The last year has seen unprecedented movement among partners and lawyers.

Global brands, cross-border and international work, secondment prospects and strong remuneration continue to lure lawyers into new firms and organisations.

This year alone, mergers, link-ups and expansions has seen the entry of Ashurst, Linklaters (through an alliance with Allens), King & Wood Mallesons, Clyde & Co and the newly-merged Herbert Smith Freehills into the Australian market.

Global merger mania among Aussie top-tier firms have dominated headlines. What is not widely reported is how this is impacting salaries in the mid-tier section of the market.

Forced to find ways to survive and thrive in the rapidly-changing environment, smaller firms are offering premium salaries and greater opportunities for experienced lawyers to direct their own practice, access a variety of local work and get involved in management’s decision-making processes.

No organisation wants an employee that is only there for the money. Salary is just one element in attracting top talent to a legal role. That said, a Hudson survey of 5,563 employers and 5,748 employees in Australia and New Zealand found the factor that would most motivate a lawyer to stay in their current role was an increased salary.

The same survey found 66 per cent of respondents were considering a change of jobs in 2012 and nearly two-thirds believed they deserved a pay rise. Some received that pay rise, with nearly three-quarters of firms increasing their salary bands this year, according to Mahlab. However, 26 per cent of firms left their salary bands unchanged.

Keeping tabs on the talent

Increased competition in the legal jobs market has made talent acquisition and retention the key focus of many firms.

According to JLegal’s latest salary survey, volatility in the European markets and lessons learnt from the GFC have made firms pay closer attention to recruiting “right”. More firms in Melbourne and Sydney are hiring into replacement roles as opposed to new roles, indicative of subdued growth and a sense of caution.

The Brisbane market, on the other hand, is upbeat and still growing on the back of the energy & resources boom and a number of large infrastructure projects. The same goes for Perth, where salaries have increased more than in any other capital city, according to Taylor Root’s latest survey.

However, it’s not only energy and resources and infrastructure specialists who are spoilt for choice. The latest survey from Dolman Legal suggests experienced workplace safety and employment lawyers are being offered multiple roles, sign-on bonuses and counter offers by their existing employers. The impending nationalisation of OHS laws and the harmonisation of mining safety laws, along with restructure and more retrenchment activities in state governments, have meant a steady demand for these lawyers.

By contrast, corporate transactional work has slowed, but there still appears to be considerable activity in insolvency, commercial litigation and banking & finance. Salaries in this area have generally stagnated, however, according to Taylor Root, and increases, if any, are in line with the consumer price index.

In-house trends

The in-house market has remained steady, mirroring private practice, with the Perth and Brisbane markets experiencing high growth as companies compete for specialist talent.

The Sydney and Melbourne markets remain mostly flat, according to JLegal, except in the energy & resources, infrastructure and IT sectors; in the latter case companies are mostly recruiting their first in-house lawyer or adding to their team.

Lawyers shouldn’t expect a significant increase in salary for a move from private practice to in-house. Throughout the year, organisations have reportedly been expanding in-house roles to the two-to-three year post-qualification experience (PQE) level to better balance profitability and delegation of work within legal teams.

Overall, lawyers have greater choice in the marketplace and competition is fierce for experienced specialists.
Read on for more detailed salary analysis of each capital city, legal practice group and the in-house sphere.

PRACTICE EVOLUTION

A minor rise in salaries across private practices is disguising more dramatic shifts between sectors driven by international tie-ups and the resources boom. Leanne Mezrani reports.

The entrance of global firms has undoubtedly sparked the most significant shake-up of Australia’s legal market in recent years. Now that the dust has settled on many of the international mergers, recruiters are looking at how full-financial integration and other alliances have impacted practice groups within these firms.

Private practice salary bands, which Mahlab Recruitment reveals increased by only 0.5 per cent this year, do not appear to mirror the seismic changes in the market. In an attempt to explain the disparity, Mary Horniblow, manager of private practice recruitment at Mahlab, said that international alliances have “not so much increased the size of the pie, but reshaped who gets what”.

She explained that there has been a reallocation of legal work at the top end and the subdued economy is “masking a more profound shift in market share”.

So who’s getting the biggest slice of the pie? On this point most recruiters agree that demand is highest in banking & finance, energy & resources, insurance, workplace relations & employment and insolvency, which is pushing up salaries in these practice groups.

Tony Holland, managing partner of DLA Piper, told Lawyers Weekly that some of the results are echoed within his firm. Specifically, DLA Piper is enjoying a reasonable flow of restructuring work, which is resulting in more internal resources being diverted to the firm’s global restructuring practice.

“We’ve looked to move our people into certain areas where there is high demand and, at the moment, that’s undoubtedly been in restructuring,” he says.

In the energy & resources sector, the mining boom is, unsurprisingly, driving demand. Those in resources hubs received the healthiest pay rise, with Perth and Brisbane salaries increasing by 13 and 10 per cent respectively, according to Mahlab.

Phillip Guest, Michael Page International’s regional managing director for Australia and New Zealand, says the high and sustained volume of work in the sector has placed upward pressure on salaries. He adds that this trend, which he predicts will continue over the next 12 months, is also forcing firms to place renewed focus on retention strategies.

“Most employers will look to award pay increases ... in an effort to retain their best talent.”

Offering your best lawyers a pay rise could be a very clever strategy if Hudson Legal’s salary survey results are anything to go by.

The recruiter’s Legal Salary and Employment Insights 2012 report revealed that the biggest motivating factor to stay with a firm – cited by more than a third of respondents (36.4%) – was an increase in salary.

Holland comments that he is not surprised at the finding given the current economic climate.

As for the remaining practice groups in the black, international recruiter Dolman claims recent legislative changes and greater retrenchment activity have led to steady demand for employment lawyers; while insurance has remained consistently busy as investors try to recoup losses suffered during the economic downturn.

Growth in these and other areas appears to be compensating for subdued demand for environment & planning lawyers and corporate lawyers in NSW and Victoria, adds Hudson.

Lawyers Weekly contacted a range of top-tier and mid-tier firms to comment on salary trends, including King & Wood Mallesons, Corrs Chambers Westgarth, Gilbert + Tobin, Holding Redlich and Lander & Rogers, but many either indicated they did not want to comment on what is clearly a sensitive topic or did not respond to the enquiry.

COASTING ALONG: WILL WEST SOON BE BEST FOR LAWYER SALARIES?

The media may be painting a picture of a stalling mining boom, but for lawyers in the resources capitals it’s a case of making hay while the sun shines. Andrew Jennings reports.

A vivacious appetite for lawyers with energy and resources expertise is driving up salaries in the resources capitals of Perth and Brisbane, several salary reports have revealed.

Strong growth in the resources states of Western Australia and Queensland has seen a favourable pay rise for lawyers working in their capital cities.

The Michael Page International Salary and Employment Forecast Report for 2012 reveals that 84 per cent of respondents working within the resources sector predict a shortage of skilled workers in the coming year.

This is likely to drive up salaries for legal professionals in Perth and Brisbane.

In contrast, in the traditional hubs of Sydney and Melbourne, replacement roles rather than new roles have been the significant trend, highlighting subdued growth and a sense of caution in the markets.  

The recruitment market remains flat in these cities except in the energy and resources and infrastructure space, where there continues to be demand for in-house lawyers with specialist experience.

So, is there any likelihood of lawyer salaries in Perth soon surpassing those in Sydney? Not according to Tony Joyner, a partner in Herbert Smith Freehills’ Perth office.

“Perth is in the middle of a 20-year process of changing from being a mid-sized economy to a big one, so everything is slowly but very steadily moving to being like the other big cities,” he told Lawyers Weekly.

“Year-on-year there is stronger growth and salaries are going up.

“I think Perth will get close to matching salaries in Sydney – maybe even get equal – but the reality is that Sydney is the big population centre and it’s where the banks live, so for a very long time Sydney will remain the centre of Australian commercial activity … so I don’t think we’ll ever overtake them,” he adds. 

On the up

According to JLegal’s 2012 salary report, Perth and Brisbane hiring markets are “buoyant” and will “continue to grow”, with the demand for lawyers showing little sign of abating.

The report shows that Sydney still enjoys a slight edge in terms of highest salaries, followed closely by Melbourne and Perth.

“In some cases, lawyers in Perth who work in specialist areas such as energy and resources can, at times, receive better packages than their peers in Sydney,” says the JLegal report.

Hudson’s Legal Salary and Employment Insights 2012 report backs-up this point.

According to the Hudson salary index, a lawyer with four-to-five years’ PQE working at a boutique firm in Perth can earn the same as a lawyer of similar experience working at one of Sydney’s top-tier firms, while an in-house lawyer in Perth can earn even more.

With up to five years PQE, a lawyer can expect to earn between $105,000 and $135,000 in a top-tier firm in Sydney, between $110,000 and $135,000 at a Perth boutique firm, and between $110,000 and $140,000 as an in-house lawyer in the Western Australia capital.  

Mahlab Recruitment’s salary report, Reshaping the model: The Push to go Global, paints a similar picture.
It shows that hiring in Sydney and Melbourne remains steady compared to last year, with new hires often replacing departing lawyers.

This contrasts with the high demand for lawyers in Perth and Brisbane, as indicated in the private practice analysis, where salaries increased by 13 and 10 per cent respectively.

John Egerton, manager of corporate recruitment at Mahlab, says that the divide in income growth between the resources capitals and the rest of Australia is simply a case of supply and demand.

“It is a tight market for mid-level lawyers, especially with resources experience, and this is putting upward pressure on salaries,” Egerton said at the launch of the report.

Perth and Brisbane lawyers may boast the fastest-growing salaries, but partners, senior associates and general counsel in Sydney are still the highest paid.

According to the Mahlab survey, the most common income for partners at Sydney’s main firms was $1.44 million, ahead of Melbourne on $1.34 million. Overall, partner income increased by an average of 3.6 per cent compared to 3.9 per cent the previous year, with the rate of growth highest in Perth at 4.5 per cent.

GRUMPY TENANTS

Outside of a few key areas, in-house lawyers are not receiving significant pay increases, with an increasing number looking to move back into private practice. Justin Whealing reports.

In-house lawyers have often been the happiest group in the legal sector.

Traditionally, a move in-house has offered a better work-life balance, an end to timesheets and the chance to do a wider variety of work, compared to being a practice group specialist in a private practice law firm.

However, lean economic times have wiped the smiles off their faces.

According to Mahlab, 60 per cent of corporate lawyers surveyed rated their performance review process as very poor, poor or neutral.

You can’t blame them really: just less than 30 per cent of respondents said they had not received a salary increase in the previous 12 months.

While 70 per cent of in-house lawyers told Mahlab they were “satisfied” or “somewhat satisfied” with their current position, a record number of in-house lawyers are looking to leave the sector.

Nine per cent of lawyers considering a move are open to a private practice role, compared to 7.4 per cent last year and 3.3 per cent in 2010.

The Robert Walters salary survey also found that private practice has been busier than in-house for the first half of this year and that “working in private practice can offer them access to additional resources, an opportunity to work on a variety of projects and increasingly better work-life balance opportunities”.

Australian Corporate Lawyers Association CEO Trish Hyde told Lawyers Weekly that she has not picked up on any increased levels of dissatisfaction from members of the peak Australian in-house organisation.

“We’re finding that in-house counsel are finding the roles more rewarding because they are able to be trusted advisers, they are enabling in the business and it is a quite an interesting role that most of them are enjoying,” she says.

Hyde also rebutted another finding in the Mahlab survey: that 70 per cent of in-house lawyers felt their current organisation does not offer good career progression opportunities.

“Personally, I haven’t been hearing that and, anecdotally, where there may be sole in-house lawyers there might be limitations,” she says. “Anecdotally, we hear that people taking on commercial roles are taking their legal skills into a new area within the business that can often have incredibly beneficial flow-on effects for the organisation.”

Money, money, money

When it comes to the hip pocket, the various salary surveys have conflicting information because the structures of the surveys from the recruitment firms are quite different.

Legal People’s real-time online survey, which has been completed by more than 4000 private practice and in-house lawyers, estimates that the median salary package for an in-house lawyer in Melbourne is $130,800.

According to JLegal, a five-year PQE lawyer in Melbourne can expect to earn between $110,000 and $150,000. The Taylor Root survey drills down into sectors and it reckons that, for lawyers with six-to-10 years PQE, the big earners are in energy and resources in Brisbane and Perth.

Lawyers in those sectors with that experience can expect to earn between $165,000 and $250,000 in those cities, outstripping their Sydney counterparts in that sector, with salaries in the NSW capital estimated to be between $160,000 and $240,000.

Despite the big money energy and resources lawyers can earn, in-house salaries, as the Hudson Legal salary report states, are “stable”, with many sectors feeling the pinch and in-house teams faced with hiring freezes or budgets for external legal spend slashed.

“The answer to your question is yes,” says Hyde when asked if there is a feeling within the in-house community that they are doing more with less. “There is pressure on the in-house function to manage their resources effectively and that is part of driving value for the organisations they work for.”