COVID has culled jobs and chilled wages across the global economy, and the legal profession has been no exception. Top law firms cut hours and pay by 20%, while barristers sought other jobs as their chambers emptied through COVID. Even as the Australian and New Zealand economies recover, wages remain stagnant, stifling career growth for many across the profession, especially younger members. Despite the prevailing climate, some commentators are calling for professionals to ask for pay rises to push economic growth. Insights explores the economic outlook for law firms and lawyers as our region emerges from COVID, and how to forge forward with your career.
Law firm earnings resilient
Insulated by our rapid COVID response, Australia’s legal profession has come out well, despite downturns in some areas. Law firm earnings were reportedly buoyed by ongoing regulatory work from the Royal Banking Commission, which triggered significant growth in compliance roles across the sector.
While the legal profession was not as adversely impacted as other industries, revenues are still expected to decline 2.5% over the course of 2020-2021, according to an IBISWorld Industry Report.
M&A, IPOs and restructuring have led the decline.
The upshot for lawyers is simple: follow the work, and specialise in new areas where necessary.
Wills & Estates, Litigation and Employment Law leading recovery
Supported by our consistent post-COVID response, IBISWorld predicts legal revenues will grow over the next five years as demand from businesses and households recovers.
Several areas are leading the recovery, including Wills & Estates, Litigation and Employment Law. Demand is also expected from property operators and developers, and banking, finance, and insurance firms. Larger law firms are expected to continue their trend towards offering diversified multi-disciplinary services, including advisory services, to stay competitive.
Indeed, the present mortal threat of COVID caused a 20 per cent spike in estate planning queries, according to Australian Unity Trustees national manager of estate planning Anna Hacker.
“As the realities set in, we anticipate that more and more Australians will seek peace of mind. A considered estate plan, including a valid will and powers of attorney, can ensure your wishes will be met regarding your medical treatment, care for your children, and distribution of your estate,” Anna told Lawyers Weekly.
“People with existing wills are now seeking to update them,” A.B. Natoli Lawyers and Notaries associate Thomas Natoli told Lawyers Weekly. “Estate plans are tailored on the basis of anticipated asset values, and family circumstances. Where shares and superannuation in particular have taken huge hits, of up to 15 per cent in some cases, people are readjusting their wills to achieve a fair and balanced outcome.”
Beyond COVID, Australia’s aging population – exacerbated by our closed borders – is likely to continue to drive growth in this area of law.
Why you should ask for a pay rise
Australia’s mixed economic climate is provoking economists to push Australians to ask for pay rises.
“Right now, salary growth is bouncing around the basement; with each successive year laying claim to the lowest growth on record,” observed ABC Business Editor Ian Verrender.
“In the past year, wages were on the mat rising a paltry 1.4 per cent. During the past four years, the snail's pace increments in pay rises for most Australians has been a key factor in the Reserve Bank's inability to achieve its inflation targets. Low inflation, excess capacity, burgeoning debt, underemployment and weak wages growth was putting a handbrake on the economy long before last summer's fires ravaged the east coast and the pandemic forced Australia shut itself off to the rest of the world,” explained Ian Verrender.
The solution, he argues, is to rethink policies which dampen wage growth in favour of company profits.
“Just as the increased JobSeeker payments helped us power through the worst of the pandemic lockdowns last year, as the unemployed spent that extra cash, most economists now argue that higher wages would result in more spending that eventually would lead to bigger profits. A "trickle-up effect",” argued Ian.
“If you really want to do something patriotic this year, if your fervent wish is to help our economy recover from the debilitating impact of the pandemic, you have the power to do something. Demand a pay rise!”
How to ask for a pay rise
Despite this passionate economic arguments, it’s important to keep COVID in mind – and your expectations in check – when requesting a pay rise.
"You need to look at it from your boss's point of view,” Charles Cotton, a reward adviser at the Chartered Institute of Personnel and Development, explained to The Guardian. “They must justify giving you extra money to their superiors, so if you give them something in writing they can refer to it is a definite plus.”
Quantify your achievements wherever possible, showing how they exceed targets and concretely contribute to revenue, if possible. Matching your work against your job description can also help to demonstrate how you might have exceeded your targets.
"Most bosses understand the world in figures,” recruitment coach Jenny Ungless told The Guardian. “So if you can show your boss you've exceeded targets by X amount or attracted X number of new clients to the firm, then it is a much clearer estimation of your value.”
Make a business case for your pay rise. For example, you could offer to expand your employer’s revenue base by upgrading your knowledge and diversifying their service offering. Even if this does not result in an immediate pay rise, it can put you on track to receive one should you hit your goals.