Compensation trends – Japan (Tokyo)

Aside from promotional advances, general salary growth in Japan in recent years has tended to be relatively glacial in comparison with neighbouring markets such as Hong Kong, China and Singapore. Top-tier US law firms tend to edge towards paying Wall Street-level salaries for foreign-qualified (typically US) associates. Despite the fact that Japan has become increasingly cheap for foreigners in recent years, and can no longer really be seen as a ‘hardship post’, some US firms still pay cost-of-living and/or housing allowances on top of salary, which in certain cases leads to some of the highest overall associate compensation packages in the region. Bengoshi associate pay, by comparison, tends to be relatively low and promotional gains are typically far more modest for Japanese associates than for those in other regions – and salary bands have shown little movement in recent years. As most offices tend to be relatively small operations, rigid lockstep systems are fairly rare, with salaries for both foreign and domestic associates more likely to be decided on individual merit.

Type of associate compensation system operated by firms surveyed:

  • Lockstep grid based purely on years of post-qualification experience (PQE): 37.5%
  • Lockstep grid based primarily on years’ PQE (with some flexibility based on merit/competency): 37.5%
  • Lockstep grid based purely on merit/competency (not PQE): 25%

Comparing the overall 2017 survey results with those of 2016 yielded the following results:

Bengoshi associates and local staff

  • Average overall net percentage change in like-for-like bengoshi associate compensation levels: +3.5%
  • Average overall net change in like-for-like support staff roles: +4.9%

Provided that associates meet performance targets, they will typically advance up a seniority level in lockstep compensation grids annually. The average annual salary increase for an associate advancing up a level on a lockstep grid in Japan during the first nine years of practice is 9% for bengoshi associates and 8% for foreign-qualified associates.

Headcount growth – Japan (Tokyo)

All personnel

  • Percentage of firms surveyed that increased total headcount during the past year: 50%
  • Median net percentage change in total headcount (among all firms): +1%

Fee-earners

  • Percentage of firms surveyed that increased fee-earner headcount during the past year: 42%
  • Median net percentage change in fee-earner headcount (among all firms): 0%

Support staff

  • Percentage of firms surveyed that increased support staff headcount during the past year: 33%
  • Median net percentage change in support staff headcount (among all firms): 0%

Billing – Japan (Tokyo)

Comparing the 2017 survey results with those of 2016 yielded the following results:

  • Average overall net percentage change in like-for-like bengoshi associate standard hourly billing rates:  +2%

It remains fairly standard for individual associates’ billing rates to increase annually, based on increasing seniority. The average annual step increase is 6% during the first nine years of fully qualified professional practice.

The above article contains extracts from the Japan 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 gdavies@GlobeBMG.com or on +44 (0) 20 7940 6858.