Law Firms - International (commentary)
As you will see from the salary tables, we have concentrated our salary guide on four key regions: Europe, Offshore, Middle East and Asia. As qualification systems, tax, VAT and benefit packages differ in each, the salary tables should be read in conjunction with these commentaries to put them in context.
If you require further advice on any particular jurisdiction please contact Andrew Waters, who manages our International recruitment desk on 020 7523 3752.
Europe
Germany
The German market is continuing to experience significant change. While law firm mergers provided the main source of news in the not too distant past, today's economic climate has created a dynamic of its own in the legal market.
There is an increasing trend for groups of lawyers, unhappy in their current environment (whether as a result of lack of clear direction, a disconnect between compensation and billings, or simply lack of enthusiasm amongst German partners to be part of the big firm structure) to set up practices for other firms or indeed their own spin-off firms.
Coupled with this is the realisation amongst senior associates at big firms that their partnership prospects are uncertain, thereby driving them to move to smaller firms.
Whether this movement continues to gather momentum remains to be seen. The recruitment market remains very tough for senior associates in the large firms which are dealing with leverage issues as well as reduced volumes of work. There is still appetite, however, for highly-qualified junior to mid-level associates, specialists in areas like tax, and partners/teams with business.
The recent significant salary increases for newly qualified lawyers (at firms such as Milbank, Skadden and White & Case, to name but a few) is a clear indication of this appetite. Furthermore, with a steadily growing trend amongst firms towards a merit-based rather than lockstep system for partners, the future business prowess of partners is becoming ever more prevalent.
Several practice areas have suffered during the pronounced downturn in Germany and some large firms are still operating below budget. Corporate law, M&A and private equity were all very quiet in 2003 but this has now turned full circle and is very much in demand and at the forefront of the firms' needs.
Ireland
The Dublin market has remained fairly static over the last 12 months and there continues to be opportunities for lawyers with a funds, banking, or financial services background.
Generally speaking, Dublin salaries are lower than those paid in London yet higher than most UK regional salaries. The top-tier law firms pay slightly higher salaries than the mid-tier firms and most major law firms continue to offer a performance related bonus that is normally between 10-20% of salary.
A move to Dublin offers an improved lifestyle with living costs far lower than that of London. The market looks set to continue to improve with competition between the top tier law firms remaining healthy for the very best lawyers.
France
The first six months of 2004 saw the French market remain sluggish with relatively little recruitment at the associate level and as a result, salaries have remained largely static. However, recent activity indicates an upswing to the market.
There have been new US entrants including Paul Hastings and Morgan Lewis and the high-profile move of Thomas Forschbach from Ashust to Latham & Watkins announced in early September came hot on the heels of Basil Zotiades' move from Linklaters, also to Latham.
US and UK law firms tend to pay higher salaries than the French law firms. The figures presented in our table show the salary ranges for self-employed lawyers - the basis on which most lawyers are recruited.
Although the cost of living is lower, taxes are higher in France than the UK. Generally speaking, being self-employed, lawyers are responsible for paying their own health care and private pension schemes and will not be given any particular uplift to compensate for this.
Again the note is one of caution but firms continue to be interested in talking to outstanding associates (particularly those with a strong banking/finance focus) and to partners with significant client business.
Belgium
There have been a number of new entrants in the last 12 months, particularly from US law firms. Business levels are increasing gradually in EC Competition with firms seeing more Articles 81 and 82 instructions rather than new merger control business.
Salaries in Belgium vary greatly for competition lawyers and salary will often be dependant on the jurisdiction in which the lawyer qualified, and whether it is a US, UK or local law firm.
Relatively few international law firms now recruit lawyers on UK City salaries on an "employee" basis. Most lawyers are treated as local hires and are recruited on a self-employed basis. Our table illustrates the salaries of lawyers hired on a self-employed basis and are exclusive of VAT. US firms, with perhaps one or two exceptions, do not pay US rates but instead the top-end of the local pay scales.
Being self-employed requires the lawyer to make their own deductions and social security contributions although most law firms do provide advice on this. It should be noted that although taxes are higher than the UK, relatively speaking, the cost of living is lower.
As law firms continue to ramp up their competition capability, there is likely to be a continuing need for junior and mid-level European-qualified competition lawyers with fluency in English and ideally knowledge of a second European language.
Italy
The Italian legal market has been slower to recover than other European markets. At the associate level there are a far greater number of lawyers searching for positions than exist for them, especially in corporate M&A. The exception to this is in banking and finance, especially structured finance.
Notwithstanding ongoing caution in the market, these are still exciting times in Italy with a number of US and UK firms using this as an opportunity to build their practices at the senior level. Other international firms are also actively seeking to gain a foothold in the market. Cleary Gottlieb ramped up its Italian capability with the notable hire of Roberto Casati from Allen & Overy. Other big news included Linklaters' loss of its alliance partner Gianni Origoni.
The tables show salary figures for lawyers reflecting the number of years' experience they have. The table assumes that after two years' experience the lawyer has been admitted to the relevant Bar, although this may take up to three or four years. Lawyers in Italy are recruited on a self-employed basis and the figures presented are exclusive of VAT.
Firms do not tend to offer any other benefits by way of healthcare or pension although most firms do offer a discretionary bonus. Salary figures also vary greatly within a band depending upon the practice area; those in corporate/finance tending to get paid more than those in litigation or IP etc. Pricing "typical" salaries therefore proves difficult, however, we have given you both a range and a typical figure to work from.
Spain
Although the start of 2004 was slow, projects and finance work remained stable during the quieter time, and there has been a slight pick-up in M&A activity. Traditionally strong in Spain, property and construction are increasingly active.
The large Spanish firms are set on increasing their market share through greater international exposure and therefore competition for international work is intense. This has forced foreign law firms to target the domestic market, which offers a steadier flow of work.
As a result, foreign and large domestic firms are competing for similar types of lawyers: the most significant moves have been those of senior corporate and finance lawyers from large domestic firms (or in-house legal departments) to international firms.
In terms of salaries, although there have been high increases at the junior level (to reflect an increase in very highly qualified juniors on the market), salaries in Spain are still relatively low. The local firms are generally closing the gap that existed between them and the international firms, but significant differences still exist at very senior levels.
Looking ahead, it is likely that the volume of lateral recruitment at the senior end will be down temporarily, while new recruits "bed down". Profitability will still be a major concern for most firms and cost control is likely to slow down activity further. For precisely the same reason however, senior lawyers with strong client portfolios are likely to remain in strong demand.
Russian Federation
The first half of 2004 has seen increased activity in the Moscow legal market. Particularly buoyant practice areas include finance and corporate and with further international law firms opening up offices or establishing links with local law firms, this trend is set to continue.
UK lawyers tend to be paid higher salaries than Russian-qualified lawyers and in some cases this can be as much as two and a half times greater. Some international law firms, however, are attempting to bring salaries in line. Salaries may differ significantly between UK and US law firms and typically, those of US firms are higher, with a few US firms offering close to New York rates.
All salaries are subject to Russian income tax which is currently 13%. Annual salary increases are generally fixed at between 13% and 15% and UK lawyers can expect expatriate benefits such as accommodation, car, and other allowances.
The recent surge in business activity is set to continue and leading law firms are keen to recruit both Russian and UK qualified lawyers at top City practices preferably with Russian language skills.
Offshore
Caribbean
Over the last 12 -18 months competition for roles in the Caribbean has been fierce as lawyers have begun to realise that moving offshore is a viable alternative to moving in-house or to another law firm within the UK. Such a move can offer excellent financial rewards in a tax-free jurisdiction with the benefit of a better quality of life.
The leading offshore law firms usually recruit UK or Commonwealth-qualified lawyers from the top tier law firms. The most sought-after lawyers are those with a funds, corporate, insurance, litigation (especially insolvency) or trusts backgrounds. Demand for structured finance lawyers has lessened although over the next 12 months or so this is set to improve.
Salary figures illustrate the total compensation package (i.e. base salary plus commission). Firms also offer health insurance and a relocation package up to US$10,000. The commission element tends to be based on a percentage of the individual's bills paid. Although salaries are high, the cost of living, particularly rental accommodation, can eat up a sizeable proportion of salary.
Stiffer immigration laws in both Bermuda and the Cayman Islands have meant that an indefinite stay may present problems. Some offshore law firms now have a number of overseas offices, and therefore they can overcome this problem by redeploying their lawyers within the network.
Recent mergers of offshore law firms include Hunter & Hunter in the Cayman Islands with Appleby Spurling & Kempe in Bermuda and Ogiers in Jersey with Boxalls in the Cayman Islands. Recent entrants include Mourant du Feu & Jeune into the Cayman Islands and Maples and Calder into the British Virgin Islands.
Channel Islands
Recruitment activity in the Channel Islands remains buoyant with particular emphasis on international finance. Lawyers with a strong City background will always be attractive to the main firms. Given that these firms tend to have leading practices in securitisation and funds work, this experience will be extremely appealing.
Corporate lawyers and lawyers with tax and trusts experience will also be of interest, particularly those with offshore experience. Property lawyers, employment lawyers and litigators need not feel excluded as occasionally opportunities do come up. As the market continues to pick up, the law firms will be jostling with each other to compete for the best lawyers and will need to be creative and generous with what they offer.
Offshore salaries have always been attractive, though not perhaps at the level many people think. This is not the Cayman Islands and the firms do not pay top US rates. Instead, as a rule of thumb, the firms pay just under top UK law firm rates and given the 20% flat tax break, this makes a pretty compelling financial offer.
The cost of living is not cheap and accommodation will be rented due to strict laws on the islands. In Jersey, houses fall into two categories either qualified or unqualified. Generally the accommodation in the first category is more appealing and therefore if a firm can apply for qualified housing (a JCAT) for you, you will be eligible for some of the best housing on the island. Firms will also pay a relocation allowance, generally between £1,000-3,000 depending on whether you are bringing a family over.
Middle East
Dubai
Work levels and recruitment activity since the end of the first quarter of 2004 has increased dramatically for corporate lawyers at all levels in the Middle East and this appears set to continue. Firms do recruit UK or Commonwealth-qualified lawyers looking to make a move to the region although the preference is for lawyers with regional experience and Arabic language skills.
The greatest concentration of international law firms is in the UAE particularly in Dubai. A number of international law firms who do not yet have offices in Dubai are actively considering opening up there given the increased business activity. Areas of particular growth include corporate, banking, projects, construction and Islamic finance law.
The figures presented show the basic salary excluding benefits such as housing allowance, health club membership, healthcare and car allowance which most firms offer as standard. Salaries tend to reflect London rates, although they are tax-equalised so lawyers do not benefit from the tax-free status. The cost of living is lower compared with the UK and therefore one can expect to save up to a third of their income.
Making a move to Dubai offers a much improved quality of life. The work tends to be more generalist in nature as departments are smaller and members of a team get involved in whatever comes through the door. back to top
Asia
Hong Kong
The Hong Kong legal market is emerging from a severe economic slump which has dented firms' profits causing a change in strategy for many firms. Dentons, Cravath, and Dewey Ballantine are all notable examples of firms that have recently exited Asia and a number have reduced their staff by sizeable amounts.
However, the last few months has seen a significant increase in corporate finance activity as a result of the boom in China and most firms are very active in recruiting Chinese speaking corporate lawyers. Firms with offices in China are also expanding their teams to provide direct investment expertise to international companies.
With many firms looking to generate a healthier profit this year, there is resistance to increasing salaries despite 2-3 years' of pay-cuts and freezes. Consequently, salaries are likely to remain flat this year.
Singapore
Singapore and south east Asia generally have faced very difficult economic times which has caused many international firms to reduce their capability in this part of the region.
Salaries have remained flat and one trend to note is that there are considerably less expat deals on offer as more lawyers are hired locally in the market.
