Stellungnahmen | 09-05-16

How to increase your salary when making a move in legal

The end of April/start of May marks the time that most law firms and businesses in China will have paid their bonuses to staff. This therefore also marks the time when many lawyers start to consider their current situation and show an interest in other opportunities across the market.  Although there are many elements to be considered by lawyers looking to move, the compensation package is always one of the most important factors. In our next series of articles we highlight how a lawyer can look to increase their salary, focusing firstly in this piece where an increase is mostly likely.

Is a law firm salary negotiable?

When associates move from one law firm to another there is generally little discussion around salary. The reason for this is that associates’ pay is generally always determined based on their background and number of years’ experience. For example, in major Chinese law firms, such as Jun He or Zhong Lun, almost all the associates at the same level have the same base salary, and the only difference is the year-end bonus which is based on the whole year performance. This is the same in the international firms where each level of pay will be different but it is likely that associates at the same level will all be on a very similar salary. However, what these levels are and what the salaries are vary from firm to firm. 

It is also worth noting that because, generally, associates are fee earners in a firm, law firms do not have a fixed budget when recruiting associates /consultants. The package which firms are willing to provide will depend on the candidates’ legal skills, practical experience and education, regardless of their previous package in their previous firm. So, while every associate at the same level will likely have a similar salary, the level at which a lawyer is considered when they join a firm will vary. Therefore, if a firm really wants to secure a candidate they may simply consider them at a higher level and can therefore offer them a higher salary. 

Of course, once at a law firm, associates will be reviewed annually for promotion, based on their whole year performance. Salary increase is decided by the level at which the lawyer is at, and promotion is not guaranteed. In this system, the more senior you are, the more difficult promotion becomes, since the goal of most lawyers is to become partner and the quantity of partners in every firm is limited. Therefore, many senior lawyers begin to consider alternative career paths, such as moving in-house. 

Is a salary increase likely when moving in-house from private practice? 

The general answer to this question is no. First of all, it is a challenge for a lawyer to move from private practice to an in-house role. Generally, these lawyers do not have in-house experience, and they will need to prove themselves as an in-house counsel. Secondly, on the whole, working hours in-house are less than in a law firm and this is reflected in the salary. Also, generally a lawyer moves in-house for a better work-life balance or for a broader role with additional responsibility, often making the actual salary less important. 

The question is, is a pay cut inevitable? The answer to this is also no as it can depend on the budget of the hiring company. On the whole, if the budget allows, most businesses will provide a salary increase for a candidate as an incentive to make the move, but this increase percentage is unlikely to be huge. 

The reason why it is widely accepted that lawyers experience a pay cut from private practice to in-house is because like for like at the same level the basic salary is generally lower. 

Here we have discussed the expectation on salary increases with a move within private practice and from private practice to in-house. In our next article we will highlight the specifics of salary within an in-house move. If you would like more information on the current market or to discuss any opportunities which are currently available please contact Shawn Chen on +86 21 6103 7331 or via email [email protected].