The news that one of Ireland’s leading law firms Matheson Ormsby Prentice (MOP) was breaking the mould for newly qualified lawyers’ salaries was one of the most significant recent developments in the booming Dublin legal market.
As reported by The Lawyer (26 February), the bold move by MOP gave it a lead in the Dublin legal market by becoming the first firm to introduce tiered salaries for newly qualified solicitors.
MOP’s flat rate for newly-qualifieds is E54,000 (£36,980); but for those qualifying into certain finance and corporate areas, including structured finance, securitisation and asset management, the salaries can now be as high as E62,000 (£42,460).
As MOP managing partner Liam Quirke puts it, the decision to introduce the new structure was a reaction to current market conditions in Dublin.
“Supply and demand for talent in those areas is very tight,” says Quirke. “This move reflects our own resourcing requirements and also reflects our strategy for the future in terms of where we see the most growth.”
The move is highly unusual not only because it breaks the apparent consensus among Dublin’s top firms to keep newly-qualified’s salaries more or less on a par, but it also represents one of the rare examples of an Irish firm going on the record about remuneration. Consequently the development is being seen by some as a pointer to the future of the Irish market, both in terms of its future shape and in terms of transparency.
It is bonus time in Dublin currently, with the end of the financial year on 31 March leaving lawyers across the city in a state of anticipation about the generosity, or otherwise, of their employers.
As Julian Yarr, head of the London office at A&L Goodbody puts it, the past year was “very chunky” for M&A, with deal flows and value levels both up.
With another bumper year behind them, many lawyers will be hoping for particularly good bonuses this year. But at MOP, the lawyers in funds, capital markets and structured finance are already ahead of the pack.
The rationale for MOP’s decision is simple: it has identified the areas in which it most needs lawyers now and the areas it wishes to develop in the future. The additional financial incentive will, it hopes, help it build for the long term. It is a strategy borne out of the tremendous changes the Irish legal market has seen over the past 10-15 years.
As Brendan Cahill, managing partner at William Fry, says, the issue for law firms to look at now is to take a view of what the market will look like over the next 10 years.
“We need to look ahead to 2017 and start preparing the infrastructure accordingly,” says Cahill. “That means, among other things, recruiting appropriately and looking at your trainee intake. We’ve doubled our trainee intake in the past 12 months, from 15 to 30.”
Anticipating the size and needs of the firm is an art, and in a maturing market such as Ireland’s the real issue for the largest firms has ceased to be winning the business and has instead become getting and keeping the best-quality lawyers.
A&L Goodbody property partner Mairead Sherlock, for example, said the firm’s 28-fee-earner team was “flat out” and that it was “extremely difficult to recruit out there”.
Declan Moylan, managing partner at Mason Hayes & Curran, says the hot areas that attract higher rates in the market are very apparent. “Investment funds, sophisticated financial services and corporate, these are the areas,” says Moylan. “There’s good demand for real estate and litigation, but not as hot as the other areas. There’s no doubt that if you don’t respond to the market you’re going to lose your people.”
There is equally no doubt that this is exactly what MOP has done and that it is a canny move. As Eamonn O’Reilly, head of recruitment consultant Abrivia Legal in Dublin, puts it, MOP’s move was the first clear indication of the competitive nature of the Irish market at the newly qualified level.
“The Irish firms are having to change or else they won’t be able to retain the best of the crop,” O’Reilly says. “MOP is the first out of the traps with this tactic and it’s reflected well on them in terms of being seen as a progressive firm. The critical thing is retention.”
Another leading recruitment consultant agrees, although he adds a word of caution. “It’s a smart move by MOP,” he says, “although I don’t know if offering an extra E5,000 [£3,420] will attract someone into funds or financial services for the rest of their career if it’s not what floats their boat.”
Perhaps the most significant aspect of the move, however, is that the managing partner of a top five Dublin firm was prepared to go on the record about salaries in the first place.
Irish firms are notoriously tight-lipped about money, arguably because the current buoyancy of the market, coupled with relatively tight equity partnerships at some of the top firms, means the levels of remuneration may far exceed those of most firms in the UK.
MOP’s decision to talk about salaries may be a sign that this is changing. The Lawyer spoke to all of the top five firms and only one, McCann Fitzgerald, was not prepared to engage at all in a conversation about salaries.
Other firms, such as William Fry, were at least prepared to confirm that they had not made a similar change. “We’ve raised salaries for newly-qualifieds across the board, and for trainees, but are not differentiating at that level between practice areas,” says Owen O’Sullivan, the firm’s marketing partner.
Arthur Cox managing partner Pádraig ” Ríordáin says the firm has not taken a similar, two-tiered move to MOP because of the fear that it would create “second-class citizens”. However, he added that the proportion of profit the firm sets aside for its bonus system was recognised as being among the largest in the market.
In contrast, the response of McCann Fitzgerald managing partner Ronan Molony, which bordered on the hostile, demonstrated the lack of value he saw in discussing what he described as “internal matters” publicly.
“Salaries aren’t the sort of thing we talk about,” says Molony. “What’s the advantage in talking about it? It’s our own business what we do with our own staff. It’s not a subject where I see any great value in talking about it.”
Molony’s comments were described by a leading recruitment consultant as “prehistoric”.
“It might be a generational thing,” the consultant added, “but MOP’s move is a reaction to commercial reality biting. But some firms seem to believe that work will naturally flow to them, a point highlighted by that kind of comment. You can’t just assume the best will just come to you, you’ve got to go out and battle.”
No one is suggesting that McCann Fitzgerald is not going out there and battling. The firm has been involved in many of Ireland’s highest-profile deals over the past year, including advising UBS and Allied Irish Bank as the underwriters to the privatisation of Aer Lingus and the banks on the Smurfit Kappa IPO (William Fry is acting for Smurfit).
But Molony’s argument points to a failure to recognise that the Irish market is changing and becoming far more competitive. The leading firms will increasingly look for anything that helps differentiate them from their competitors as they compete for the best talent. Even if that means talking publicly about money.