As more and more global firms enter Australia, the country’s law firm hierarchy has shifted and the gap between top-tier and mid-tier salaries is closing.

Promoted by Lawyers Weekly • 07 December 2011 • Big Law

Share

Share this article on:

×

Facebook
X
LinkedIn
Copy link

As more and more global firms enter Australia, the country’s law firm hierarchy has shifted and the gap between top-tier and mid-tier salaries is closing.

Top dogs

Top partners in major Australian firms are being lured to global firms by the “promise of access to international deals and referrals, offshore secondments … a fresh, strong brand, and a full purse”, according to the Mahlab 2011 Salary Survey.

Australian firms insist that competition for talent with global firms is not driving salary changes.

“It might in the future,” says John Denton, partner and CEO of Corrs Chambers Westgarth, which last month poached Baker & McKenzie construction partner Andrew Chew.

“[Global firms] are not a great concern for me in terms of recruitment, because we haven’t actually seen a lot of that ‘luring’ of top partners away.”

Similarly, at Allens Arthur Robinson, any change in salary trends at the lateral recruitment level has not been noticed because the market is “always really tight for the highest quality lawyers”, says the firm’s executive partner Maryjane Crabtree.

“There’s not a lot out there that we would be interested in, but there never are … so we haven’t really noticed a big change,” Crabtree told Lawyers Weekly.

According to the 2011 Hays Salary Guide, salaried partners can expect to earn between $200,000 and $250,000 in the top tier and around $180,000 in small practices, while equity partners can rake in between $400,000 and $750,000 in the top tier; $300,000 in the mid tier; and $250,000 in small practices.

In line with survey predictions that major firms must “streamline their services, adding or removing practice groups” over the next year to bolster their “gold standard” in specialised areas in order to compete with international firms, the top tier is taking close notes on the market.

“I don’t think we’ve changed our practices at this point, but we’re watching the market very carefully,” says Crabtree, adding that Allens tends to recruit highly specialised practitioners rather than utilising one lawyer across several practice areas. Such a strategy, Hays reports, is a sign of the improving market.

Performance perks

Mahlab reports that newly appointed junior to mid-level lawyers are enjoying fixed bonuses, rather than percentage bonuses. However, at Allens, bonuses are not paid at all to entry-level lawyers.

“They kick in at about second year,” says Crabtree.

“[Bonuses] relate to various aspects of [our lawyers’] performance and seniority, and are not linked to the firm’s performance, so it’s really looking at their individual performance,” she says.

No fixed bonuses are given at Corrs, either.

Instead, the firm has an “unusual” incentive scheme for all employees, says Denton.

“Under the plan, an upper range of 10 to 15 per cent of salary can be paid as a bonus, but this rises to between 15 per cent and 22.5 per cent if Corrs reaches designated performance goals for the year,” he says.

Young blood

Mahlab reports that an increase in class actions has created roles for the excess of lawyers at entry level, except in Victoria, where “fewer graduates were recruited at the same time as universities increased their law intake”.

Despite these findings, Corrs recruited more graduates this year, especially in Victoria, but Denton says this is not related to class actions.

“We don’t recruit grads on a commodity basis to service a particular area. A lot of firms are looking at the relationship with their employees as a transaction rather than a relationship of values for both parties,” he says.

Allens, too, reports that it “gradually increased” the number of graduates it recruited in both Perth and Brisbane this year.

With the “outsourcing of legal work to offshore providers [set to] increase in the next 12 to 18 months”, according to Mahlab, the effects on graduate intake will be closely watched.

Mallesons Stephen Jaques, which announced a major outsourcing contract last month, has emphasised that it will not decrease its graduate intake as a result.

According to Mahlab, graduates in top-tier private practice can expect to earn between $70,000 and $80,000, and look forward to increases of between $6,000 and $15,000 after one year’s experience. Graduate salaries are also generally higher in Sydney and Perth and lowest in the ACT, according to Hays.

Balancing act

In terms of desire for work/life balance, which Hays suggests is becoming increasingly important to employees and a catalyst for their movement to smaller boutique or specialist firms, Allens has people working flexibly at all levels of the lawyer spectrum.

“We recognise that both younger lawyers and partners have lives outside work … so we have different combinations of work modes at all levels,” says Crabtree.

Those who seek balance through management responsibility within firms are experiencing frustration with the lack of opportunity to get involved, according to Mahlab.

While there are opportunities for partners to take on leadership positions in staff liaison, practice head or client relationship roles, Crabtree says many partners “don’t want to be involved in management at all”.

“They’re very happy to focus on their practice and their team and couldn’t be less interested in management. That said, you do find partners who really want to be more hands-on who might look for a move,” she says.