Private Practice Australia Survey 2007
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1 07
2 Foreword 1 2 In Brief Partners Figures contained within tables in this survey have been rounded to the nearest $500 and are quoted in local currency. Designed by Savanah Design Mahlab Recruitment (NSW) Pty Ltd 2007 Mahlab Recruitment (VIC) Pty Ltd 2007
3 Foreword By Dr Bob Birrell n employers are about to experience some fundamental changes in the underlying domestic workforce situation. The annual rate of growth in s workforce (those either working or seeking work) which has recently been at a very high level of 2% or above, or over 200,000 per year, is about to fall. Over the next decade, the rate of workforce growth will subside to half this rate and the absolute number of net new entrants will fall below 100,000 per year. This will occur even if the present high rate of net overseas migration continues, and even if it is assumed, as I have in this projection, that the workforce participation rate of older workers continues to increase. Foreword The dominant reason for this impending change is the inevitable retirement of the large baby boomer generation, that is, those born in the 1950s and early 1960s. Assuming that the global economy continues to favour high growth in, the balance of power in the employment market will swing towards employees. In the case of professionals, shortages are likely to be particularly severe because of s poor higher education training record. There has been very little growth in domestic undergraduate commencements in s universities since Yet over the decade the numbers of persons employed as professionals in has increased by nearly 40%. Much of the shortfall has been covered by an increasing inflow of professionals through overseas movement. This number greatly exceeds the loss of resident professionals each year. When all such movements in and out of are taken into account, there was a net inflow of about 45,000 professionals in By contrast, in 2005 there were just 110,000 domestic undergraduate completions in n universities. As many employers will be well aware, the underlying mismatch between employer demand and domestic training is now manifesting in severe shortages across a variety of professions, including most health professions, engineering, accounting and, as the Mahlab survey indicates, law. The implication is that will have to sharply increase the level of domestic university training. To do so, a much larger share of the late teen to early 20s age group will have to be attracted to university than is currently the case. This in turn will require that the share of bright young people from lower middle and blue collar family backgrounds attending university has to increase. If this is to occur, university attendance will have to be made more welcoming than at present. Currently, most students face life at university without any government financial assistance for their living expenses at all, because of the ferocity of the means tests in place for the higher education Youth Allowance. Mahlab Recruitment 2007 page 1
4 In the case of law, there are plenty of well qualified prospective students eager to take on legal training. Moreover, n universities will expand their domestic enrolment levels now that they are free to offer an unlimited number of full fee places to domestic students, after they have filled their quota of subsidised places. Foreword The legal profession faces the moral issue of whether it is happy to go along with these arrangements, given that the likely outcome will be to remove access to the ranks of the profession for all but the well off. Bob Birrell is Reader in Sociology and Director of the Centre for Population and Urban Research at Monash University. Mahlab Recruitment 2007 page 2
5 Welcome to We re delighted to introduce you once again to s most comprehensive survey of the legal profession, encapsulating market trends and accurate, current remuneration ranges compiled after the standard annual review process for 1 July In Brief Information provided by respondents allows us to report with assurance on market conditions and broader employment issues facing organisations and individuals, including private practitioners here and overseas (employed solicitors and partners), corporate counsel and company secretaries, and marketing, human resources, and knowledge management professionals. We are pleased to include a foreword written by Dr Bob Birrell, Director of the Centre for Population and Urban Research and Reader in Sociology at Monash University. Dr Birrell has acted as an advisor on immigration issues to both Labor and Coalition governments and was a member of the Commonwealth Government s National Population Council from 1987 to Recently he was a member of the independent Review of the General Skilled Migration Program which reported in May We re sure you ll find his comments on the future of the n workforce thought provoking. Each year we aim to extend the reach and relevance of our survey. This year, for the first time, we have spread our research results and conclusions over 4 booklets, Corporate, International and Practice Development Professionals. We have extended our international coverage to include China and Hong Kong, London, the USA and the Middle East. After consultation with you, our clients and candidates, we have focused our questionnaires and our commentary for 2007 on three core areas: recruitment, remuneration and retention. Our survey reveals interesting trends and benchmarks across these inextricably linked drivers for employers, and areas of key interest to all employees saw an extraordinary year in legal recruitment, with heightened business activity placing heavy demands on practitioners at all levels and the professionals who support them. A shortage of talent in has led to the continuing development of creative recruitment and retention strategies, including increased use of sign on bonuses, spotters fees, hefty remuneration increases and bonuses, and aggressive headhunting. Overall, private practice salary bands rose by 4.65% nationally, with overall individual salaries rising by 14%, higher than last year s 8%, although increases exceeding 20% were reported by high performers. Bonus payments were more prevalent at 42%, up from 33% in Katherine Sampson Lisa Gazis Mahlab Recruitment 2007 page 3
6 Partner income has experienced significant increases, particularly in the larger firms. The sheer volume of work and client demands, and the resultant increase in drawings for partners at all levels has led to a slow down in partner movement, although the trend of senior partner movement into key general counsel roles continues. Corporate salaries also increased by 5.9% nationally as corporations compete with law firms for quality lawyers. Whilst Sydney and Melbourne continue to offer more in-house opportunities, the mining and resources boom has had a dramatic effect on the number of corporate roles in Perth and Brisbane. Interestingly, many lawyers returning from private practice roles overseas view an in-house role as their next career move. Many of the larger law firms now reluctantly accept that the lure of gaining overseas experience is often too strong for their young employees to resist, and encourage them to return to the firm in the future through ongoing alumni activities. The choice for lawyers in the international market has widened, with New York becoming an accessible and popular destination. Business activity in London continues to draw n and New Zealand practitioners, while the Middle East is also an attractive option. Interest in, and movement to the main Asian markets remains steady. In Brief Mahlab gratefully acknowledges the support of these industry associations in circulating links to the online questionnaire to their members. There was a significant increase in demand for company secretaries in A notable trend in company secretarial recruitment is the preference of many organisations to recruit legally qualified employees. There was also a strong increase in the number of individuals who hold combined general counsel and company secretary roles. Salary increases for practice development professionals increased, with HR professionals receiving significant increases of up to 13% for specialist roles. The national increase for marketers was 6.2% and 5.7% for knowledge management professionals. As with previous surveys, we are assisted in this ever expanding project by many organisations including n Corporate Lawyers Association (ACLA), Asia-Pacific Professional Services Marketing Association (APSMA), Victorian Women Lawyers, NSW Young Lawyers, Young Lawyers Section of the Law Institute of Victoria, Queensland Young Lawyers Inc, Precedents Network Group and Women Lawyers Association of NSW. We appreciate their ongoing involvement in making a success. Thank you. As always, we thank you, our clients and candidates, for taking the time to fill out the questionnaires. We greatly value your continued support and interest. Naturally, we are always keen to learn what you think. Please direct feedback to our consultants in either of our Melbourne or Sydney offices. Precedents Network Group Lisa Gazis Katherine Sampson Mahlab Recruitment 2007 page 4
7 To say that the past financial year has been a busy one would be an understatement. High levels of corporate activity have generated enormous opportunity for growth in private practice firms, resulting in interesting and challenging work at all levels and across all tiers. With the quality and volume of work on the rise, law firms have worked hard to retain their lawyers and to recruit new ones with significant remuneration increases designed to dilute the lure of overseas firms, perhaps reflecting an increased willingness of partners to share the profit with those who are necessary to generate it. In addition to the influx of quality work and the benefits which form the cornerstone of many retention strategies in local firms, talented lawyers are also enjoying a plethora of overseas and local in-house opportunities created by the buoyant economy. Consequently, although relatively happy with their current conditions, at least 29% of respondents to intend to pursue a lucrative overseas role. Indeed the overseas stint has become de rigueur for lawyers with 2+ years experience. This view is fuelled by key international practices conducting recruitment campaigns targeting the best and brightest legal talent from the n and New Zealand markets. Simultaneously the in-house sector showed increased interest in recruiting lawyers at the 2 6 year level. With the demand for lawyers consistently outstripping supply at this intermediate level, the catch cry from firms for was severe candidate shortage. Areas of practice in which the demand for lawyers was strongest in in Melbourne included corporate/commercial (particularly mergers & acquisitions), private equity, banking & finance and property. Tax, litigation, projects and workplace relations have also been busy. In Sydney, the highest level of recruitment activity was in corporate, mergers & acquisitions, banking & finance, construction (front end), employment and financial services (funds management and superannuation). law firms have worked hard to recruit and retain their lawyers National salary increases of 14% Brisbane and Perth have also generated strong needs for lawyers with 2 5 years experience across most practice areas. The need for lawyers with construction/infrastructure, projects, commercial property and energy & resources experience has been acute and this need has resulted in a steady increase in salaries. Perth has been exceptionally busy with significant activity in the energy & resources and Public Private Partnerships areas generated by the major resources players and government authorities. Offering high profile, cutting-edge work, Perth is fast becoming a favoured destination for lawyers. Consequently the migration of Perth based lawyers to the east has slowed down. The lawyers enjoying this resources boom are also attracting interest from international firms, particularly in the UK and Middle East. Faced with the dual conditions of busy practice groups and fierce competition for a seemingly shrinking pool of talented lawyers, local firms are engaging teams of partners and their star lawyers in their recruitment drives. As a recruitment strategy this has been particularly effective. Executive search, traditionally used to source senior lawyers for specialist roles, is now used routinely to fill vacancies at all levels. Mahlab Recruitment 2007 page 5
8 Firms also showed greater interest in high calibre candidates seeking part time or flexible work arrangements, as well as contract lawyers or lawyers trained interstate or overseas. An increasing number of firms sweetened their offers with sign on bonuses, as verified by 17% of respondents confirming receipt of a sign on bonus comprising a one-off lump sum payment (usually refundable upon resignation within 6 or 12 months of joining the firm). More than half of the respondents to were satisfied with the outcome of their salary review. This is not surprising considering that salary bands rose by an average of 4.65% nationally and individual salaries rose by an average of 14% nationally. Lawyers in Sydney and Perth enjoyed the highest increases with some high performers achieving increases exceeding 20%. Melbourne and Brisbane followed closely behind. As with last year, and not surprisingly, lawyers paid at the higher end of bands were those whose performance was rated as outstanding. The percentage of respondents confirming that their firm also offered discretionary performance based bonuses rose to 42%. 35% of respondents who had moved to a new role within the last 12 months had also received a salary increase following completion of their probation. The development and implementation of innovative and effective retention strategies has been a key focus for firms as they grapple with the demands of generation Y lawyers. Policies for flexibility, diversity and equality in the workplace as well as leadership, networking, marketing and management training, mentoring and coaching programs have again featured in , especially at senior associate level. Firms have also continued to offer secondments, travel and study assistance. Several have developed sophisticated alumni programs to maximise the possibility of securing lawyers returning from overseas but also to maintain a network with those working locally. Notwithstanding these efforts, in more than half of the respondents reported that they were considering leaving their current position (58%). This compares to 49% last year. Interestingly the percentage of respondents considering a move to another law firm dropped from 43% in to 30% in The percentage of respondents who expressed an interest in pursuing partnership also dropped from 56% last year to 42% this year. In % of respondents were most likely to pursue a role overseas, 27% expressed interest in making a move in-house and 7% were likely to leave the law altogether. The most important factors that would influence a move were reported, in order, as remuneration, work/life balance, career progression and quality of work. In the top 3 factors were identical but in a different order, with career progression topping the list. Remuneration, the leading factor in , was also cited by respondents as the prime reason for moving overseas. Importantly, when asked what their firms could do to increase their job satisfaction, respondents listed a better work/life balance, effective and meaningful performance reviews and better leadership and management by partners ahead of remuneration. Lawyers it seems, do not measure job satisfaction solely by how much they are paid. However, when it comes to moving, remuneration features as a key consideration. The message is that all these factors are important when developing retention strategies. Salary increases designed to dilute the lure of overseas firms Mahlab Recruitment 2007 page 6
9 Sydney Salaries Top Tier Firms* Year level Range Mode Graduate $63,000 $70,000 $65,000 1 $72,000 $80,000 $75,000 2 $80,000 $95,000 $87,000 3 $90,000 $115,000 $103,000 4 $95,000 $135,000 $115,000 5 $100,000 $145,000 $125,000 SA 1 $130,000 $145,000 $135,000 SA 2 $140,000 $165,000 $155,000 SA 3 $150,000 $190,000 $170,000 SA 4 $160,000 $220,000 $180,000 SA 5 Special Counsel $180,000 $295,000 $220,000 Mid Tier Firms Year Level Range Mode Graduate $50,000 $66,000 $60,000 1 $59,000 $78,000 $70,000 2 $67,000 $85,000 $78,000 3 $68,000 $105,000 $90,000 4 $78,000 $130,000 $102,000 5 $98,000 $125,000 $110,000 SA 1 $105,000 $145,000 $125,000 SA 2 $114,000 $150,000 $135,000 SA 3 $123,000 $180,000 $145,000 SA 4 $135,000 $180,000 $150,000 SA 5 Special Counsel $145,000 $255,000 $190,000 Small Firms Year Level Range Mode Graduate $45,000 $65,000 $50,000 1 $50,000 $70,000 $58,000 2 $56,000 $80,000 $67,000 3 $65,000 $100,000 $76,000 4 $75,000 $110,000 $88,000 5 $80,000 $120,000 $100,000 SA 1 $98,000 $120,000 $108,000 SA 2+ $105,000 $220,000 $155,000 * This category also includes some practices with a strong presence in a particular city as well as a limited number of boutique practices. Figures include superannuation but do not include bonuses or other benefits. Given that firms take into account a range of factors when determining remuneration, an individual s position within a band will vary based on their background, experience and performance. Lawyers paid at the higher end of the bands are usually top performers and/or employees who bring with them an additional skill that is over and above the general requirements of the role. For tailored advice, please contact our consultants. Mahlab Recruitment 2007 page 7
10 Melbourne Salaries Top Tier Firms* Year level Range Mode 1 $57,500 $70,000 $65,000 2 $64,000 $90,000 $80,000 3 $68,000 $105,000 $90,000 4 $85,000 $120,000 $100,000 5 $90,000 $140,000 $120,000 SA1 $110,000 $170,000 $130,000 SA2 $125,000 $180,000 $145,000 SA3 $130,000 $210,000 $155,000 SA4 $140,000 $245,000 $185,000 SA5 Special Counsel $165,000 $290,000 $215,000 Mid Tier Firms Year level Range Mode 1 $53,000 $74,000 $60,000 2 $58,000 $80,000 $71,500 3 $66,500 $105,000 $82,500 4 $76,500 $120,000 $95,000 5 $92,000 $125,000 $110,000 SA1 $95,000 $130,000 $125,000 SA2 $125,000 $140,000 $132,000 SA3 $130,000 $160,000 $145,000 SA4 $140,000 $222,000 $175,000 SA5 Special Counsel $145,000 $260,000 $195,000 Small Firms Year level Range Mode 1 $38,500 $57,000 $48,000 2 $43,000 $70,000 $60,000 3 $48,000 $78,500 $67,500 4 $52,500 $85,500 $73,000 5 $61,500 $116,000 $80,000 SA1 $77,000 $130,000 $96,500 SA2 $85,000 $197,000 $135,000 * This category also includes some practices with a strong presence in a particular city as well as a limited number of boutique practices. Figures include superannuation but do not include bonuses or other benefits. Given that firms take into account a range of factors when determining remuneration, an individual s position within a band will vary based on their background, experience and performance. Lawyers paid at the higher end of the bands are usually top performers and/or employees who bring with them an additional skill that is over and above the general requirements of the role. For tailored advice, please contact our consultants. Mahlab Recruitment 2007 page 8
11 Brisbane Salaries Top Tier Firms* Year Level Range Mode 1 $50,000 $62,000 $60,000 2 $65,000 $75,000 $67,000 3 $65,000 $85,000 $78,000 4 $76,000 $100,000 $90,000 5 $87,000 $110,000 $96,000 SA 1 $105,000 $125,000 $110,000 SA 2 $110,000 $138,000 $118,000 Perth Salaries Top Tier Firms* Year Level Range Mode 1 $60,000 $70,000 $65,000 2 $67,000 $85,000 $78,000 3 $75,000 $95,000 $90,000 4 $85,000 $128,000 $105,000 5 $95,000 $130,000 $110,000 SA 1 $118,000 $130,000 $125,000 SA 2 $125,000 $160,000 $135,000 Adelaide Salaries Top Tier Firms* Year level Range Mode 1 $42,500 $56,500 $50,000 2 $50,000 $68,000 $60,900 3 $55,000 $78,000 $70,000 4 $60,000 $95,000 $80,000 5 $65,500 $115,000 $88,500 SA1 $74,000 $125,000 $105,000 SA2 $88,000 $175,000 $130,000 * This category also includes some practices with a strong presence in a particular city as well as a limited number of boutique practices. Figures include superannuation but do not include bonuses or other benefits. Given that firms take into account a range of factors when determining remuneration, an individual s position within a band will vary based on their background, experience and performance. Lawyers paid at the higher end of the bands are usually top performers and/or employees who bring with them an additional skill that is over and above the general requirements of the role. For tailored advice, please contact our consultants. Mahlab Recruitment 2007 page 9
12 Benefits Offered in to Lawyers % of surveyed lawyers offered benefit Benefit Technology Mobile phone Laptop Home computer Internet connection 9 13 Blackberry 8 23 Financial Share plans/options n/a 2 Vehicle 2 2 Car parking Additional superannuation 3 5 After hours travel allowance Subsidised meals Income protection insurance Life insurance Private health insurance 4 6 Paid parental leave Lifestyle Additional leave without pay Reduced working days per week Work from home Gym membership Stress management (yoga, massage, chiropractic) Career Development Secondments local Secondments international Travel interstate Travel international Management training Professional memberships Further study full fees Further study part fees Paid study leave Unpaid study leave Mahlab Recruitment 2007 page 10
13 Partners With strong market conditions, has been characterised by high levels of corporate activity, prolific working hours, and soaring billings, all resulting in significant revenue growth. In particular, the corporate/commercial, private equity and banking & finance practice areas have benefited greatly from the buoyant economy. Business growth is not however the sole factor behind partners working the sort of hours not seen since the heady 1980 s. The high attrition rate of more junior lawyers to take up positions overseas has seriously depleted the associate and senior associate ranks of all major law firms. As a consequence, partners are spending longer hours in the office servicing their clients needs. Law firms have attempted to harness the opportunities afforded by the busier market to expand their practices, acquire practices and merge with other firms. Partner search is at an all time high with firms aggressively recruiting laterally. However, while partners are busy billing and earning well, they are less inclined to look around for new roles. Over the past year, partner movement has been principally motivated by the desire to achieve greater work/life balance or greater control in terms of the management of one s own practice and input into that of the firm generally. The trend of partners to downsize from the larger, highly structured firms to mid tier or boutique firms has continued. The past year has seen the movement of whole teams to firms offering greater flexibility and more opportunity for input into firm direction. It does not appear that drawings are reduced to any significant extent. In fact, the reduced cost structure of the smaller firm often affords greater gains in income. Partners Significant revenue growth Busier market affords opportunities to expand, acquire and merge A trend that has emerged in the past few years is the establishment of small, commercially focused CBD firms comprising partners with similar values to those at major firms. Bringing quality client bases, they aim to maintain a harmonious, collegiate atmosphere, and individual management of their practices. There is still considerable interest at senior levels in legal and management roles in-house. This push has accelerated over the past year as a result of the groundswell at the more junior ranks. Partnership is seen as a less attractive option for younger lawyers. Only a minority (15 20%) of lawyers work their way up through the ranks of private practice to partnership and now more partners are putting their hands up for the opportunity to diversify. The increasing flexibility of movement between private practice and in-house can pave the way for future opportunities in business and management roles in the broader context. Mahlab Recruitment 2007 page 11
14 What defines the current trend in partner movement is that continuing at one s current firm is, in fact, a decision. Save for the more senior partners who have opted to finish their careers with their present law firm, all partners in the current market are potentially moveable. Discontent comes in many forms: levels of remuneration, lack of work/life balance, or the perennial politics of the law firm. Loyalty, both that of the partnership and clients, is clearly a thing of the past. Client bases are fragile at the best of times. In an increasingly competitive environment, there is little tolerance for a declining practice. Moving to a smaller firm which can appreciate the client mix of a diminished practice and the skill set of the experienced practitioner is an excellent option. Minimum practices of $1.2 $1.5 million are generally required for equity in mid tier firms and around $700,000 $900,000 in small firms, in contrast to the $2 million plus requirement of top tier law firms. However, partnerships of all sizes will continue to grow while the economy remains buoyant, whether this growth is due to lateral recruitment or internal promotions. Partners Partners work longer hours to service client needs Mahlab Recruitment 2007 page 12
15 Partnership Salaries Sydney Mode Top Tier Firms* $1,084,000 Mid Tier Firms 676,500 Small Firms 442,800 Partners Melbourne Mode Top Tier Firms* $1,028,500 Mid Tier Firms $588,000 Small Firms $368,000 Brisbane Mode Top Tier Firms* $795,000 Mid Tier Firms $520,000 Small Firms $285,000 Perth Mode Top Tier Firms* $805,000 Mid Tier Firms $543,000 Small Firms $372,000 Adelaide Mode Top Tier Firms* $780,000 Mid Tier Firms $510,000 Small Firms $280,000 *This category also includes some practices with a strong Presence in a particular city as well as a limited number of boutique practices. Figures include superannuation but do not include bonuses or other benefits. Mahlab Recruitment 2007 page 13
16 Benefits Offered in to Partners % of surveyed partners offered benefit Benefit 2007 Partners Technology Mobile phone 83 Laptop 63 Home computer Internet connection 50 Blackberry 41 Financial Share plans/options 0 Vehicle 6 Car parking 67 Additional superannuation 12 After hours travel allowance 25 Subsidised meals 37 Income protection insurance 37 Life insurance 27 Private health insurance 6 Paid parental leave 19 Lifestyle Additional leave without pay 31 Reduced working days per week 19 Work from home 50 Gym membership 12 Stress management (yoga, massage, chiropractic) 12 Career Development Secondments local 0 Secondments international 6 Travel interstate 50 Travel international 31 Management training 56 Professional memberships 88 Further study full fees 31 Further study part fees 36 Paid study leave 50 Unpaid study leave 50 Mahlab Recruitment 2007 page 14
17 Melbourne Level 1, 535 Bourke Street, Melbourne 3000 Sydney Level 9, 6 O'Connell Street, Sydney 2000 T: (03) F: (03) E: melb@mahlab.com.au T: (02) F: (02) E: syd@mahlab.com.au
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