Monday 05 December 2016 10:45 AM
Top-10 law firm partners average $1.3m in billings a year
By Fiona Rotherham
Dec. 5 (BusinessDesk) - The 10 best-performing law partners in New Zealand earned average revenue of $1.3 million a year compared to the bottom 10 who averaged $422,800 per partner, according to an annual survey.
The survey of 41 law firms nationwide was conducted by the Australasian Legal Practice Management Association (LPMA) and Crowe Horwath. It showed the average revenue per partner was more than $803,171, a 12 percent rise on the 2015 survey.
Non-equity partners’ salaries averaged $171,000, 12 percent down on the prior year. The average firm had 4.2 full-time equivalent staff members per partner. Salaries for both fee-earning staff and non-earning workers also dipped this year to an average $74,000 and $52,000 respectively. That compares to the average hourly wage in New Zealand for the third quarter of 2016 of $29.84 an hour, or just over $62,000 a year.
The sector is more optimistic about the outlook, expecting an average of 5 percent growth in the next financial year while 74 percent of the firms surveyed expect revenue growth compared with just 53 percent the prior year.
Crowe Horwath business advisory principal Glen Gernhoefer said strong revenue growth was putting pressure on staff and capital capacity.
“Hiring expectations are very strong to help balance this with 94 percent of respondents expecting to hire new fee-earning staff in the next year,” he said.
The law firms surveyed had average operating profit margins – the amount available to partners before interest and tax - of nearly 38 percent, or $369,000, up 7 percent on the prior survey.
Gross profit margins, the amount left over after direct costs including fee-earner salaries, averaged 79 percent. On the expense side, rent was the largest cost at an average 6.9 percent of revenue.
While other professional service firms are now using more fixed-fee packages, the law firms showed a move back to hourly rates at 76 percent of those surveyed, up from 69 percent last year while only 12 percent did fixed fees, compared to 16 percent the prior year.