How much should you be paid in a law firm?

Last week, I shared that I’m not a fan of salary surveys as a guide for remuneration. Below is an alternative approach to take when reviewing remuneration.

How much should I be paid?

Who can relate to the following scenario?

You’re preparing a quotation for a client. You spend hours collating supporting information to analytically determine an amount to quote. After meticulously adding each line item, you finally press enter to calculate the total sum—only to be horrified by the number.

"That’s way too high. My client will never agree to that," you think.

So, in a matter of seconds, you do a quick thumb-suck, and voilà—that’s the new price.

Sound familiar?

The same applies to remuneration. Extensive analysis can be done to determine how much professionals at a certain level should be paid. However, in most cases, I would argue that the old economic principle holds true: “The value is what the market is willing to pay.” This is why salaries among large firms in the professional services sector tend to be quite similar.

If you’re a junior lawyer questioning whether you’re being fairly remunerated, rather than comparing your salary to a friend at another firm—who you 'know' is earning more—start thinking like a business owner (i.e., the Partners).

Are you a financial asset? In other words, do you bring in more financial value to the firm than you cost? This analysis can be as complex as you want it to be, but most firms follow a typical approach:

1️⃣ How much is this person expected to bill in a year?

2️⃣ What multiplier should be used?

3️⃣ Divide the total expected billings by that multiplier to get an approximate remuneration figure.

From this, three key dependencies emerge:

✅ Charge-out rate

✅ Expected billable hours

✅ Multiplier

In my opinion, these three dependencies should be the focus of internal remuneration discussions—not just the final salary figure. They vary from firm to firm and often slide based on seniority.

If someone at another firm is earning more than you, it’s almost certainly because the financial expectations of their role are higher.

Next week, I’ll share some thoughts on how each of these dependencies influences what is financially tolerable for you.

Let me know if you’d like to discuss your current situation or dive deeper into any of these concepts. I specialise in placing Partners and senior lawyers—if you’re based in Sandton and would like to meet for a chat, feel free to get in touch.