Like it or not, global and local economics and a fiercely competitive legal services market will play a major factor in how firms handle imminent salary negotiations as well as lateral recruitment in the short to medium term.
For lawyers, it is important that you are aware that the market has changed and continues to do so. Top performers will continue to be well rewarded, but for the majority of lawyers the next 12 months will continue to see a shift in the balance of power at the negotiating table. No longer can you stake your claim “or else” because you may find that your firm – and the rest of the market – have changed their views about your worth. Now, more than ever you need to be smart and strategic about managing your career.
The most successful lawyers will be the ones who understand the changing market and have the self-awareness and commercial acumen to adapt. There are many lawyers working in firms currently earning a salary that was negotiated in “headier” times, perhaps on a lateral move from another firm. These lawyers will need to ensure that their performance measures up because in this more conservative, cautious and profit-challenged legal business environment firms will be concentrating on getting a sensible return on their investment in individual lawyers and less likely to persist with under-performers or tolerate the mis-guided and naive salary demands of average performers.
This also potentially spells danger for some lawyers who think they can just jump from firm to firm to secure a higher salary and continuing to under- perform because that will no longer be tolerated – it catches up with them eventually and it doesn’t end well.
Come salary review time this year (and when laterally recruiting) firms will feel less of a need than previous years to build in any particular increase on their lawyer salaries just to keep or attract them. The high performers will continue to be handsomely rewarded, as they should. But those lawyers whose performance hasn’t been on target should be more measured in their salary expectations and carefully negotiate with their employers accordingly. Do not just expect an automatic increase simply because you have one extra year’s PAE, because for many it simply will not happen and you will be disappointed.
Understand that your firm is a business and that you are a “Business of One”. So be commercial, not naive about how you manage salary negotiations. Don’t pitch a number that you have seen in some worthless salary survey – be smarter than that. Understand what value YOU bring to your firm and how they value it. Treat your salary review and the next 12 months as an opportunity to “do a deal” with your firm. Tell your employer what you want to be earning in 12 months time and then ask them what you need to do in their business to be able to earn that sort of money. Be very clear about what’s required of your performance. Document the deal and use its contents to develop your personal career plan for the year ahead. If you then go on to deliver on your part of the bargain then you should expect to be rewarded.
Above all, be aware of the changing market and your firm’s expectations of you. Know your own value proposition and negotiate a deal. Be a Business of One.