So, you want to be a millionaire
18 January 1999
17 December 2013
9 December 2013
10 December 2013
17 February 2014
12 August 2013
Money makes the world go round, or so the saying goes. In the week that a mystery US firm offered a staggering £1m-plus remuneration package to lure partners to its London office, an exclusive survey by The Lawyer and recruitment specialists QD Legal revealed that just over a third of private practice lawyers in the UK (37 per cent) consider money as the biggest motivational factor in deciding whether to change jobs. This is a surprisingly low percentage considering the popular public perception that lawyers are only interested in money.
The survey of over 200 lawyers, called Lawyer Motivation and Workplace Trends 1998, also revealed that only 33 per cent cited promotion prospects as the most important factor.
QD director Adrian Fox, who placed the million-pound solicitor advertisement in The Lawyer on behalf of the company's client, says: "Attitudes over the past 10 years have changed. Lawyers are less interested in becoming a partner nowadays - they are more interested in lifestyle issues. They want a good job with a respected firm where they can do well and be happy."
Events over the past two years certainly appear to prove that mega-bucks do not buy you happiness - or even a permanent staff.
The plight of Chadbourne & Parke is a case in point. After offering the profession's previous highest salary of £700,000 in an aggressive ad campaign, the US firm recruited project finance partner Martin Stewart-Smith to its London office from Ashurst Morris Crisp, only to have him defect to Cameron McKenna after just six months.
At the time, Stewart-Smith said Cameron McKenna, which distributed £245,000 per equity partner profit in 1997-98 according to the figures in one legal directory, offered broader practice opportunities and a chance to team up with friends. Stewart-Smith made no mention of money. And, last June, he was followed by five English lawyers from Chadbourne & Parke's London office.
Terence Kyle, the managing partner of Linklaters & Alliance, believes UK firms can compete with US firms that offer top-of-the-range pay packets by "making one's firm a nicer place to work".
"One has to create an atmosphere of belonging and community that can withstand the lure of filthy lucre," he says.
Kyle says that so far Linklaters & Alliance has not really lost out to US firms - although one partner did leave to join Weil Gotshal & Manges. He admits, however, that there is no guarantee that his partners will not find the £1m carrot too alluring to resist.
"I'm not saying that this advert won't tempt some of our people, but if they are lured away by that amount of money there's nothing we can really do to stop them," he admits.
He says that there is no reason why the US firm placing the advert should not attract a significant player from the UK market with its £1m offer.
"There are certainly a number of US firms which can afford to pay that," he says. "If one tried to be objective, there are probably only about 20 to 30 people around at that sort of level." He adds, however, that to attract such a leading light away from another firm demands a pay packet over the odds, but believes that money is not the whole story.
"It may be because they see greater opportunities and challenges," he says.
Fox agrees that it is not just the prospect of more money that lures UK lawyers to US firms: "Many UK lawyers like the thought of working for a US practice because they see them as stronger and more focused than the UK firms they are working for." He adds: "UK firms may say that money isn't everything and that some people don't want to work for a US firm but in our experience, it is extremely rare for people to say that they would not work for a US law firm."
This assertion seems to backed up by The Lawyer's survey. Forty seven per cent of all respondents say they would work for a US firm if the opportunity arose, even though 81 per cent think they would have to work longer hours and 62 per cent proclaim that US firms have a "ruthless culture". An overwhelming 89 per cent of respondents think that US firms pay higher salaries.
But, says Fox: "Not all US law firms are brash and aggressive. Many are more conservative and relaxed than some UK firms."
One big area of concern is the amount of hours that partners at US firms are expected to put in. Kyle jokes that the lucky lawyer who joins the millionaire's club "certainly won't be working nine to five".
Fox admits that for £1m, the chosen candidate will have to work incredibly hard and will probably have to generate millions of pounds in new business.
He refutes, however, that he or she will have to work every hour God sends. "The selected candidate would have to work very hard for their money but they won't necessarily have to work harder or longer hours because they would have been very hard working in the first place, otherwise they wouldn't have been selected," he says.
Fox believes that, although the chosen candidate will be expected to bring in new business for the mystery US firm, partners with less business development nous could still be in the running to land a job - albeit for less cash.
He concedes that US lawyers are expected to put in more billed hours than their UK colleagues - 2,000 billed hours per year compared to a UK average of 1,500.
However, he says US firms have a more favourable billing system than those in the UK: "There are number of things that are billed for in the US which are not billed for in the UK."
Kyle agrees. "I think US lawyers do tend to work longer hours - at Wachtell Lipton, for instance, they work prodigious hours. In the US though, I think they are better at capturing the time spent working." He adds that the gap in working hours between US and UK firms has narrowed to a point where the two are now comparable.
It is easy to forget that it was only this decade that the Law Society allowed US firms to operate under their own name in the UK with local lawyers on board. But have the US firms' fat pay packets affected UK pay structures since the Law Society changed its rules?
QD's managing director Stephen Rodney is convinced the effects have been felt throughout the profession - from partner level down.
"In the past five years, US firms have caused a ripple across the ocean. The higher salaries they offer has put more pressure on UK firms."
US firms, he says, are responsible for pushing up the salaries of newly-qualified lawyers - mostly those in City firms - "by as much as 30 or 40 per cent".
According to QD, average pay for newly-qualifieds in UK City firms is around £33,000, while their US counterparts pay anything between £45,000 and £60,000.
Fox says that although the salary gap between the two is narrowing, particularly for the two to four year-qualifieds, "there is still a substantial difference, enough to get people to move anyway".
Kyle, however, isn't convinced. While he accepts that the pay gap between the two countries has narrowed, he disputes this is due to the influence of US firms.
"UK firms have been seeking to maximise their profits anyway and in doing so have generated more money, leading to more profits that partners can draw," he says.
"There is some pressure to increase the levels of remuneration for associates but I don't really think the US firms are a significant factor because they start their newly-qualifieds at such a very high level - between $110,000 and $200,000 - and UK firms just wouldn't pay that sort of figure; it wouldn't be economically viable."
But the pay difference is not only between UK and US firms. Fox identifies a trend among UK firms towards different levels of pay for comparable jobs in different departments.
"There is a vast difference between the fees made by a firm's private client or residential property lawyers and its finance lawyers, and there has been a move towards paying finance lawyers more than others in the same practice, whether through salary or bonus payments," he explains.
He predicts that the UK norm of paying partners according to the lockstep system - whereby they are paid according to seniority - will be phased out.
"A lot of junior partners get disaffected by what they see as unfair remuneration so a lot are moving to US firms where they can earn more money," he says, adding that a performance-related pay (PRP) structure is gaining favour.
But, while these schemes are intended to keep the troops happy, they don't seem to be doing the job. The Lawyer's survey reveals 55 per cent of firms with incentive schemes - mostly PRP - feel they are not beneficial. The schemes are described as "hopeless", "not genuine", "too small an amount" and, very commonly, "not linked to individual performance".
There is no doubt the £1m advert has attracted attention. Fox says QD received a "significant number of high calibre responses" just one day after the advert was placed.
The press, too, sprang to attention, with the Mirror gleefully quoting officials of trade union, Unison, who fumed that £1m would pay for 72 nurses a year. (Funny how no one kicks up a similar fuss about football players - Liverpool's Steve McManaman is allegedly being offered £110,000 a week to defect to a rival club.)
The Times, meanwhile, went as far as to suggest that no job was available, suggesting the advert was a cynical attempt by QD to dig out the names of highly-paid lawyers who might be interested in changing jobs.
"What a load of balls," Fox scoffs. "This is a real firm, with real needs which is offering real opportunities for serious lawyers."
The US stream into the UK, is not over yet it seems. Says Fox: "We are talking to a large number of US firms - as many as 20 - about the merits of establishing a presence in the UK whether by merger or association of separate office, and we would expect to see movement from some of those before the end of the year."
Watch this space.
The full report - Lawyer Motivation and Workplace Trends 1998 -is available from February, priced £125. Contact Claire Mould at The Lawyer on 0171-970-4000.