Law partner pay to fall for first time in seven years
Australian law firms are following the global trend of flat profits in the legal industry, with partner pay expected to fall for the first time in seven years due to an explosion in expenses.
Most top commercial firms in the US and Britain increased revenue in 2022-23, but there was little or no growth in profit per equity partner (PEP).
Thomson Reuters senior manager William Josten said its Peer Monitor data indicated the Australian industry would follow suit after failing to recover from a poor first quarter, when PEP fell by 7 per cent.
“The last time we saw a contraction for profit per equity partner in Australia was financial year 2016,” Mr Josten said.
“That streak will likely end in financial year 2023.”
Mr Josten said PEP in US firms for 2022 had declined for the first time since 2009.
“Some of this was due to the extreme growth in associate compensation, which got a lot of press here in the US.
“But these trends are not unique to the US market.”
In Australia, nearly one-third (31.6 per cent) of associates left their firm across 2021-22, more than their counterparts in the US.
Peer Monitor draws on data collected from the financial management systems of law firms. Most of the top 20 firms by size inThe Australian Financial Review Law Partnership Survey are involved. The report for the final quarter of 2022-23 will be sent out shortly.
In the recent reporting season in the UK, where the legal financial year runs from May 1 to April 30, the top eight London-based firms reported falling PEP of up to 6.6 per cent.
Global firms Ashurst and Herbert Smith Freehills revealed that PEP for the year to April 30 was steady at around $2.2 million, results both firms called “pleasing”.
Eversheds Sutherland, which recently
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