Legal industry wages continue to flatline

Salary growth in the sector has dropped to a four-year low

Legal industry wages continue to flatline

After virtually no wage growth in the industry in 2016, wages in Australia’s legal industry has continued to stagnate over the past 12 months.

The insight comes from Australasian Legal Practice Management Association (ALPMA)’s “2018 Australian Legal Industry Salary and HR Issues Survey,” which found that the average salary growth in the sector for 2017 reached a four-year low of 0.7%.

The trend is consistent with the wider Australian economy, ALPMA said.

The largest pay increases were given to administration and finance personnel, but even those in these departments only received a 2% pay bump on average. Paralegals and law clerks, secretarial and support staff, and marketing and business development staff all received an average of 1% in pay increases.

There was no net movement in pay for IT staff, while lawyers including partners saw wages drop 1%. Modest increases were given to lawyers less than three years PQE, while those between three to six PQE experienced wage cuts on average. The average salary of lawyers in 2017 was just shy of $140,000, according to the research. Salaries for managing partners fell 14.1% to an average of $261,000, ALPMA found.

Wages among HR personnel also slid 1%, while executives and senior managers saw an average of 2% decrease in their salaries. Employees working in knowledge management departments experienced the steepest drop at 4%.

“Most Australian law firms are predicting modest wage increases at CPI, with 28% expected to negotiate with employees above CPI and a further 17% expect to increase salaries for all employees between 3-to-5%. While only 3% of firms will freeze wages for all staff, 14% expect to implement a limited freeze for some positions only,” said Dion Cusack, ALPMA president and K&L Gates corporate services manager.

The research found that firms supplement lawyer salaries with bonuses and incentives, with nearly 40% of firms paying their lawyers and partners bonuses of more than 5% of base pay. It found that 15% of salaried partners receive bonuses worth more than 10%.

“To attract and retain staff in a market of stagnating wages, bonuses and other benefits are an important component of the remuneration package offered to key employees at Australian law firms,” Cusack said. “Bonuses for fee earners are calculated on their individual financial performance, usually based on fees they generate for the firm, while bonuses for other staff mainly relate to discretionary individual performance measures.”

The research included responses from 288 Australian law firms employing nearly 11,000 people. It was supported by In2View Recruitment, KBE Human Capital, Carlyle Kingswood Global and u&u Recruitment Partners.

Related stories:
Virtually no wage growth in Australian law firms
Despite slowdown, NZ law firms expect revenue growth

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