While Sydney partners bagged an average $1,015,000, in Melbourne, average top-tier partner earnings lagged at $896,000. Partner remuneration in Sydney and Melbourne significantly towered over those in small firms, which was a more stately $432,000 in Sydney and $340,000 in Melbourne.

The figures were published in Mahlab’s Recruitment Salary Survey 2006, released last Friday as the first salary survey of the financial year.

Overall, New South Wales lawyers had the lowest salary increases in the country — a 7 per cent rise on last year, while the largest increases were enjoyed by Victorians, at 8.3 per cent, and Queensland and South Australia at 8 per cent on average. Across the nation, the salary increases showed as the lowest average increases in the past six years.

Lawyers in Sydney still had the highest salaries in the land, however, with top-tier firms offering their first year lawyers $68,000 on average, compared to an average of $63,500 in Melbourne. Lawyers of 10 years or more seniority commanded salaries of $200,000 on average in NSW’s capital, while in Victoria’s they had to be content with $170,000.

Across the board, the 8 per cent increase in pay of financial 2006 was the same as that of 2005, and both marked the lowest average increases in the last six years. Salary bands meanwhile increased by only 4.5 per cent.

Rather, many firms underlined their commitment to high achievers by offering better bonuses. Thirty-three per cent of lawyers at private firms surveyed by Mahlab are receiving discretionary performance-based bonuses, making such benefits more prevalent than previous years.

The Mahlab survey also noted that some lawyers returning from overseas and lateral recruits practising in sought-after areas had triggered a “bidding war” between firms which was putting pressure on salaries. Sign-on bonuses were increasingly used as a counterattack by firms to keep a lid on salaries in this environment while enabling firms to offer lawyers an incentive to join.

Other benefits were offered by employers to encourage talent retention. Mobile phones were offered to 32 per cent and laptops to 22 per cent of lawyers surveyed, while 32 per cent had been offered the chance for secondment within Australia. Thirty-seven per cent of lawyers had been offered paid study leave, and 33 per cent full fee reimbursement for studying.

The trend of rewarding the highest achievers was continued. Overall, top tier partner earnings rose by 7-8 per cent since last year, while those at mid and low-tier levels rose 8 per cent. At firms with performance-based partnership remuneration, the highest-billing partners were claiming salaries of as much as two thirds more than their lowest-performing colleagues.