Law firms in Midlands struggle to pay wages

The senior partners at Birmingham's top law firms have met to discuss how to tackle the “serious salary inflation” problem faced by Midlands firms.

Wragge & Co's John Crabtree, Pinsent Curtis' Julian Tonks, Eversheds' Birmingham senior partner Adrian Bland and Edge Ellison's James Retallack were among those who met last week to consider how to hold onto their most talented lawyers.

Retallack says that although all private practices have to pay over the odds to attract and keep good lawyers, the problem is particularly pressing in the Midlands.

He explains: “The client base is more manufacturing in the Midlands than in London and in this sector there is no such thing as wage inflation. Therefore there is no scope to increase rates to clients. In fact, they are usually looking to us to reduce our rates.”

He says that this inability to increase rates to meet the spiralling wages bills is affecting law firms' profit margins.

Bland says the problem has become particularly marked in the past 12 months with the double whammy of manufacturing suffering due to a strong pound and firms in Birmingham and the City recruiting heavily.

He says: “Clients are not going to pay 25 per cent more for the same service, especially those in manufacturing who are facing a deflationary situation at the moment.

“It's different in London where there is a booming financial market sector. Here manufacturing is still very important. It's really quite a squeeze.”

He says: “It is a matter of supply and demand. Everybody is chasing a small number of good quality lawyers. It was like that during the late 1980s.

“In reality we can do very little. We all agreed this is awful and agreed to take a tougher stance but we will probably still keep pinching each other's lawyers for more money.

“That's just the way it is at the moment.”

Bland adds: “Market forces dictate that we have to compete for the best people with each other and with firms in London. We have acknowledged that salary inflation is quite a problem but it can't be stopped. You have to pay market rates.”