Recruitment in Sydney and Melbourne has remained steady compared to last year, with new hires often replacing departing lawyers, the survey revealed. This contrasts with high demand for lawyers in Perth and Brisbane, where salaries increased by 13 and 10 per cent respectively.

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

“It is a tight market for mid-level lawyers, especially with resources experience, and this is putting upward pressure on salaries.”

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

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 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.

Mary Horniblow, manager of private practice recruitment at Mahlab, told attendees that income has become “highly variable among partners in the same firm” because most equity partners are rewarded under a hybrid model. Many blend a base income with bonuses based on competitive criteria (such as individual and supervised billings) and practice development, which is widening the income gap, she explained.

Nationally, salary bands for legal professionals at all levels increased by 0.5 per cent. This does not mirror the dramatic shifts in Australia’s legal market since the entrance of global firms, said Lisa Gazis (pictured), Mahlab managing director.

“We are witnessing an unprecedented pace of structural change ... this is an increasingly fluid, fast-moving market,” she said.

Horniblow added to Gazis’ comment, stating that these 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”.

International tie-ups have not impacted the mid-tier firms in terms of them missing out on work, according to Mahlab, with some opening new offices.

“Major firms are dropping practices like insurance, traditional property and other more operational areas of law [and] there has been some fallout as these practices settle into mid-tier firms,” the report stated.

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