We are pleased to announce the publication of our Hong Kong Private Practice Mid-Year Salary Survey 2012-2013.
Aquis Search is delighted to present our midyear private practice salary survey for Hong Kong 2013. Our aim in producing this survey is to provide guidance to clients and candidates on current compensation levels post midyear reviews, examine changing trends for skills in demand within the private practice industry in Hong Kong and attempt to predict how the market will shape up over the next six months. Our information has been researched and collated with the help of our clients, and candidates and from our knowledge of the marketplace. Data was primarily sourced from the international firms in Hong Kong that undergo midyear salary reviews. As with all surveys, the ranges represent the mainstream view and there will be individual situations that fall outside the range published here so please use this survey as a guide and do not hesitate to call for further clarification on the compensation trends in the market.
Law firms have maintained a cautious approach to hiring with the exception of some of the newer entrants to the region, alongside ‘must have’ replacement hires within perceived ‘key’ practices. With the globalization of firms there is also an increasing trend of firms parachuting in associates from other offices, either for discrete works or even longer secondment.
The mid tier UK and US law firms have been the most consistent in their approach to hiring as many have carved out a niche in the market that do not rely on the biggest deals and the most expensive associates. We have seen a number of moves between mid tier law firms where lawyers have gained a breadth of experience and a diversity of skills, but still have reasonable price tags.
In contrast, the mega firms are now looking for synergies across their newly formed teams and have begun to make some downward adjustments to the headcount in order to right size and reflect their new market positioning. English only speakers and professionals in practice areas that are not control to growth strategies of new management have come under pressure.
The highlight of the year is litigation which has witnessed a surge of hiring and interest amongst many traditional firms that are looking to recession proof their IPO dominant practices. In addition, several new UK and US firms have entered the market to focus on litigation. Mid and senior level litigators with Hong Kong court exposure and fluent local language skills are particularly high in demand. Associates with regulatory, arbitration and investigation related skills, alongside general commercial litigation have also been sought after. We have continued to see significant movement in this space including in-house candidates moving back to practice.
In contrast, the corporate practices have been flat despite a slight uptick in IPO activity, and firms have focused hiring across M&A and non listing related areas instead. Typically firms have reallocated skills to respond to the market and to keep billable hours up, for example rebranding of IPO lawyers as M&A, R&I specialists, and increasingly FCPA specialists. However, many continue to be interested in mid level IPO lawyers in case the market comes back and many mid tier firms are able to utilize their teams in more diverse practice areas. The growth of mid tiers and even local law firms has been relatively strong as many have picked up mid size IPO deals where the chargeable rates are more affordable for a significant portion of clients.
Despite the increased success of mid tier firms, the barrier to entry for associates remains high, and all law firms are willing to wait for the right person. Candidates have continued to be interested in looking for practice areas that can give them great salaries but also diversity in skills and marketability over the longer term.
The banking and finance teams remained stable whereas specialist skills have continued to keep pace with strong demand in the market. Other types of financing also rose in importance with increased activity in areas such as investment funds, fund ventures, and various types of private equity activities. Many China RMB fund practices have had a particularly busy year to date.
The climate for newly qualified lawyers is difficult with a general oversupply of newly qualified trainees that have come into a patchy market and are not all being retained. However, we have witnessed many of the top tier UK law firms attempting to retain the bulk of their trainees. In contrast, some of the city law firms have delayed their decisions on retention, and many have retained only about half of their trainees, with minimal headcounts in corporate.
ASSOCIATES LEVEL COMPENSATIONS
On average, firms increased salaries amongst associates by approximately 5-8% across the board, although the percentage increment tends to be higher at the lower PQE range. In reflection of these higher trends, compensation for litigators standout amongst the others. Top performers can get up to 10% increment. Alternatively, some firms may decide to pay up to 4 months+ bonus. We are also aware that a portion of the international law firms delayed their salary reviews for several months due to uncertainty in the market and reduced billable hours due to the down market.
A selective number of US law firms in Hong Kong continue to pay NY rates plus COLA to their Hong Kong corporate lawyers. In order to retain the best talent, more US law firms are under review with such rates and we expect to see more coming out with cross the board decisions on extra COLA for these lawyers, starting from US$65,000 per annum.
|Level||Monthly Salary (HK$)||Average Salary (HK$)|
|Newly Qualified||65,000 – 75,000||70,000|
|1 year||73,000 – 83,000||78,000|
|2 years||80,000 – 91,000||86,000|
|3 years||85,000 – 97,000||91,000|
|4 years||88,000 – 108,000||98,000|
|5 years||95,000 – 120,000||108,000|
|6 years||100,000 – 128,000||114,000|
|7 years||110,000 – 135,000||122,000|
|8 years||120,000 – 155,000||138,000|
|Level||US$ per annum|
We expect to see a continued growth towards a more positive equity markets, but the growth will be slow and most of the deal flow will continue to be centered on the mid size IPO/M&A deals. Although firms are looking towards a stronger pipeline in the next two quarters, in light of the uncertainty around and where deals are not getting done in this market, firms will maintain a cautious approach to hiring. Furthermore, we predict continued development in cross-border structuring, financings, M&A, and certain niche practice areas. Litigation and arbitration, particularly across financial services regulatory, investigations, and FCPA will remain busy. Demand for talented litigators across international and local law firms will continue.
In terms of hiring, we will continue to see some movements primarily from the UK and Australian firms to a number of US firms, where higher salaries and benefits are on offer. Some of the top UK law firms have strategically managed to retain their lawyers by putting up their bands, and increasing the bonuses for top performers. We will continue to see a level of pressure to increase base salaries at US and amongst some of the magic circles.