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Modest pay rises not enough to lift morale

user iconLeanne Mezrani 01 August 2014 SME Law
Modest pay rises not enough to lift morale

Firm revenue is up but lawyer morale is down as firms fail to meet salary expectations and move on underperformers, a new survey has found.

Last year saw a number of large firms institute pay freezes. While many have since been lifted, pressure to maintain profitability is keeping salary increases modest and teams lean, said Lisa Gazis (pictured), managing director, NSW at Mahlab Recruitment.

Gazis spoke with Lawyers Weekly ahead of today’s (1 August) release of Mahlab’s annual salary survey, which found that the average salary increase for private practice lawyers was 3.8 per cent and in-house lawyers was 3.3 per cent.

According to Gazis, firms remain overly conservative despite strong revenue figures for FY14.

“The cost pressures on firms are still enormous,” she said in response to why only 44 per cent of firms increased their salary bands in FY14, compared to 50 per cent in 2013 and 75 per cent in 2012.

Those pressures are being driven by clients, who are dealing with their own cost constraints by demanding more value for money from their external legal counsel.

Firms also face stiffer competition from low-cost service providers, claimed Gazis.

“The market is still very competitive for partners in private practice and you’ve got competition which is being created by technology,” she said, adding that clients are increasingly giving work to “the one man band or small boutique firms”.

The haves and have nots

Not all lawyers are feeling the pinch.

Those who have taken a significant step up and high performers received up to a 12 per cent salary increase this year, the survey revealed.

Gazis commented that while firms are rewarding top performers, they are also moving on underperformers.

“If you’re a lawyer or partner who is not meeting benchmarks, there seems to be less time for you to come up to speed,” she said.

“In these sorts of environments you want to retain people but you also want to move people on who are not performing because firms simply can’t afford to carry these people anymore.”

Can’t get no satisfaction

Unsurprisingly, job satisfaction has declined across private practice and in-house this year. The survey revealed that 63 per cent of private practice lawyers and just 59 per cent of corporate lawyers were satisfied in their current role, with almost half of lawyers across the profession considering their job options.

Gazis said lawyers are feeling stressed and under-appreciated.

“People feel that they are working incredibly long hours but are not necessarily getting the financial rewards and it impacts morale,“ she said.

“The focus is on employers now to try and find ways of retaining and rewarding staff, even if they can’t do that through pay increases.”

Gazis believes bonuses should be used in combination with other benefits to retain overachievers. She nominated professional development opportunities, secondments and a positive workplace culture as non-financial benefits that lawyers value.

For more findings from The Mahlab Report 2014 for private practice and in-house see the documents below.

Mahlab-Report-Private-Practice-2.pdf Mahlab-Report-Corporate-1.pdf
You can also download the Mahlab Report app here.