The average salary for lawyers fell in 2010, according to PricewaterhouseCoopers’ (PwC) 2010 law firms survey.
The research found the steepest decreases were among the top firms, because the average wage for a London-based lawyer in a top 10 firm has dropped 10% from £64,200 to £59,000.
Matthew Thorogood, HR services partner at PwC, said: “Salary reductions have been one of many cost-cutting measures taken by law firms to preserve profitability in a tough market.†
“Lawyers have not been forced to take pay cuts, just smaller pay rises following promotions. But morale could dwindle unless firms find alternative ways to reward staff satisfactorily.†
“As the job market picks up, firms need to focus on motivating top talent or increased staff turnover will threaten profitability over the longer term.”
According to the survey, law firms have found paying a greater proportion of salary as a bonus proved a useful way of incentivising staff, while holding down fixed salary costs.
At the top 10 firms, bonuses paid to lawyers more than five years qualified were on average 20.5% of salary, compared to 15.1% in the previous year.
However, PwC’s survey found a quarter of legal staff do not have formal performance management discussions.
Thorogood added: “It is concerning such a high proportion of lawyers do not seem to have formal performance assessments. These are crucial to motivating and incentivising staff as well as changing behaviours and cultures.†
“Moreover, it is impossible to reward employees appropriately without systems in place to help measure performance. In times when costs must be spent wisely it is all the more important bonuses are targeted at the individuals who most deserve them.”†
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