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4 and 5 year PQE salaries outperform more senior In-House roles

Posted by: Laurence Simons 08/11/11
  • In the UK, 4 years’ PQE and 5 years’ PQE salary bands have increased most since 2004 while 9 years’ PQE and 10 years’ PQE salaries have fallen furthest
  • Russian lawyers see greatest increases in salaries over last 6 years
  • Salaries fall most in Spain & Belgium – but Poland still has worst pay in EU

Over the last six years, 4 years’ PQE and 5 years’ PQE salary bands in the UK have performed far better than 9 years’ PQE and 10 years’ PQE, according to international legal recruiter Laurence Simons. Salaries of 5 years’ PQE in–house lawyers have risen 7 per cent over the last six years while those of 4 years’ PQE lawyers have risen 14 per cent. In 2004, a 4 years’ PQE salary was worth £57,000. That has now risen to £65,000. 5 years’ PQE salaries have risen from £65,750 in 2004 to £70,500 today.

The research shows the big losers of the downturn have been the 10 years’ PQE and 9 years’ PQE salary bands. In 2004, the average 9 years’ PQE salary was worth £89,000. But by 2010, average salaries at that level had fallen to £84,750 – down 5 per cent. Average salaries at the 10 years’ PQE level have been hit even harder. They fell from £95,500 in 2004 to £89,000 (down 7 per cent) in 2010.

Naveen Tuli, managing director of Laurence Simons said, “Many people assume senior lawyers suffered the least during the downturn but as far as in–house roles go, that’s wrong. Our research shows that 4 years’ PQE and 5 years’ PQE salary bands performed proportionately much better than 9 years’ PQE and 10 years’ PQE - perhaps reflecting the ‘sweet spot’ at which most legal departments look to hire in lawyers to their teams. Over the last 18 months or so, those companies that have been in the fortunate position to be hiring in-house staff have tended to focus on those with slightly less experience. As a result, 4 years’ PQE and 5 year’s PQE lawyers have been in demand. That has driven up salaries.”

Rachael North, director of Laurence Simons adds, “This has been particularly noticeable in the technology and telecoms sectors . The increasingly rapid pace of digitization and the widespread adoption of mobile broadband have meant the telecoms and technology sectors have ridden out the global downturn relatively well. Although 2009 saw some salary freezes and non payment of bonuses, in 2010 the marke t has shown slow, but steady signs of improvement.”

UK

2010 Median Salary (£)

2PQE

51,750

3PQE

57,750

4PQE

65,000

5PQE

70,500

6PQE

74,250

7PQE

77,750

8PQE

81,000

9PQE

84,750

10PQE

89,000

Highest Global Salary Increases

The research, which was gathered over the course of six years and collated data from over 14,000 in–house lawyers throughout the world, showed overall salaries in Russia had outperformed the rest of the world. For instance, pay at the 2 years’ PQE level increased 81 per cent from 2004, up from €25,000 to €45,250 in 2010 ( UK comparison: +15 per cent).

Meeta Dutt, manager for Russia, Central & Eastern Europe at Laurence Simons said, “By 2004, the concept of an internationally staffed in–house legal department had become accepted by local Russian companies keen to float on international stock exchanges. The result of that, alongside the boom in the energy, metals, consumer, and technology sectors, was intense competition for the best local lawyers - and those trained in the UK or US - who could demonstrate good cross–border corporate finance and M&A experience. In the last five years business focussed lawyers with generalist commercial skills in both multinational and domestic companies have become increasingly more sought–after.”

Winners post-boom

Although even the worst affected salary bands in Russia (10 years’ PQE) still rose 5 per cent from 2008 (€89,750) to 2010 (€94,250) – the real winner post the 2008 watershed has been the Middle East.

The largest increases across salary bands from 5 years’ PQE to 10 years’ PQE have all been recorded in the Middle East, with the 5 years’ PQE band rising 41 per cent from €123,000 to €173,000. At a more junior level, salaries rose most in Australia, where the 2 years’ PQE level salaries rose from $64,000 to $87,000 between 2008 to 2010.

Mark Anderson, Middle East manager at Laurence Simons added, “The situation is better in the Middle East. Despite Dubai’s well–documented economic woes, the Gulf region as a whole has held up relatively well through the downturn. But even here, the boom time for lawyers is most definitely over. Over the last twelve months, pay levels have remained flat with little sign of any early rise.”

Ruth Salamon, Manager at Laurence Simons’ Sydney office said, “ Australia’s lawyers did relatively well out of the recession riding on the back of the ‘bullet proof’ natural resources-fuelled economy. As a result pay for in-house lawyers here has held up well and few if any departments have found the need to shed staff over the past year.

Global salary decreases – Spain & Belgium

The story was very different in Belgium and Spain. In Belgium, 2 years’ PQE salaries have fallen 29 per cent over the same period while salaries in the 4 years’ PQE band have fallen 26 per cent (UK: +14 per cent).

Tanja Albers, European in-house manager at Laurence Simons said, “The in–house market in Spain remains something of a ‘closed shop’ with few if any organisations recruiting outside the country. Salaries have been hit by this and the substantial damage done to the Spanish economy by the recession. There’s little sign of early recovery there.

At a more junior level, the worst cuts were seen in Spain and the US where average salaries at the 3 years’ PQE level fell 9 per cent from $135,000 to $122,500.

But more senior salary bands have been hit hardest in Germany. The average 10 years’ PQE salary in Germany has fallen 31 per cent – from €135,000 in 2008 to €93,750 in 2010.

Michael Roche-Kelly, US Managing Partner at Laurence Simons said: “Although the numbers in the States look bad, in-house lawyers performed much better than their colleagues in practice. Unlike law firms that saw extensive layoffs over the course of 2009, most in-house departments battened down the hatches and managed to maintain headcount by freezing pay, slashing bonuses and shelving recruitment plans. As the market improves, we are seeing a modest return to hiring and, in some areas, a correspondingly small improvement in pay”.

Tanja Albers adds: “As for Germany, we do not expect to see much improvement in senior pay levels there until well into the second half of the year.”

Eurozone salaries - a snapshot

Within the Eurozone, at all levels, the highest salaries are to be found in Ireland . The worst paid in–house lawyers with less than 3 years’ experience are to be found in Spain. The worst paid in–house lawyers with more than 3 years’ experience are to be found in Poland .

 

Naveen Tuli said, “The market for in–house lawyers in Poland is a relatively new one but is being fuelled by a growing desire to keep the cost of legal services down to an acceptable level. Despite the increasing number of in–house lawyers in the country basic pay still tends to be lower than that on offer in law firms. The average in–house lawyer with 10 years’ qualified experience can earn €113,000 a year in Ireland but only €63,750 in Poland.”

2010 (€)

France

Ireland

Italy

Germany

Spain

Holland

Belgium

Poland

Lux.

2PQE YEARS

39,750

60,750

n/a

48,250

32,000

43,000

38,500

37,250

41,000

3PQE YEARS

44,000

67,750

n/a

53,500

37,000

50,500

45,000

40,500

48,000

4PQE YEARS

50,000

71,250

n/a

60,500

43,000

55,500

51,000

41,500

54,000

5PQE YEARS

55,750

75,750

57,725

68,000

49,000

60,000

57,500

44,250

59,000

6PQE YEARS

61,250

81,250

64,575

76,000

55,000

64,000

64,500

48,750

63,000

7PQE YEARS

67,750

89,000

72,500

81,750

60,500

69,000

70,250

54,000

71,000

8PQE YEARS

75,250

99,000

81,500

85,250

65,500

75,000

74,750

60,000

83,000

9PQE YEARS

84,750

107,000

87,500

89,250

71,250

81,750

81,000

63,250

92,250

10PQE YEARS

96,250

113,000

90,500

93,750

77,750

89,250

89,000

63,750

98,750

Global forecasts - headcount, the economy and Brazil

82 per cent of lawyers interviewed said they thought headcounts at their current employer would either increase or remain static over the course of the next 12 months. While 56 per cent expect them to remain unchanged, 26 per cent of in–house lawyers predict their office numbers are going to rise over the course of the next year.

 

And when asked about the future of the global economy over the next twelve months, 66 per cent of respondents described themselves as “optimistic” or “extremely optimistic”. Only 24 per cent said they were either “pessimistic” or “extremely pessimistic”.

Laurence Simons said Latin America, and specifically Brazil would drive international growth in in-house legal jobs over the coming year.

Pedro Amaral Dinkhuysen, Latin American managing partner at Laurence Simons said, “While the boom times are over for the Middle East, certainly for the short term, the market in Brazil – where we are seeing a huge influx of law firms into Sao Paulo and Rio – is very strong. This has caused a noticeable upward pressure on pay – in some cases by as much as 20 per cent for in–house lawyers and 30 per cent for law firm practitioners. Lawyers with solid experience in corporate, banking, compliance and tax are most in demand and able to command a premium to move in the current climate.

BRAZIL

2010 Median Salary (R$)

2PQE

51,750

3PQE

60,500

4PQE

69,500

5PQE

75,000

6PQE

77,000

7PQE

82,250

8PQE

90,750

9PQE

108,750

10PQE

136,250