirates.

United States – New York

While interest in the US and particularly New York remains high, an extremely competitive market and difficult admission requirements means that those interested in North America are generally more successful when placed through an internal secondment rather than a standalone hire.

Recruitment in New York is tight, and firms generally prefer lawyers who have completed their US admission requirements or studied a Master of Laws (LLM) at a top US law school. US firms recognise that foreign lawyers need to retrain and undertake additional studies to obtain admission in the US. Australian and New Zealand lawyers from elite practices with impeccable academics are still able to secure roles, but will generally have their experience discounted by approximately two years.

Australians are in a better position than other nationals in navigating the complex US work visa system. In particular, the treaty-based E3 visa available exclusively to Australians promises to increase the availability of visas while reducing the cost and length of the application process.

The starting salary for a graduate in New York is USD $160,000 across most major firms. Generous bonuses for high performing lawyers ranged from 15% (for first year lawyers) to 22% for senior lawyers. We are unlikely to see a substantial increase in salaries and bonuses next year.

INTERNATIONAL

Melbourne

Level 1, 535 Bourke Street, Melbourne 3000 T: (03) 9629 2111 E: [email protected]

Sydney

Level 3, 15 Castlereagh Street, Sydney 2000 T: (02) 9241 1199 E: [email protected]

@MahlabLegal

www.linkedin.com/company/mahlab-recruitment

www.mahlab.com.au

mahlab report 2016 private practice · 2016-07-25 · mahlab report 2016 private practice 1 we are...

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