Legal Private Practice Salary Survey 2015 INTRODUCTION Aquis Search is delighted to present our annual private practice salary survey for 2014-2015. Our aim in producing this survey is to provide guidance to clients and candidates on current compensation levels post year end reviews and predict how the market will shape up over the next six months. Our information has been researched and collated with the help of our clients and candidates and from our knowledge of the marketplace. As with all surveys, we represent the mainstream view and there will be individual situations that fall outside the data published here so please use this survey as a guide and do not hesitate to call for further clarification on the compensation trends in the market. TRENDS Following a predominantly cautious market of 2013 before a notable uptick at year end, we are pleased to report that 2014 has proven a consistently more encouraging year. Recruitment has branched outside the ubiquitous corporate/capital markets space and we have seen steady hiring needs across all practice areas. The restructurings/ redundancy programmes that have been recurrent in the legal market post Lehman have proven less visible and we are consequently seeing candidates approach the market with greater confidence. Vitally and to be explored in further detail, law firms are revising how they compensate their lawyers in order to secure the best talent possible and this is proving a powerful incentive to invite lawyers to go to market. US firms and UK firms (particularly the Magic Circle) continue to vie for the niche legal talent. The business models of these firms have been historically different with UK firms retaining their multidisciplinary, full-service offering and US firms focusing on a select few practice areas, often leveraging on their US strengths. However, the distinctions between these firms are blurring in with the UK firms proving more strategic in their focus and the US firms proving more inclined to diversify into different practice areas and to enter into local markets. The hire and fire concern commonly linked to US firms continues to create anxiety amongst UK lawyers but the substantial salary increase offered by US firms continues to be attractive especially as there are many UK lawyers who have watched their colleagues join US competitors for a dramatic increment only to see them work similar hours. Corporate/ Capital Markets In terms of corporate roles, activity has been consistent. The IPO market notably slowed down during the first half of 2013 but steadily picked up towards the end of the year with our clients seeing an uptick in terms of IPO instructions. This increase consequently translated into a more pressing need for IPO lawyers at the beginning of 2014. Fickle as ever, the IPO promise did not quite crystallise as anticipated over the course of 2014 and we witnessed a resurgence of corporate M&A instructions, prompted by an upturn in China outbound investment, an increase in mid-market deals and other Asian economies investing across the region. The mid-market deals were often picked up by mid-tier UK/US firms offering cost effective rates to be retained on such work. Such firms are in a position to offer clients a global platform but they are well-connected with domestic clients, accepting instructions which the global giants would deem incongruous to their elite business model. The market shift drove an emphasis on more diverse corporate roles, requiring lawyers to undertake a combination of corporate M&A and IPO work. Such roles proved attractive to candidates especially those siloed into a predominantly IPO role and concerned at the limitations such experience would present for their long term career. With today s complicated regulatory environment and active regulators, we also saw an increase in corporate regulatory roles however the candidate pool was small for this skillset making roles tricky to fill. US Securities The US securities market in has enjoyed a high profile in 2014 primarily mirroring the growing confidence in the US market and an increased appetite for Chinese issuers on the New York stock exchange this year. Many US firms have sought to address this need by redeploying associates from their US offices but equally, it has led to the creation of US corporate associate roles. A Magic Circle firm has made the bold move of abandoning its longstanding tradition of not hiring lateral partners in its appointment of a leading US partner to provide both a and US offering for the 1
firm in. Litigation In terms of litigation, we did not quite see the volume of instructions which characterised 2013 but activity levels were nonetheless steady. In addition to a broad stream of commercial litigation, we witnessed an increase in banking litigation/ financial services regulatory work in response to the tightening of regulation in and a deluge of enforcement actions against investment banks and financial institutions. FCPA and investigation practices have seen an upsurge in growth. US firms that have concentrated predominantly on developing their corporate/ capital markets offering are identifying the potentially lucrative revenue stream from litigation/ regulatory work and are opportunistically making inroads in this market. Some of the newer UK firms are equally capitalising on this space and have parachuted London financial services regulatory partners to with a view to bolstering their existing practice. Interestingly, international firms have demonstrated a refreshing flexibility in terms of candidates eligible for consideration for the relevant litigation roles. Candidate sourcing which is almost always restricted to peer international firms has been opened to local firms and there is veritable appreciation of the exposure and connections which such lawyers have enjoyed. Banking A highlight of 2014 has been the notable increase in banking roles, predominantly towards the end of the year. The leading UK firms continue to hold dominance with longstanding relationships with many of the key global banks. We can confirm that candidate mobility within the banking space remains at best conservative and akin to corporate lawyers of previous years, banking lawyers are currently in a strong position to negotiate title and remuneration. In addition to broad corporate lending roles, we saw an increased need for lawyers with aviation and asset finance exposure but again such experience is not common. Derivatives and structured products roles were steady in private practice although given the nature of this type of work such candidates found themselves equally sought after for attractive in-house roles often with investment banks. Funds Funds has proven a consistently solid area of recruitment throughout the course of 2014. Coveted funds experience includes private equity funds, fund formation, infrastructure funds, real estate funds retail and PRC-related funds. We have witnessed a considerable shortage of funds candidates in to such an extent that we have actively sourced candidates from other global legal hubs to satisfy client demand. We are continuing to see a steady flow of funds lawyers leaving private practice to take an in-house role. The in-house roles are typically awarded to the lawyers from the select top few funds practices in. Offshore firms, who are traditionally strong in funds continue to grow in and as such, we anticipate funds to be an area of sustainable growth over the course of 2015. Other Prevalent Areas Other notable areas of interest have been private client, project finance shipping, real estate, intellectual property, shipping, insurance, employment, competition and construction law. Such roles tend to arise within the larger, full-service international firms or more boutique firms with a strength within one of these practice areas. Such hires tend to move at a moderate pace and there tends to a necessity for local / China experience. They do however represent a sizeable constituent of legal recruitment and we anticipate this trend to continue into 2015. Newly Qualified Market The newly qualified market proved to be reasonably buoyant this year with the emergence of some very attractive banking, corporate and litigation roles primarily within Magic Circle firms, mid-tier UK firms and some of the elite US firms. Recruitment at this level appeared to be more opportunistic than growth driven and in some instances, firms ultimately elected not to hire at all at this level. We found this market to be ferociously competitive and the candidates that managed to secure mobility were absolute stars - highly advanced for their level, trilingual and equipped with high level experience from a leading firm in that particular practice area. Our clients 2
also looked to the London market and there was demonstrable interest in London trained candidates with Mandarin language skills. Equally, there was a reciprocal appetite from such candidates to return to Asia. The NQ interview process was partner driven with often highly rigorous technical questioning. We found that candidates who had not (for whatever reason) been retained by their current firm were subject to substantial probing on why this has proven to be the case. Given the finite number of NQ roles, such candidates found themselves in a vulnerable position with firms taking a risk adverse approach to their candidacy and favouring those who had secured a role with their existing firm. Consequently, we witnessed such candidates fall out of the market, substantially downsize firm or accept paralegal or contract roles in order to keep their legal experience alive. Offshores Firms The offshore firms have hired steadily across the funds and corporate space. The candidate market for such roles tends to be smaller in light of their requirement for Commonwealth qualified lawyers (who in turn become foreign registered lawyers) but the offshore firms can offer competitive rates, high level work and something akin to a work/ life balance in comparison to other international firms. Associate Level Compensation Firms on average increased salaries amongst associates by approximately 5-8% across the board, although the percentage increment tends to be higher at the lower PQE range. A select few US law firms in continue to pay NY rates plus COLA to their qualified corporate lawyers. Salaries at US firms have increased within their standard lockstep as associates matriculate into their next year and bonuses continue to be competitive and in line with the market, similar to last year. For those who have met billable hours targets, bonuses tend to start around 10,000 US$ for juniors and move up to 15-20,000 for mid level associates and going up 35,000 plus for senior levels. Additional bonus is available to lawyers who exceed target. Support Roles In 2014, Aquis Search expanded its offering and has carved out a division solely dedicated to support roles within law firms and we are pleased to confirm that this area has proven busy with a positive forecast for 2015. In particular, we have seen an increase in roles within the paralegal and business development/ marketing space. In particular, the US and UK law firms have seen the value in embedding such staff within their business, supporting fee earners and partners and releasing time to dedicate to current client matters and further client development. Litigation paralegals have proven very popular especially in assisting in disclosure exercises for high value claims. We have found that paralegals have an existing legal background, having completed legal studies or completed an internship within a law firm. We have also witnessed PRC admitted lawyers relocating to and taking paralegals roles within law firms. PSL Roles PSL roles are traditionally a function of UK firms and widespread in the London market are now emerging ever more frequently in the market. lawyers have ambivalent attitude towards this role. On the one hand, they see it as a support function and lacking the kudos enjoyed by fee earning counterparts. On the other hand, many identify the positives of a PSL role, namely greater certainty of hours, flexible working and no time recording pressures. The compensation for a PSL has generally been about 10-15% below that of equivalent level fee earners. The bulk of PSL roles have been within the banking/ corporate space and whilst the role continues to focus on knowledge management, training and precedent documentation, its remit has now started to diversify to include pitch presentation and practice manager responsibilities. Partners Partner level hiring has proven reasonably conservative in 2014. Our view is that firms are very much in consolidation mode vis a vis partner level recruitment especially in light of the high profile mergers and flurry of lateral partner hiring in recent years. Lateral senior associate to partner hires are 3
exceptionally rare although by way of compromise, of counsel lateral promotions do occur. Firms are willing to put lateral hire lawyers on track to partnership but this is always subject to stringent performance objectives, ongoing favourable market conditions and the overall performance of the firm. The risk very much falls on the lawyer joining in this instance and detailed due diligence is required to drill down on how credible prospects really are. The bulk of partner mobility remains within corporate and capital markets practices. Litigation practices tend by their very nature to be less portable. Parachuting partners from offices in the UK and US is proving less common in a market where local language skills and legal knowledge are paramount. Outlook SALARY SCALES Associate UK Firms Level Monthly salary (HK$) Newly Qualified 68,000 78,000 1 year 75,000 85,000 2 years 83,000 91,000 3 years 88,000 108,000 4 years 91,000 115,000 5 years 98,000 120,000 6 years 110,000 128,000 7 years 115,000 135,000 8 years 120,000 155,000 Average Monthly Salary (HK$) 73,000 80,000 87,000 98,000 103,000 109,000 119,000 125,000 138,000 The outlook for 2015 is proving favourable based on financial predictions for the market, work flow as predicted by our clients and consequently, the increase on mandates we have received. Lawyers are finding themselves to be better utilised and they have greater confidence about lateral opportunities. We look forward to updating you further later in the year. Please do feel free to contact one of our consultants listed below for a more detailed confidential discussion on the market. US Firms Level 1st 2nd 3rd 4th 5th 6th 7th 8th Annual salary (US$) 160,000 170,000 185,000 210,000 230,000 250,000 270,000 280,000 About Aquis Search Aquis Search is a regional leader for Corporate Governance and Control functions recruitment covering roles in Finance, Human Resources & Corporate Services, Legal, Risk and Compliance. We operate from offices in Beijing,, Mumbai, Shanghai and Singapore handling search assignments in numerous Asian countries. Our clients are members of a global network of prestigious Financial Institutions, leading UK & US Law Firms and many of the largest companies within the Fortune 500. Professional integrity is the key value on which our client relationships are built and the majority of our business is the result of personal referral. This is testament to the high level of professionalism for which we are known. 4
CONTACTS Scott Harrison Managing Director In-house Legal & Compliance, Private Practice scottharrison@aquissearch.com Scott Harrison is Co-founder and joint Managing Director of Aquis Search and heads up the firm s Legal & Compliance desks. He has more than a dozen years of recruitment experience spanning the major Asia Pacific markets. He specializes in middle to senior level assignments across Private Practice and in-house markets, including Legal, Compliance, company secretarial and government affairs roles, and regularly advises clients across the financial markets and traditional industries on recruitment strategies and talent pools. Scott leads a team of professional recruiters who focus in these markets and recruit at all level of seniority. His indepth Asia-Pacific experience has enabled him to foster a breadth of client relationships and given him access to talent at all levels in the region. Scott holds a master s degree in Applied Psychology and was trained as an organizational psychologist before moving into the recruitment industry. Scott is an MOM registered EA, registration number: R1112903. Miriam Leung Director Legal Private Practice miriamleung@aquissearch.com Miriam is responsible for the development and recruitment of Legal Private Practice for the firm. She covers all areas of practice for lawyers from entry to senior levels for leading law firms across Asia Pacific region. She has experience working with key decision makers across the region including Partners and Human Resources professionals. In particular, her knowledge of the Greater China market has given her a great deal of success working with leading US firms in the region. She is extremely well-informed about the legal market in Asia and has also recruited on the In-house Legal desk. Prior to recruitment Miriam worked in a marketing role coordinating business related events for educational and non-profit programs and campaigns. Miriam obtained her degree in Psychology and Sociology from the University of Toronto and holds a law degree from the Manchester Metropolitan University. She is fluent in English, Cantonese and Mandarin. 5
CONTACTS Ciaran Foy Associate Director Private Practice ciaranfoy@aquissearch.com Ciaran is an Associate Director responsible for the recruitment of private practice lawyers across Asia with a focus on the major hubs in and Singapore. His remit ranges from newly qualified lawyers to partner level placements and he has had proven success in recruiting within various practice areas of major law firms. Prior to joining Aquis Search, Ciaran worked as a qualified lawyer for five years at a top US law firm specialising in real estate transactions before joining a global London search firm. His background has afforded him a true understanding of the legal recruitment market and uniquely positions him to offer commercial, consultative advice to both clients and candidates alike. Ciaran grew up in Northern Ireland and read law with French at Queen s University in Belfast. He completed his legal practice course at Nottingham Law school and was admitted as a solicitor in 2006. Kardia Leung Senior Consultant Legal Private Practice kardialeung@aquissearch.com Kardia is a Senior Consultant working in the Private Practice team responsible for the recruitment of fee earners at all levels into US and UK law firms across the Asia Pacific region. She is in touch with numerous associates advising on opportunities and providing advice to employers on talent in the market, compensation and hiring trends. She is part of an established private practice team that has moved numerous Associates and Partners in, Singapore and China. Kardia previously worked in for a leading UK recruitment firm where she gained exposure to recruitment within the Asian markets which has allowed her to build a solid network and develop a strong understanding of the legal community in Asia. She obtained her Bachelor of Laws from the University of Manchester where she acted as a student legal advisor for the university and interned with Eversheds before moving into recruitment. She has native level English and Cantonese and combines local relationships and a global outlook. 6