Kriegler, Roy --- "What do lawyers earn" [1997] LawIJV 32; (1997) 71(2) The Law Institute Journal 12

• What do lawyers Earn?
• Income surveys of the legal profession

What do lawyers Earn?

Income surveys of the legal profession

Increasing reports about poor business conditions, practitioners coming under increasing personal financial pressures and a general perception of the legal industry having lost much of its attractiveness to practitioners, particularly young lawyers, have prompted the Law Institute to survey the incomes of lawyers.

A similar survey conducted by the NSW Law Society found that over the 1994/95 period, 65 percent of lawyers earned less than $75,000 per annum and 40 percent earned less than $50,000. Practitioners in small firms and firms situated in country and suburban areas were highly represented in this low income group.

The Law Institute's 1995 and 1996 in-come surveys indicated a similar pattern for Victoria. The results of the 1995 study (shown in Tables 1 and 2) are based on a survey of a randomly-selected stratified sample of 350 legal firms in the state. The research sought information on gross annual incomes and hours of work of full-time, adult employees in legal practices. The survey gained a net response rate of 70 percent.

Table 1 shows that large CBD-based legal firms tend, on average, to pay salaries well in excess of those paid by suburban and work. For instance, first year solicitors in the country earned an average of $25,500 per annum, which increased by over 50 percent to just under $39,000 after two years of service. The actual increments for years of experience are well in excess of the minima under the (then) Legal Profession Employees Award, a trend which reflects higher market rates for skilled professional and clerical staff throughout the state.

Table 2 shows that at the time of the survey non-legal staff in country and suburban firms tended to work a standard 38 hour week, with employee solicitors in these practices working slightly above the standard. Employees of the large CBD practices tended to work more than 40 hours per week, with second and third year solicitors working an average of 44 hours per week.

It should be emphasised that the data for this survey was provided by the man-aging partners and the office or human resources managers, not by the employees themselves. Estimates of time worked is often a very subjective issue, and one which has provided difficulties for the Australian Bureau of Statistics for many years.

In September 1996, the Law Institute conducted a survey on the incomes of sole practitioners and partners of legal firms. This survey was also conducted by way of a small, randomly-selected stratified sample of 267 persons from the profession. Respondents were asked to provide information on their total personal gross (pre-tax) earnings from legal and related practice over the 1994/95 and 1995/96 financial years. This included earnings from service companies, SMICS and payments into family trusts. Only respondents working on a full-time basis were included in the survey, which gained a net response rate of 56 percent.

The results of the survey are presented in Table 3, which shows that not only do incomes of partners vary according to the size of their practice (larger practices drawing greater incomes), but also according to the geographical location of the practice. Accordingly, partners in large Melbourne CBD practices tend to earn the highest incomes and the partners of small country practices the lowest.

This table also compares the median incomes of respondents over the two-year period, 1994/95 and 1995/96, and indicates the percentage change over that time. This shows that the average earnings of partners of firms in all categories increased over the two year period, except 5-9 partner firms in which earnings dropped significantly.

This particular survey did not provide information on the hours worked by partners of legal firms. This is unfortunate as it would have added a further dimension to the data. There is anecdotal evidence which suggests that many partners work longer hours than employees. If this were broadly true across most practices in Victoria, then this would make some of the incomes in Table 3 look even less attractive. This is an issue which will be further explored in future research.

Roy KRIEGLER

Roy Kriegler is the Law Institute's Human Resources Manager.