An analysis of the accounts of Britain’s top 50 limited-liability-partnership (LLP) law firms shows that salaries in the profession were rising even during the pandemic.
Business-services firm Evelyn Partners looked at the accounts of the top firms for the 2020/21 financial year, which almost exactly mirrored the first year of the pandemic.
It found that there were above-inflation salary increases even before what it called “the post-pandemic war for talent” had started.
‘Surprising’ rise in income
The report said that the overall rise in total lawyer and support costs was 4.8% for the top 50 firms, “at a time when lawyers weren’t moving from firm to firm and there was no broader wage pressure”.
Evelyn Partners also found that firms had higher cash reserves and lower levels of costs in the period, suggesting that they acted swiftly and effectively to protect their businesses.
The report also described 4.2% growth in fee income during the year as “perhaps the most surprising aspect” of its findings.
It points out that, while gross margins declined, operating margins rose, as firms made lockdown savings in areas such as marketing, travel, and entertainment.
The analysis concludes that the question of whether such increases in pay are sustainable is “more pressing than ever”, referring to the salaries of more than Stg £160,000 being commanded by newly qualified solicitors at some London offices of US firms.
It warns that recruitment policies based solely on pay may not succeed in attracting talent, as younger lawyers have different workplace priorities.
The report adds that, while offering more money may get people through the door, it may not build loyalty and commitment.
“Those associates that are lured by the highest possible salary can always be drawn away by a higher offer,” it states.