Robservations on lawyers' incomes and other thoughts relevant to talent acquisition and retention...

With the current well-publicised difficulties with talent acquisition and retention, I’m very interested in three things:

1.?????Assisting client firms to pay everyone who should be on the team really well.

2.?????How to help clients stand out in the employment market in all aspects of benefits in packages offered and “lived” culture, including work/life alignment, and:

3.?????How to ensure practices are run really well so the numbers stack up, allowing small firms providing exceptionally competitive packages to remain profitable, liquid, and financially healthy in the long game. This obviously impacts on the Principals’ salaries and business returns mix.

Trying to get good data on incomes in the legal Profession in Australia is not an easy task.

The Australian Taxation Office statistics are a good source, require a lot of patience in navigating the masses of data, and can also be frustrating given the delay in publication.

As of today, much of what I was looking for related to the tax year 2018-2019! For comparison, our accountant emailed me today seeking some information in relation to our draft 2022 returns!

N.B. In the comparable New Zealand data there are some additional very useful insights.

Data available from recruiters is much more recent, but the source of the data needs to be reviewed closely. In some cases, it only relates to data from positions the particular organisation has filled. Understanding the recruiter’s market segment becomes useful! In others, some law firms are also surveyed so the representation in the survey is useful to know.

Because of the three points above my interest is particularly in lawyers in private practices.

In this issue of Robservations I’m thinking about:

·??????incomes of lawyer Principals, and of,

·??????employed lawyers in the approximately 92% of private practices that have 1-4 Principals...?

Despite what I say below about averages, I find it very interesting to compare alleged average incomes in data generally available to what I’m seeing actually happening in client firms in real time, last week and today!

This is especially important when the usefulness of many averages is carefully considered. Not many months fly by without me being asked by firm management for input into the ubiquitous, “salaries being paid elsewhere”, claims put forward by an employed lawyer heading into a remuneration review!

My Robservation is that it is very unusual to find a lawyer significantly below market in a firm that is switched on and planning well.

N.B. I’m not talking about averages in the market in the points immediately above. It was well over thirty years ago that a colleague shared with me the observant, insightful, aphorism that an average can be viewed as representing the cream sitting on the crap below it! The truly relevant numbers are found as you head north!

Bearing that truth in mind, when we look at average lawyers’ incomes the numbers aren’t impressive in the ATO statistics for job categories, not featuring in the top 10 in 2018-2019.?

N.B. Don’t be fooled by the 7th?ranking of “Judicial or other legal professionals” in the Top 10 occupations of individuals by average income. The clue that the particular category (#2712) does not cover your typical private practice lawyer is in the numbers in the cohort...just 3,866.

There were over 83,500 lawyers in Australia in the data available elsewhere for the following year, in the “National Profile For Solicitors 2020”, and over 56,000 of those were in private practices. The numbers will have changed little in totals from the year ended 30 June 2019.

The correct category for lawyers in private practice is #2713.

Average salary or wage income was $114,615, with average total income $134,312 and average taxable income $130,177.

Interesting to me that about 15% of these lawyers’ average incomes was not their salary/wage, and that there was not the gap I expected to see between the total income average and the taxable income average...just a bit over 3%.?

For interest, and whatever it’s worth in terms of comparisons...Electrical lines workers’ average salary or wage income was very close to lawyers at $114,684, Train drivers’ $120,677 and Dredge operators’ $148,573.

Having canvassed that beating what you perceive to be average incomes is not particularly all-important in terms of getting and retaining the right talent for your team, here are a few things you may want to keep in mind.

·??????The right talent for your team is your focus...get the antennae up throughout. Even the way that someone negotiates salary and benefits usually holds clues to whether they’re really made of the right stuff for your team.?

·??????“Golden handcuffs” aren’t a particularly good strategy, because unhappiness wins out in the end for most good people...you may just be getting a bit of a delay in the inevitable, but at what cost to the culture of the whole team?

·??????You need for most business purposes to be sure you will be able to keep the team member busy with the right volume, of the right type, of work at the right promptly collected invoices to make financial sense for the business.

·??????You have to be clear what else you will want the team member doing on your team as valued work in pursuance of your business plan.

These vary greatly firm to firm, but leading examples are some appropriate business development involvements likely to be satisfactorily productive, or some supervision, training, or mentoring of others.

The potential list is long, and includes some activities that are necessary but you may wish they weren’t! It should go without saying that not everyone should be involved in everything, and that each individual will have aptitudes, interests and skills that should be taken into account.

Increased focus on quality of life, as seen through the eyes of the individual, was a strong trend before Covid-19 injected itself (no pun intended) into the picture, but the full scope of its impact on people’s lives has clearly led a big slab of the workforce to reassess.

Having reassessed, those not deciding on joining the Great Resignation will have a fair bit of clarity about what they are looking for in the next phase of their working lives.

To successfully intersect the culture and success of your firm with the right talent in the cohort available to you to interview, or seek to retain, will require a lot more thought and agility than ever before.

The enjoyment and success of your business, indeed its very existence in many cases, is at stake.