The below article contains extracts from the Lexology Insights 2019 Gulf Cooperation Council law firm compensation, benefits and billing report. The full report contains compensation, benefit and billing benchmarking data for all levels of fee-earners and business support staff.
Legal market trends and conditions – United Arab Emirates (Dubai and Abu Dhabi)
Beloved of the boom-and-bust economy, Dubai seems to be showing signs of entering a downturn. While official UAE government figures are typically to be taken with a pinch of salt, even these show that annualised GDP growth slowed to just 0.8% in 2017. Figures for 2018 have yet to be published, but anecdotal evidence points to economic contraction. Despite the local hype surrounding Dubai’s hosting of the 2020 World Expo, the predominant topic of conversation among survey participants was the shrinking international business community – with many reporting that the expat workforce is departing at a rate far outstripping that of new arrivals. Reports indicate that diminishing job opportunities, combined with a stripping back of the benefits afforded to expats and their families, have seen large numbers of them (particularly those with families) leave Dubai. With no obvious slowdown in the speed and volume of real estate construction, the wave of expat departures seems to be fuelling a continued – and generally welcome – drop in the cost of local real estate. Most survey participants have inferred that the increase in expat departures points to an economic recession, but such observations may well be skewed by the demographic of the observers. There is little doubt that the expat workforce in Dubai is diminishing; however, the government’s push towards Emiratisation is likely to mean an increasing proportion of vacated roles being filled by locals. And although the current business environment may be challenging, it is perhaps merely the expat community that is waning, rather than the economy as a whole. Either way, for international law firms that cannot source enough local talent to fill legal roles, it remains a requirement to look further afield for most recruitment – a practice that is likely to become even more challenging as the UAE government continues to induce companies to hire from the domestic workforce.
The recent introduction of value added tax (VAT) in Dubai seems to have resulted in the level of price increases for consumer goods that many were predicting; most retailers have used the 5% tax as an excuse to hike prices even further during 2018. However, most law firm management teams felt that falling prices in the housing market served to counter any rise in the general cost of living last year, so few firms chose to factor any VAT premium into salary increases during 2018. That said, anecdotally it seems that average salary increases for business services staff tended to outstrip those of 2017 by a single percent or so. Meanwhile, trends in associate salary grids tended to flatline, with most UK firms sticking to salary bands that have in some cases remained unchanged for three years or more now. Those firms that did make changes typically did so with the intention of overhauling their systems in the name of fairness or reassessment, rather than in response to market pressure on salaries – of which very little was reported. Any overall upward trends have tended to come from the growing influence of US law firms in the region, with the higher echelons of this group offering Wall Street-level salaries that UK law firms usually refuse to match.
In the past year, it seems that the general evolution of corporate working practices has finally arrived at law firms in Dubai – with participants universally reporting increases in the flexibility on offer to employees in terms of working hours and remote access. Changes within the office environment itself also appear to be widespread, with more open-plan environments, hot desking and mixing of fee-earners and business services now taking place across the board.
Any recent changes to benefits packages have generally been limited, with many firms having stripped back extra allowances and benefits around flights and housing in recent years, choosing to adopt a more all-inclusive salary system instead. Where recent changes have been made, they have typically been in the area of healthcare: many firms have increased fringe healthcare benefits such as employee assistance hotlines, periodic health checks and support of mental health, nutrition and healthy living.
Compensation trends – United Arab Emirates (Dubai)
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 Dubai during the first 10 years of practice is 7.5%.
Comparing the overall 2019 survey results with those of 2018 yielded the following results for Dubai:
- Average net percentage change in like-for-like junior (0 to 3 PQE) associate compensation levels: +0.6%
- Average net percentage change in like-for-like mid-level (3 to 7 PQE) associate compensation levels: +2.3%
- Average net percentage change in like-for-like senior (7+ PQE) associate compensation levels: +2.3%
- Average overall net percentage change in like-for-like associate compensation levels: +1.8%
Headcount growth – United Arab Emirates (Dubai)
- Mean annual headcount turnover: 19%
- Percentage of firms surveyed that increased fee-earner headcount during the past year: 56%
- Mean percentage growth in fee-earner headcount (among firms that grew): 22%
- Mean net percentage change in fee-earner headcount (among all firms): +8%
- Median net percentage change in fee-earner headcount (among all firms): +7%
- Mean annual headcount turnover: 13%
- Percentage of firms surveyed that increased support staff headcount during the past year: 40%
- Mean percentage growth in support staff headcount (among firms that grew): 15%
- Mean net percentage change in support staff headcount (among all firms): +3%
- Median net percentage change in support staff headcount (among all firms): 0%
Billing trends -- United Arab Emirates (Dubai)
Based on the latest Dubai survey, like-for-like average standard hourly billing rates among associates of the same level of seniority at the firms surveyed tended to decrease slightly, by an average of nearly 4% over the past year. It remains fairly standard for individual associates’ billing rates to increase annually, based on increasing seniority. The average annual step increase is 5% during the first nine years of fully qualified professional practice.
- Average total work hour target for associates: 1,757
- Average billable hour target for associates: 1,639
- Average number of billable hours clocked by associates during last financial year: 1,173
- Average number of billable hours clocked by associates during current financial year: 1,220 (projected)
- Average utilisation percentage (billable hours recorded/billable hour target): 72%