Ask anyone if they’re paid what they’re worth and unless you’re talking to someone extremely honest then there’s a chance that you will be met with a somewhat enthusiastic ‘no’. According to a recent survey in Canada 46% of the working population feel that they are underpaid; in contrast only 4.5% believe that they are paid more than they’re worth.
This is hardly surprising, given that human nature means that we always want more than we have. This isn’t a new or recent fad; even in biblical times it was enough of a problem that when God was trimming the Commandments down to ten He still felt it necessary to include one about not coveting anything which our neighbour has, explicitly not his house, wife or his oxen. But then.....what if he’s only attracted his wife because he’s on more money than you, and has a nicer car and better house and......<grumble, grumble>
Despite being warned off having an envious glance at the neighbour (and his wife – remember commandment no. 7 too), it’s that desire to earn more money which drives most of us onto success. Matching and exceeding what your peers have achieved is one of the fundamental drivers of ambitious professionals, and is the yardstick by which we tend to measure ourselves.
Salaries are always a hot topic within both the legal profession and the legal recruitment worlds. After all, unless you’re working pro bono the chances are that the remuneration has some impact on your decision to get out of bed and go to work in the morning. At least once a year VG Charles & Co is consulted by firms looking to get an idea of where they are in the market with their salary bandings, particularly at the lower PQE levels where followings are less likely to come into play.
Like it or not, salaries are often a good indicator of where a firm sees its standing within the local legal community. Unsurprisingly those who see themselves as a leading player generally pay the highest salaries to ensure that the best talent comes to their door first. To a lesser extent there is also the status of being the best payers in town, with the obvious inference that your profitability levels are sufficiently high to enable you to do so.
Generally salary negotiations are a balancing act between what a firm is looking to pay and what the new recruit is looking to earn (which is generally the higher figure!). In a market which has realigned as certain areas experience more supply than demand for the first time in years, salaries have generally reached more realistic levels than those experienced in the pre-credit crunch boom.
Recently Sullivan & Cromwell announced that they would be paying their London trainees a starting salary of £50,000, coming shortly after Bingham McCutchen confirmed that their NQs would be earning £100,000 upon qualification. Substantial figures indeed compared to the average wage, but in truth this is not a massive increase on what some of these lawyers earned last year. However, as often happens when a significant milestone is passed there has been a great deal of press coverage and people with an opinion on whether these salaries are justified.
Speaking in the broadest terms the legal market tends to stick to the rule of thumb of three times salary; if you’re a solicitor then your target is roughly 300% of your basic salary, if a partner then your following should be a minimum of three times what you’re expecting to earn. Therefore logic states that an NQ on £100k needs to be billing around £300k, which is a considerable target considering this would be at an NQ charge-out rate. To achieve this firms may opt to ‘sweat the assets’ to ensure these targets are met, contributing to the high burn-out and drop-out rate between 1-3 years PQE.
Irrespective of what industry you work in there is always going to be an argument over whether the remuneration is justified; curiously enough it always tends to work in the currency of nurses.....?
Is a professional footballer worth the equivalent of 200 or 400 nurses? In the grand scheme of things probably not; morally it’s difficult to compare the value of kicking a ball with saving lives. That said, football clubs are businesses just like law firms, accountants or internal designers and with the turnover in any of these industries being dependant upon success and the talent at your disposal, you have to pay a premium to get the best.
To use the old cliché, money makes the world go round and for as long as that is the case firms and businesses of all types will be willing to outlay attractive salaries to get the best talent. Should a newly-qualified lawyer be earning between three and four times what a doctor of an equivalent qualification can command? As long as that lawyer is producing the goods and generating significant levels of fees and profit for their firm then its difficult to argue against it.
Besides, think of the tax that top earning lawyers will be paying. There’s a couple of nurses right there.
Do you feel undervalued at present, concerned that you are not being paid enough for the role that you undertake? Interested in discussing what level of remuneration you should be expecting? Or are you responsible for setting the salary levels within your practice and would value talking to an independent expert as to where you compare with your competitors? Call one of our specialist consultants at VG Charles & Co on 0121 233 5000 / 020 7649 9094.