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Size does matter

12 December 11

The Journal's 2011 employment survey, in association with Thorpe Molloy Recruitment, shows up some sharp contrasts between sectors, despite a stable overall picture

by Peter Nicholson

It is a year ending in a state of high economic uncertainty, as global markets swing from despair to hope and back again. 2011 has also been the year when most law firms reported that they had managed to reverse the decline in revenues and profits brought on by the initial recession in 2008-09. Has that been reflected in what individual solicitors report by way of earnings and benefits in the Journal’s latest employment survey?

In many ways the results in fact show a consistent pattern with the 2010 survey, reported at Journal, February 2011, 12, having drawn a similar set of respondents. Thus, of just over 1,050 who replied, 59% were female and 41% male; and of those employed (6% were not), 81% were full time, 14% part time, and the remainder trainees, locum or contract workers, or on secondment.

Just over half had been qualified more than 10 years, with the balance evenly split between less than four, and four to 10 years. But the biggest single group in terms of job title was solicitor (assistant), at 22.6%, followed by in-house adviser (17.9%), associate (14.2%), equity partner (10.7%) and senior solicitor (9.1%). Again there was a weighting in favour of in-house lawyers (38% of respondents, two thirds of these in the public sector).

Chris Clark, Head of Legal and Banking at Thorpe Molloy Recruitment Ltd, comments that the consistency of the survey results indicates that conditions are relatively unchanged for legal professionals. “Apart from candidates operating in niche areas, salaries have remained relatively static, and in areas such as residential property where there are few roles but an abundance of candidates, salaries have actually marginally decreased”, he says.

Price of freedom

This time we have focused our analysis on comparing different sizes of firms or companies. The results are striking. With the caveat that they form a smaller sample (4.1%) than those from larger businesses, sole practitioners appear to pay a price for their independence. Of our respondents, 78% had been qualified more than 10 years, and a higher proportion than in other groups (60.5%) were men, but 64% report earnings of less than £40,000 a year (the average across all groups was 44.1%; both figures include those working part time). The majority of the rest, however, are in the £60-80,000 rather than the £40-60,000 bands, though one or two individuals claim six-figure earnings.

Nor can they be said to be content with their lot, as 60.7% ticked “unsatisfied” or “very unsatisfied” in relation to their earnings, against an overall average of 40.9%. Two thirds of sole practitioners also have no benefits beyond their drawings; 56% don’t expect to take all their holiday allowance for the year. And of those in private practice, they are most pessimistic about the short term economic outlook, with 40.6% expecting it to be worse as affecting their business in 12 months’ time (18.8% replied “better”; the remainder thought “about the same”, or “don’t know”).

Were there any redeeming features for these brave souls? Well, they are on average able to work more flexibly than all except those in the public sector, with 68.8% claiming flexible hours, though the proportion working over 45 hours a week (46.9%) is in line with most other practice sizes, and they also have the highest frequency, at 18.8%, of those working more than 65 hours weekly.

Whatever the reason, sole practitioners appear the least likely to make a move, with 6.5% saying they are actively looking for another post (in line with most sectors) and 25.8% who would pursue a job if the right one came up (survey average 32.1%).

Moving up the scale, the trends emerge. Average earnings creep up with size: the proportion below £40,000 was 60% in 2-9 partner firms, 45.3% in 10-49 partner firms, and 33.3% in the biggest practices, though there were also more junior lawyers in the latter groups. In-house, the figures were 45% (public sector), 22% (private companies), and 19% (listed companies).

There is also a clear watershed as respects benefits, with 49% in 2-9 partner firms saying they have no benefits, compared with 12% at 10-49 partners and 9% at 50+. There is a corresponding decline in dissatisfaction with earnings, from 51.2% (2-9 partners) through 44.2% (10-49 partners) to 36% (50+) – the last figure, of course, still representing more than a third of those employed.

The results show less variation when it comes to working hours and flexitime. Though across all sectors apart from sole practitioners, fewer than 10% report contracted hours of more than 45 a week, between 45% and 50% say they actually work over 45 – except that here the biggest firms (50+ partners) stand out, with a score of 58.8%.

“The interesting dichotomy between sole practitioner and larger practice firms is laid bare in the survey results”, Clark comments. “Although the sole practitioners cite poorer benefits and remuneration compared to larger practice colleagues, the working week is more flexible and fewer respondents claim they would move roles. This may point to the work-life balance choice and the importance of flexible working which smaller firms can sometimes offer, compared to the more rigid procedures in place at large firms. Small firms are also less likely to operate a highly competitive internal environment, and will offer a broader range of work compared to the higher degree of specialisation and long working hours culture in large firms.”

Caution the watchword

What do the figures mean for the job market? Moves must be taking place, whether internally or from firm to firm. Once again over 70% report a pay freeze in place over the past 12 months; yet 48% say their own earnings have increased. There may also be an element of moving up a pay scale there, otherwise we might expect more than the 17.1% who recorded that they have been in their current position for less than a year.

Clark observes: “Although the number of respondents in post for less than 12 months is down [by 3.5%] on last year, I believe there are several reasons people have decided to take on a new role. For some, the persistent lack of improvement to salaries and benefits will have been a driver to move, and, taking Aberdeen as an example, new entrants to the professional market, combined with a more buoyant oil and gas sector, have offered new opportunities for candidates seeking a promoted post in practice or a move into industry.”

There is a pool of people with at least half an eye open for a possible move. Across all private practice sectors the number saying they are actively looking for work is no more than 7%, and scarcely any more in the public sector despite the gloomy outlook there, but between 30 and 40% in most groups say they would pursue a new job if the right one came up. In-house lawyers with the larger private companies, who already enjoy the best packages on average, are more on the hunt, with over 14% actively looking and a further 38% who would go for an opportunity that appealed.

Clark observes a level of competition especially between the larger legal firms and the in-house private sector, reflected in the packages on offer: “Benefits packages are a growing area of interest for all levels of candidates and are an increasingly important element of the overall total reward package for firms trying to attract and retain.”

He adds that there are pros and cons to be weighed. “Although larger practice firms can offer attractive flexible packages, they are certainly lagging behind the oil and gas companies in Aberdeen, where we are based. Paradoxically though, once in industry, the rate of career progression can be slower as defined career paths are not as structured as in practice.”

Caution appears to be the dominant feeling, however, as Clark concludes from the numbers likely to stay put despite the general uncertain outlook, and the outright pessimism pervading the public sector – where 60% believe that things will be worse in a year’s time (but 80% are in a final salary pension scheme). “This trend is across the other organisation types too, indicating that candidates remain cautious, perhaps turned off by the lack of recruitment activity in recent times and a genuine concern that the grass would not be greener elsewhere”, he says.

“Although there are an increasing number of opportunities for experienced candidates in niche roles such as corporate, commercial and employment law, the legal market does remain challenging, particularly for newly qualified candidates, where vacancies remain in short supply.”

 


Promoting pro bono

At least two thirds of respondents work for businesses which adopt some form of pro bono activity. By far the greatest number of these (65.8%) have employers who organise activities to raise money for good causes, followed by 16.5% where qualified staff put their skills to use pro bono, 10.5% who are allowed volunteering during work time, and 7.2% where the volunteering has to be done in the individual’s own time.

 


Taking CPD seriously

Another new question in this year’s survey sought to find out how people rate the CPD provision in their businesses. Here the results were very positive. The overall “very satisfied” score was 37.9%, ranging from 26% in firms with 2-9 partners to 53.3% in the biggest firms. A further 49.2% on average were “satisfied”, giving an overall satisfaction score of 87.1%.

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