Most staff working at New Zealand law firms can expect to receive a modest pay rise at or above the Consumer Price Index (CPI) and supplemented for some by bonuses dependent on their individual performance, according to research conducted by Australasian Legal Practice Management Association (ALPMA) and McLeod Duminy.
94 New Zealand law firms from across the country, employing 2,259 people, participated in the 2017 ALPMA/McLeod Duminy NZ Legal Industry Salary & HR Issues survey.
Sixty percent of respondent NZ law firms expect pay rises to be above the rate of CPI this year, with a further 20 percent planning on increases in line with CPI,” said Ms Sheryll Carey, ALPMA NZ President and General Manager at Lowndes Jordan.
Fifteen percent of respondent firms are planning a limited or total wage freeze.
“For select staff, these increases will be supplemented by significant bonus payments, typically based on their individual financial performance—usually based on fees they generate for the firm,” she said.
Wages supplemented by significant bonuses – for select staff
Bonus payments are an increasingly important part of the compensation mix at NZ law firms in 2017, and are offered by most law firms (84 percent), up 8 percent from the previous year.
However, only 2 percent of firms offer bonuses to all roles at their firm – and these were all small firms. Most firms offer bonuses to their lawyers and executive staff.
“Few firms reward team efforts with bonus payments, and this represents a significant opportunity for firms to seeking to create cultures that support high performance teams and cross-business collaboration,” Ms Carey said.
McLeod Duminy Legal Recruitment Consultant Kirsty Spears agreed and noted that an individual approach to bonuses may disadvantage women, who extensive research shows, tend to be team players, while men tend to look after their own career first can lead to unintended pay disparity.
Continued gender disparity at partner-level
The results from the 2017 ALPMA/McLeod Duminy survey also indicate that the NZ legal industry has made little progress on addressing gender disparity at partner level and in the board room. .
“There are considerably more women than men working in private practice—yet, women make up less than a fifth of equity partners and only 43 percent of salaried partners,” Ms Kirsty Spears said..
“It seems that despite women making up 63 per cent of lawyers and solicitors, and 64 per cent of senior management, the top position of partner is still dominated by males.”
The survey also showed that the perception of a gender-based pay gap is reducing; just 1 respondent believed that there is a gender pay gap at his or her firm, but 24 per cent (down from 33 per cent in 2016) believe that there is a gender pay gap in the wider industry.
Flexible work arrangements on the rise
The vast majority of law firms (81 percent) now offer flexible working arrangements for staff (up from 68 percent last year). This includes flexible working hours, additional leave and maternity and paternity leave.
“The few firms who do not see flexible work arrangements in their foreseeable future—and implement this well within their firm—are going to lose the battle for employee ‘hearts and minds’,” Ms Carey said.
“In a highly competitive market, they may struggle to retain quality staff, let alone make themselves an attractive destination for new talent.”
Positive signs for the NZ legal employment market
The survey showed positive signs for the NZ legal employment market, with 57 per cent of firms expecting to hire new staff mostly to grow the firm rather than replace departing staff.
Ms Spears says that the high percentage of hiring intentions reflects continuing mobility in the legal profession.
The research also revealed an average staff turnover rate of 18 percent across the NZ legal industry, which is consistent with the national average.
“I expected to see a lower rate for the professional services space, given the national figure includes extremely high turnover industries like retail and hospitality,” Spears noted.
Comprehensive, independent information on salaries, benefits and bonuses
The Australasian Legal Practice Management Association (ALPMA) together with McLeod Duminy conducts the Legal Industry Salary & HR Issues Survey in New Zealand to provide an annual overview of salaries paid in legal firms across the country.
A total of 94 firms completed the survey, which provides data about 2,259 people employed in the legal industry. The survey was conducted by independent research firm Survey Matters. This is the third year the survey has been conducted in New Zealand. A similar survey is also conducted in Australia.
In addition to salary data, the survey includes questions about staff employment profiles, employment benefits, bonuses paid, employment and salary projections for the next 12 months and the HR issues facing the legal community in 2017.