Having endured several years of economic turbulence, survey participants express hope that the legal services market in Moscow has bottomed out and is now beginning to stabilise. Some have already experienced a recovery of sorts, with just over half reporting revenue growth in 2016. However, most still have a long way to go to return to previous levels, after two or three years of double-digit revenue drops in many cases.
The vast majority of survey participants are cautiously optimistic about business prospects for the coming year. There is a growing sense that the market has bottomed out and can only go up from here, although few expect significant revenue growth in the short to medium term. The prevailing sentiment expressed is that while work volumes may increase slightly in 2017, realisation will continue to take a hit from cost-conscious clients.
While most participants expect a flat to modest year on revenue growth, some are beginning to consider longer-term strategies for replenishing lawyer ranks, which have been seriously depleted over several consecutive years of streamlining. However, for the time being, recruitment in the Moscow legal services market remains a cautious affair, with job security still of paramount importance among employees.
Compensation and human resources
Associate compensation trends
Recent salary trends for associates on the Moscow legal services market have tended towards the chaotic. Firms which set salaries in roubles saw compensation levels rise in US dollar terms during 2016 as the Russian currency regained strength. Meanwhile, average compensation levels also grew among firms that set salaries in hard currency, driven primarily by the decision of certain firms to end salary freezes or temporary reductions in compensation at certain levels which have stood in place for several years.
Comparing the 2017 survey results with those of 2016 yielded the following results:
- Average overall net percentage change in like-for-like associate compensation levels (among international firms which set salaries in hard currency): +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 a lawyer advancing up a level on a lockstep grid in Moscow during the first 12 years of practice is 17%.
Headcount growth trends
- Percentage of firms that increased total headcount during the past year: 40%
- Percentage of firms that increased fee-earner headcount during the past year: 40%
- Percentage of firms that increased support staff headcount during the past year: 30%
- Median net percentage change in total headcount (among all firms): -2%
- Median net percentage change in fee-earner headcount (among all firms): -3%
- Median net percentage change in support staff headcount (among all firms): 0%
Based on the latest Moscow survey, like-for-like average hourly billing rates among fee-earners of the same level at the firms surveyed tended to remain flat 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 9% during the first 12 years of professional practice.
- Average hourly billing rate recorded internally last fiscal year: $405
- Average rate billed to clients during last financial year: $294
- Average annual total work hours target for associates: 1,950 hours
- Average annual billable hour target for associates: 1,540 hours
- Average number of billable hours clocked by associates during last financial year: 1,157 hours
The above article contains extracts from the Moscow 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. For further details and pricing contact Gwilym Davies at gdavies@GlobeBMG.com or on +44 (0) 20 7940 6858.