Pay Rises Expected Across NZ Legal Industry

26 March 2018

Most staff working at New Zealand law firms can expect to receive a pay rise at or above the Consumer Price Index (CPI), according to research conducted by Australasian Legal Practice Management Association (ALPMA) and McLeod Duminy.

More than 100 New Zealand law firms from across the country, employing 2,676 people participated in the 2018 ALPMA/McLeod Duminy NZ Legal Industry Salary and HR Issues Survey.

“Fifty percent of respondent law firms expect to be offering pay rises above the rate of CPI this year” says Ms Sheryll Carey, ALPMA NZ Chair and General Manager at Lowndes Jordan.

A further 22 percent of firms are planning on increases in line with CPI, while 19 percent of respondent firms are planning a limited or total wage freeze.

“The majority of firms (56 percent) supplement these increases with bonus payments available to all staff—15 percent more firms than offered this in 2017,” said Ms Carey.

“For fee-earners, bonus payments 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.”

Most lawyers can expect to receive at least an additional five percent of their base salary in bonuses; senior managers can expect between three to five percent, while support staff can expect less than two percent of base remuneration from bonus payments.

Recruitment and retention remain top issues

The survey signalled continued growth for the New Zealand legal employment market, with half of respondent firms expecting to hire new staff predominantly to fuel firm growth this year.

Employee retention is the number one HR issue for NZ law firms in 2018, with the research showing average employee turnover of 14 percent at law firms over the past year.

“It’s clear that law firms have been focusing on addressing this retention, as employee turnover is down four percent from a high of 18 percent in 2017,” says Ms Kirsty Spears, Director at McLeod Duminy Legal Careers.

“When you consider that ‘finding good people’ is the second biggest challenge for law firms, it certainly makes good business sense to develop new strategies to keep the people you have,” she says.

More firms are also offering staff recruitment referral incentives this year to encourage staff to recommend their firm to potential employees.

Continued gender imbalance at partner level

According to the research, women make up 71 percent of all staff at New Zealand law firms and 63 percent of all lawyers, yet this dominance is not reflected in partner ranks.

The number of female equity partners increased a modest four percent to 23 percent in 2018, while the numbers of salaried female partners remained the same (43 percent).

“While there has been some positive movement, it does seem that the partner gender imbalance is entrenched across the industry and firms must do more to address this,” says Ms Carey.

“Given the number of women in the industry and the need to retain them, firms need to embrace more family-friendly benefits and policies and use these to gain strategic advantage in the employment market.

“While flexible work arrangements are on the rise, the research shows that only 19 percent of firms offer parental leave entitlements over and above the government scheme, which is a real missed opportunity,” she says.

Close to a third of respondents believe there is a gender pay gap in the NZ Legal industry (up seven percent from 2017)—yet despite this, few (six percent) believe there is a gap at their firm. Accordingly, only 11 percent of firms plan to conduct a gender-pay gap audit.

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 101 firms completed the survey, which provides data about 2,676 people employed in the legal industry. The survey was conducted by independent research firm, Survey Matters. This is the fourth year the survey has been conducted in New Zealand.

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 2018.

2018 ALPMA/McLeod Duminy New Zealand HR Issues & Salary Survey research report is available now.

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The Australasian Legal Practice Management Association, (ALPMA), is the peak body representing managers and lawyers with a legal practice management role.  ALPMA provides an authoritative voice on issues relevant to legal practice management.  Members of ALPMA provide professional management services to legal practices in areas of financial management, strategic management, technology, human resources, facilities and operational management, marketing and information services and technology.