Compensation trends – China (Shanghai and Beijing)
Levels of legal education and relevant experience remain highly variable among entry-level Chinese-qualified lawyers. Unlike in other major markets in the region – where years of post-qualification experience (PQE) are typically used to benchmark salary levels – foreign firms operating in China usually prefer to assess young Chinese-qualified lawyers on an internal basis for several years before admitting them to associate career tracks. The way in which firms approach this varies, but typically they will initially place Chinese-qualified lawyers without previous international law firm experience at paralegal level, regardless of local experience. This paralegal position is often labelled ‘legal assistant’, ‘China consultant’, ‘legal adviser’ or similar. This tends to serve as a period of both training and evaluation of the individual’s suitability for more advanced fee-earning duties. Individuals usually end up occupying such paralegal-level roles for between two and four years, depending on performance. During this period, they may complete their local legal studies and qualification (although typically they already have a local qualification, which they must relinquish while under the employment of a foreign law firm); some may also undertake an LLM or other foreign bar qualification. However, LLM sponsorship from the employing law firm is not as common as it once was and most firms require a tie-in period of between two and five years’ service in return for any such sponsorship.
Following a successful period of paralegal-level employment, individuals typically advance to the entry level of a lockstep Chinese associate salary grid. The pay grades of these grids are usually lower than the international associate lockstep grids at most firms – but if they do match international pay grades, the bands at each level tend to be far wider in China.
Type of associate compensation system operated by firms surveyed:
- Lockstep grid based purely on years’ PQE: 14%
- Lockstep grid based primarily on years’ PQE (with some flexibility based on merit/competency): 72%
- Lockstep grid based purely on merit/competency (not PQE): 14%
Comparing the overall 2017 China survey results with those of 2016 yielded the following results for foreign-qualified associates:
- Average net percentage change in like-for-like junior (years 1 to 4) associate compensation levels: +9.1%
- Average net percentage change in like-for-like mid-level (years 5 to 8) associate compensation levels: +3.7%
- Average net percentage change in like-for-like senior (years 9+) associate compensation levels: +3.4%
- Average overall net percentage change in like-for-like associate compensation levels: +6.1%
Provided that associates meet performance targets, they will typically advance up a seniority level in lockstep compensation grids (usually annually). The average salary increase for a foreign-qualified associate advancing up a level on a lockstep grid in China during the first 10 stages of promotion is 8%.
Headcount growth – China (Shanghai and Beijing)
- Percentage of firms surveyed that increased total headcount during the past year: 31%
- Median net percentage change in total headcount (among all firms): -1%
- Percentage of firms surveyed that increased fee-earner headcount during the past year: 44%
- Median net percentage change in fee-earner headcount (among all firms): 0%
- Percentage of firms surveyed that increased support staff headcount during the past year: 13%
- Median net percentage change in support staff headcount (among all firms): -11%
Billing – China (Shanghai and Beijing)
It remains fairly standard for individual associates’ billing rates to increase periodically, based on lockstep compensation grids (usually annually). The average step increase for foreign-qualified associates is 6% during the first 10 stages of promotion.
The above article contains extracts from the China sections of the Asia-Pacific 2017 Legal Market Intelligence Report. The full version of this report contains further data, including detailed compensation, benefit and billing rate benchmarking tables for all levels of fee-earners and business support staff across eight key legal markets in the region. For further details and pricing contact Gwilym Davies at [email protected] or on +44 (0) 20 7940 6858.