CORPORATE CORPORATE LAWYERS - COMPANY SECRETARIES
Mahlab Report 2017
Introduction 1Corporate Lawyers 6Company Secretaries 13
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Figures contained within tables in this survey have been rounded to the nearest $500 and are quoted in local currency.
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The Mahlab Report has always been informed by a unique mix of industry knowledge, research and discussions with clients and lawyers, with the aim of producing a useful, accessible guide for the legal profession.
We interviewed clients and lawyers and engaged in discussion groups, which enabled us to source information more widely from the legal profession about work conditions, remuneration and emerging trends.
We thank our consultants for their commitment, work and effort in providing quality search services to our clients and in assisting lawyers with career management and placement services. Their efforts and work have enabled the discussions regarding the legal profession, employment experiences, trends and remuneration which have informed the Mahlab Report 2017.
We thank all contributors for their frank perspectives and the generosity with which they have shared their information and experiences. It is this first-hand information that has equipped us to produce industry relevant reports that not only inform but also challenge best practice.
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KEY FINDINGSValue and innovationAn increasingly savvy and demanding corporate client group, and investment in technology and innovation are the key elements driving the growth and speed of the legal profession this year. Corporates are demanding faster and cheaper solutions from their law firm panel members but also expect innovation and business partnering. Competition on price and service, including value-adds, is more ferocious than ever; innovation is the catch-cry of corporations in their demands of law firms.
Corporates have also led the way in their use of technology and a nimble work force, with a high take-up of technology to track external spend and manage process in compliance, litigation and transactional work and the employment on a needs basis of contract, secondee, part time and flexible staff. While law firms are also investing heavily in new technologies, many still struggle with flexibility of resourcing, the formation of contract labour subsidiaries notwithstanding.
Outsourcing of legal process by mid sized and larger firms and companies with a sophisticated in-house legal function is now the norm.
Corporates are retaining more and better work in-house. The trend is for only very specialised and very large transactions and litigation to be outsourced,
Mahlab Report 2017The Mahlab Report is a leading source of insight for employers and professionals into Australias legal industry. The Mahlab Report is recognised for its in-depth information about the legal profession, employment experiences, trends and remuneration tables.
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generally to the larger firms. Not surprisingly, firms of all sizes report a decrease in work flow outside these categories (and even within, as competition for each matter is heavy), although small firms may still retain high volume, low margin work from a corporate client. Private practice winners are those firms with clients not large enough to hire their own lawyers yet. Government continues to provide a steady work flow to panel firms, albeit at lower hourly rates.
New entrants, including US firms, have disrupted the local market particularly in Sydney and Melbourne. Well-established global firms (themselves newcomers only five years ago) are facing aggressive competition for their partners, many of whom have moved to new global entrants with deep pockets.
Firms feel pressured not only to cut their fees, but also to provide secondees, CLE, entertainment and engagement opportunities for their in-house counsel clients. At the same time, corporates are sourcing team members from the very firms that service them, building in-house capability beyond broad commercial law into specialised areas such as competition, finance and mergers and acquisitions.
Demand for lawyers with 3 to 6 years experience is particularly high. Areas of demand in private practice have centred on construction and infrastructure, (especially front-end), property, competition, IT, banking and finance, wealth management and general commercial including business structuring and trusts. Companies are competing head-on with their law firm providers for the same talent pool.
Legally qualified individuals are becoming more deeply embedded in the company, not only in legal and company secretary roles but also risk, compliance and regulatory. The general counsel role has in many instances expanded to encompass other service areas such as governance, corporate affairs and insurance. Company secretarial recruitment has been stable.
As opportunities change and develop in the corporate world, the path to partnership is slower than ever. Disgruntled senior associates, while paid well, are more inclined than ever to explore loss-leader career choices in government and in-house law. Senior associates (and partners) are also more motivated than ever to explore careers outside the law.
The market has responded favourably, with senior lawyers being regarded as highly attractive candidates for non-executive directorships, CEO and senior government roles. Management consulting, participation in start-ups and quasi legal roles also attract many lawyers.
Equity partnership numbers are falling as equity is redistributed from existing equity holders whose status is changed to non-equity or they are encouraged to leave the firm. Salaried partnership is being used as a smokescreen: to all the world a partner but in reality, still an employee. Overall, partner income has fallen slightly this year.
Hiring activity has fallen in Perth but remains strong in Sydney and Melbourne. Brisbane is picking up; Adelaide remains flat.
The market has responded favourably, with senior lawyers being regarded as highly attractive candidates for non-executive directorships, CEO and senior government roles.
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RemunerationIn private practice, movement in remuneration has continued to be conservative, with an average national salary increase of 3.5%, down from 3.8% in 2016. However, this figure belies the hot spots of demand and remuneration-based retention strategies. Hard-to-find and hard-to-replace lawyers in banking and finance, for example, might enjoy a 25% uplift upon promotion as a senior associate; new global entrants will pay well above the odds to secure partners and teams.
Some lawyers with 3 to 6 years post qualification experience in the larger firms enjoyed increases of 710%. High-achieving senior associates in similar sized practices were awarded increases of up to 10%, plus a bonus.
In-house remuneration movement is generally linked to corporate performance: lawyers are not singled out for special treatment. Having said that, in-house lawyers joining a company from private practice will usually find that their current remuneration is at least matched or a slight increase applied as inducement in a competitive market. Overall in-house remuneration has risen by a national average of 2.7% compared to 3.4% last year.
Bonuses in private practice are still applied where individual performance is exceptional; corporate bonuses are less common due to the company not hitting its targets. That said, 62% of lawyers working in the corporate sector still have a bonus component in their package, and this percentage has been fairly consistent for over five years.
Interestingly, an in-house candidate this year is more likely to ask for and receive compensation for the bonus they will forego if they change from one corporate to another.
InternationalInternational firms, especially those based in the US, have continued to enter the Australian market, in some instances through aggressive recruitment of whole teams.
Global instability and tighter visa rules has dampened enthusiasm for Australian lawyers seeking adventure in London and Australian firms interest in foreign lawyers, although inter-office secondments continue in the global firms and can be an effective retention strategy for mid level lawyers.
Katherine Sampson Lisa Gazis
62% of lawyers working in the corporate sector still have a bonus component in their package, and this percentage has been fairly consistent for over five years.
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State of the market
Average national salary
increase of 3.5% down from 3.8%
Average national salary
increase of 2.7% down from 3.4%
Current partner market
General counsel role is
Partner income flattened
Outsourcing trend growing
Some work being lost to in-house
Retaining more and better
Increased recognition for corporates
Firms feeling pressure to cut fees
Investment in technology and innovation
Companies becoming more flexible
New entrants are disrupting local markets
Demand for lawyers wit