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Total Legal Pay Falls 5% but Bonuses are Up

Posted by: Laurence Simons 27/02/13
  • Total remuneration now £139,040, down from £146,500 in 2011.
  • Salaries fell 7% but bonuses rose from 32% to 34%.
  • Two thirds of lawyers considering a new role in 2013
  • Projected job growth of 6,794 new hires in 2013

Total remuneration for lawyers fell 5% last year according to research from Laurence Simons International, the specialist legal and compliance recruiter.
The report found average total remuneration for lawyers now stands at £139,040, down from £146,500 in 2011.

Of this, average salaries fell 7% over the past year to £103,450, down from £111,500 the previous year while bonuses rose from 32% to 34% of annual salary. However, the actual bonus amount rose only slightly (£35,590 compared with £35,000) due to falling base pay.

Despite a fall in the percentage of lawyers receiving a bonus from 65% in 2011 to 59% last year, the total legal bonus pots stands at £2.3bn – a significant boost to the economy that is spread throughout the year as bonuses are paid in different months depending on the firm or department.

By area, lawyers, working in-house in financial services receive the biggest bonuses, with an average of £48,688. Their counterparts in corporate in-house legal departments receive an average of £40,081 while private practice lawyers get the smallest bonus at £14,852.

Lucinda Moule, Managing Director of Laurence Simons said,
“2012 was a tough year for legal firms and departments, meaning they couldn’t replicate the sharp rise in pay seen in 2011. The focus was on stability and a conservative steadying of salary costs. However, the increase in bonuses towards the end of the year offers some green shoots for lawyers, suggesting performance exceeded expectations. Often after a pay freeze, the following year sees steep pay increases as the shackles of conservatism are removed, so this may show itself in 2013.

“Overall, total remuneration is still significantly higher than it was in 2010 signifying consistent longer term growth.”

Job Growth and Movement
One cause for optimism is job creation in the legal sector. Last year, the average legal department saw its headcount increase by four people, and the average expected increase in 2013 is an additional two people per department. This is a projected job growth of 6,794 new hires over the next twelve months**.

Two thirds of lawyers are also either actively looking for a new role, or would move if the right opportunity presented itself. More than two thirds (69%) said they would consider moving internationally – up one percentage point on last year.

Lucinda Moule said,
“Despite the projection that almost 7,000 new hires will be made in 2013 and 72% of lawyers will be considering changing jobs, many organisations are still struggling to secure talent. Our survey suggests that the average lawyer looking to change roles in 2013 will be expecting an increase in basic salary of 15%. This type of increment is more the exception than the norm, particularly when you consider that basic pay has fallen 7% year on year.

“This disparity in salary expectations makes for an interesting state of affairs – one in which both parties’ negotiation skills will be put to the test. Firms and legal departments will need to consider increasing salaries and bonuses in order to attract the best talent; however, candidates will equally need to rethink their compensation expectations in order to secure their desired role.”