The legal market in 2014 could be characterised as being candidate-short. There was an intense competition for quality candidates with Chinese language skills and experience in desirable practice areas, as a result of the increasing use of Mandarin when conducting business due to an increase in PRC clients. The competition for Chinese-speaking legal talent will continue in 2015, especially for the private practice sector.
In terms of practice areas in hot demand, law firms will continue to focus on corporate finance and litigation hiring in 2015. The Hong Kong Stock Exchange is an attractive listing option to companies and was the second largest fundraising centre worldwide in 2014 with 115 IPOs. As PRC corporations look to raise overseas capital using Hong Kong as a medium, this trend will continue to grow and it is predicted that over HKD200 billion will be raised in 2015 through the origination of IPO deals. This will create more opportunities in the corporate space, while the city’s position as Asia Pacific’s hub for arbitration, commercial and regulatory litigation will continue to drive the demand for litigators and arbitrators.
To secure candidates in such a competitive market, law firms will need to offer attractive salaries and we have seen firms break rigid salary bandings in order to attract the top talent. From a candidate perspective, opportunities for career progression remain an important factor for consideration. In particular, young professionals should understand the differences between working in law firms of different sizes and decide which moves will help them achieve their long-term career objectives.
Factors to Consider When Choosing a Prospective Law Firm
The size of a firm has a big influence on the type of work you will be involved in and the work culture. Working in a small to medium-sized law firm can be a very different experience compared to working in a large law firm or big corporate environment.
Variety and Flexibility
Unlike larger law firms and big corporations, where specialisation is key, lawyers employed by small to medium-sized firms are often generalists who work on a variety of assignments across a wide range of areas. This keeps things interesting and offers a well-rounded experience.
For example, we have seen this is particularly relevant in relation to roles in the corporate area where the majority of larger firms hire corporate finance lawyers specifically to work on capital markets deals. These corporate lawyers may only sometimes work on a particular aspect of the IPO transaction and therefore not be able to develop their skill sets in other areas such as mergers and acquisitions, regulatory or corporate governance. On the other hand, smaller to mid-sized firms often offer a much more diverse range of corporate work and exposure to their lawyers, although the size of the deals may not be as large.
Work schedules at smaller firms also tend to be more flexible, and depending on the firm dress codes less stringent, which allows for a generally more relaxed office environment.
Autonomy and Client Contact
With a limited number of staff, employees at smaller firms are often given more responsibilities and allowed to perform with less supervision from senior staff. Junior-level lawyers have more autonomy and client contact than they would in larger firms where only senior lawyers interact with clients.
The benefit of this is crucial, especially for senior associates or counsel-level candidates who are expected to develop their own portfolio of business. Small to mid-sized firms tend to be more open to cross selling clients and fostering those relationships to help senior lawyers. In most situations, for larger firms, partners normally manage the relationship with clients. While senior lawyers may have some client contact, it is often hard for them to take ownership of the client relationship, making it difficult for them to build a portfolio of business unless they have their own contacts. As a result, some senior lawyers within the larger firms tend to be bottlenecked to progress to counsel-level or to partnership.
In smaller firms, everyone knows their colleagues on a first-name basis. There is less in-house competition as there is usually enough interesting work to keep everyone satisfied. Employee input and feedback is also valued more in smaller firms, so staff have more influence in how the firm is managed. Lawyers in smaller firms do not get lost in the crowd and increased visibility allows them to show their skills to their superiors and receive the deserved recognition and reward.
With fewer lawyers and layers of management, small to mid-sized firms offer more opportunities to expedite your career path and make partnership if you perform well. This is very different within larger firms in which the process is based normally on a rigorous application procedure. Partnership voting, while sometimes can be decided by local management, in most cases is dependant on international management as well.
Salaries, Benefits and Resources
Although there are exceptions to the rules, smaller law firms tend to pay less than larger firms due to limited budgets, and benefits may not be as comprehensive. Limited resources mean that smaller firms tend to have more modest looking offices with fewer facilities and amenities. Smaller firms may not be able to hire support staff such as paralegals and personal assistants, so lawyers might have to do, to some extent, their own administrative work themselves, including managing their own diary, filing and other non-billable tasks. Moreover, the financial stability and growth of smaller law firms may rest on only a handful of clients, so the loss of a major client could impact revenues and the future of the practice.
Professional Connection and Exposure
In smaller firms, there usually aren’t senior counsels or mentor figures available to provide training on the job, so a lawyer joining the firm must learn as quickly as possible in order to stay afloat. Lawyers at firms with less than 10 employees may find themselves spending a lot of time working alone which deprives them of the opportunity to socialise, network, seek development and support as well as share knowledge.
Another drawback of working for a smaller mid-sized firm is the limited exposure to complex international deals and agreements. With these firms, the training may not be as thorough and detailed, and also size and complexity of matters are not as wide as with international firms. This will mean that it may become harder to transit into an international law firm in the future as these firms usually seek candidates from other similar sized law firms. This could mean limited career progression.
However, there are exceptions – for example, a lawyer may work for a reputable international law firm, subsequently move to a smaller, mid-sized leading local firm and then move back again to a larger firm. Provided that they are not too senior and can explain their career moves and breadth of experience or deals they have worked on, they have a better opportunity to move around in the market.
Once professionals have decided what type of firms they would like to go into, it is important to know a few tips on salary negotiation when preparing for the job application.
Do Your Research – What are You Worth and Why?
The key to negotiating your salary is gathering as much information as possible before negotiation begins. You need to do your due diligence in the market before going into any salary negotiation.
Some of the things you could do include:
Check out online market research such as salary surveys and guidelines from consulting companies and recruitment firms to benchmark your salary against market rates.
- According to the Robert Walters Global Salary Survey 2015, the average salary for legal professionals working in US firms in Hong Kong with one to three years’ experience is HKD1.05–1.6 million per annum, rising to HKD1.55–2.3 million per annum for those with four to six years’ experience, and HKD2.0–2.4+ million for those with over eight years’ experience
- As for non-US international firms, the average salary for legal professionals with one to three years’ experience is HKD850,000–1.35 million per annum, rising to HKD1.2–1.9 million per annum for those with four to six years’ experience, and HKD1.5–2.0+ million for those with over eight years’ experience
- Speaking to your peers from similar institutions or law firms can also give you an indication of salaries.
- Talking to recruitment agencies who can liaise with their clients (normally the HR division or sometimes line managers) directly to discuss salary bands.
- Looking at job boards to find out what other similar roles are paying at your PQE level will give you a general indication of salaries as well. The key is to demonstrate and justify your views with good examples of similar jobs both inside and outside the firm.
- If you are interviewing for other opportunities, do not be afraid to let the firm and recruitment agent know as it will create a sense of urgency to push the process should you be a prime candidate for the role. You will be able to leverage this when discussing salary and negotiation if the other roles are paying more competitively as well.
Find out How the Firm is Doing
It is important to understand how the firm you are interviewing with is performing. Make sure you do your research and check the firm’s website, latest newsletters, annual reports and general publicly accessible information online to give you a better understanding of the firm.
Some key questions to consider include:
- Have they posted record profits for the previous year, or is their financial performance below their targets?
- Have they made many redundancies in the past 12 months?
- Is this a replacement role or a newly-created role due to growth and expansion of the practice?
All of these factors will have an effect on whether the firm is going to pay above/below or on the market rate salary for a role.
Learn More about General Market Conditions
It is important you know the answers to all of these questions so that you understand what level of salary you are able to request and what is realistic:
- Is there a shortage of candidates with your skill set?
- Have general salaries been rising or falling within the sector?
- Are there a high number of roles appropriate to your skill set available in the market?
For example, in areas of practice such as corporate finance/M&A and litigation (construction, shipping, regulatory, commercial), mid-level lawyers are the most sought-after candidates in the market at the moment. Within financial services, there are limited candidates with funds, derivatives and debt capital market experience. If you have experience in any of these areas, you are likely to be able to command a higher increment when negotiating your salary.
Determine Whether There are any Salary Trade-Offs
Try not to be lured into a false sense of satisfaction by the top-line salary figure. Make sure you do your salary sums because you may have increased costs in your new job. For example, you may need to travel further to reach your new office or workplace and you might lose out on other benefits too. Of course, the reverse can be true. Your new salary may not be as high as you’d like but there could be other advantages, such as more annual leave days, company car, better medical insurance schemes, gym membership or other perks.
Long term career progression and opportunities to progress to counsel or partnership within the firm are also extremely important as well, and in some cases candidates have taken offers that are the same or possibly lower salary for promising career development opportunities.
Never forget, however, that this is the wage you are going to be living on. So the greater actual salary you earn, the greater your financial security.
For more information on legal market and salary trends in Hong Kong, visit the Robert Walters recruitment insight hub online at http://www.robertwalters.com.hk/recruitment-insight.html.