Legal firms keep pay hikes modest as revenue grows

Partners at big firms in one city pocket an average $1.35m — eclipsing everywhere else.

Sydney partners at the big firms pocketed an average of $1.35 million — eclipsing average remuneration for partners in Melbourne ($1.3m), Brisbane ($1.25m), Perth ($1.1m) and Adelaide ($600,000). Picture: iStock

Salary increases have failed to keep pace with solid revenue growth at the nation’s leading law firms, as they invested heavily in technology and prepared for weaker conditions expected next year.

The latest salary report by legal recruitment firm Mahlab reveals that most lawyers received modest salary increases, but this still continued to outstrip inflation of 1.9 per cent as the firms were forced to compete with their ­corporate clients in the war for talent.

Sydney partners at the big firms pocketed an average of $1.35 million — eclipsing average remuneration for partners in Melbourne ($1.3m), Brisbane ($1.25m), Perth ($1.1m) and Adelaide ($600,000).

US firms tended to reward local partners and staff at much higher levels than their competitors, the report found.

However, at other global firms, many Australian partners felt dissatisfied with remuneration decisions made by central committees, often based offshore, and ill-represented in management ranks.

 

Two of the US firms that have made their mark locally include White & Case and Jones Day.

Strong growth continued in corporate in-house teams, and lawyers with three to six years experience were most in demand.

The corporate sector was able to offer lawyers better working conditions, including flexible work, and bonuses ranging from 10 to 25 per cent. Most lawyers attained about 75 per cent of their bonus target. In contrast, few lawyers in private practice received bonuses, with those at the upper end being paid 15 per cent of their salary. This was generally limited to those who exceeded their budgets after an especially demanding or lucrative deal or litigation.

Specialist lawyers in hard to fill positions such as construction, M&A and private equity were able to command “top dollar”, the report said, especially those in Melbourne with three to seven years post qualification experience.

In private practice the queue to partnership was “longer than ever”; many lawyers with 12 years or more of practice hoped but were not guaranteed to gain equity in the next two to three years. The stretch of senior associates and special counsel was very wide, covering lawyers with five to 15 years’ experience.

Partners in financial services, litigation, and projects and construction “overperformed” last year but there were “notable underperformances” by other groups, the report said.