Compensation trends – Hong Kong
Observing market trends with a strong degree of caution has become the new normal in the post-financial crisis world, but after having enjoyed several consecutive healthy years, the Hong Kong legal services market seems to be rediscovering some of its former swagger. Lateral recruitment appears to have reached levels of movement not seen since before the global financial crisis, with associates, partners and entire teams moving between firms with renewed regularity. Several smaller international law firms have been decimated due to the loss of entire teams, while others scramble to consolidate strength and build up firepower. Consequently, average fee-earner salaries are now rising well ahead of inflation as a war for talent erupts with vigour across the Hong Kong legal services market. Demand for newly qualified lawyers in particular seems to have reached a fever pitch, with many UK and competing mid-tier US firms having significantly increased entry-level salaries over the past year in an arms race for young talent.
Type of associate compensation system operated by firms surveyed:
- Lockstep grid based purely on years’ PQE: 13%
- Lockstep grid based primarily on years’ PQE (with some flexibility based on merit/competency): 67%
- Lockstep grid based purely on merit/competency (not PQE): 20%
Comparing like-for-like associate salary changes among law firms in Hong Kong, for which two years of data was available, yielded the following results:
- Percentage of firms that increased like-for-like salary bands for associate pay: 82%
- Mean net percentage change in lower limit of salary bands for associates: +1.9%
- Mean net percentage change in upper limit of salary bands for associates: +3.5%
- Mean net percentage change in average level of salary bands for associates: +3.4%
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 Hong Kong during the first 10 years of practice is 7%.
Headcount growth – Hong Kong
- Percentage of firms surveyed that increased total headcount during the past year: 56%
- Median net percentage change in total headcount (among all firms): +2%
- Percentage of firms surveyed that increased fee-earner headcount during the past year: 52%
- Median net percentage change in fee-earner headcount (among all firms): +2%
- Percentage of firms surveyed that increased support staff headcount during the past year: 47%
- Median net percentage change in support staff headcount (among all firms): 0%
Billing – Hong Kong
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 10 years of fully qualified professional practice.
The above article contains extracts from the Hong Kong 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.