Confidence building in Portuguese legal sector with more than half of partners in Portugal expecting a further increase in earnings in 2016
Half of the law firm partners in Portugal received an increase
in their income in the last year, according to a new remuneration
survey conducted by Iberian Lawyer. A total of 47 per cent of
respondents said their income was larger than it was 12 months
earlier. And the good news for law firm partners in Portugal does
not stop there, with 54 per cent of participants in the survey
saying they expected their income to increase in 2016.
In a sign that considerable confidence is returning to the legal
market, more than a third of law firm partners expect that their
income will increase fairly substantially in the next 12 months. A
total of 38 per cent of participants in the study said they
expected their level of remuneration to rise by nine per cent or
more in the coming year.
The best paid participant in the confidential survey – who
said their annual income was in the range of €1.3m-€1.4m
– said their primary area of practice was
"administrative and public law including litigation and
arbitration" and that they worked for a law firm that employed
fewer than 50 lawyers.
The second highest paid participant in the study – who
said they earned in the region of €950,000-€1m per year
– identified their primary area of practice as dispute
resolution and said they worked for a firm that consisted of
100-200 lawyers. The lowest paid respondent – with earnings
of less than €50,000 – identified themselves as working
in the area of real estate, construction and planning.
However, not all partners in Portugal are enjoying an increase in
income. A total of 40 per cent of participants in the study said
their income was the same as it was one year ago, while 13 per cent
said their income was smaller than it was at the same point 12
months earlier. In a similar vein, one in four partners in Portugal
(24 per cent) said it had been more than two years since they had
experienced an increase in their income.
Remuneration systems unfair?
Despite the fact that the income of around half of the partners did
not increase in the last 12 months, the vast majority of partners
in Portugal seem happy with their firm's procedures for
remunerating lawyers. A massive 87 per cent thought their
firm's remuneration system was effective, with only 13 per cent
not content with the way their firm's method of rewarding
lawyers.
The survey suggested that some firms need to alter their processes
for compensating lawyers in order to make them fairer. One partner
remarked that his firm's remuneration system "should
include key performance indicators for partners that positively
affected the highest performing partners and negatively affected
the non-performing partners". Another partner claimed that his
firm's method for financially rewarding lawyers was "not
flexible enough to allow younger partners to increase income in
proportion to their contribution to the firm's
results".
One participant in the survey said that his firm's approach to
compensating lawyers meant that partners were not able to devote
sufficient time to business development. The respondent said:
"The firm's remuneration system requires that partners
have the same amount of chargeable hours as juniors, which means
that partners do not have time for business development –
should they have time, the firm could bill a lot more and then
increase all remunerations."
Filipa Mendes Pinto, co-founder of Lisbon recruiter FIND, said
increased activity in the areas of corporate and M&A, real
estate, tax and arbitration has enabled some lawyers to increase
their income. She added that firms that viewed their activities as
a business and properly managed their careers and expectations of
their lawyers would be well placed to achieve further success:
"This includes, most probably, the need to introduce changes
in their remuneration policy and procedures, which must be
transparent, flexible and effectively rewarding."
Commenting on the finding that more than a third of partners in
Portugal expected their income to increase by nine per cent or
more, Mendes Pinto indicated that this was perhaps a little over
optimistic. "An increase of nine per cent seems too
high," she added. Though the highest paid participant in the
survey said they earned €1.3m-€1.4m, Mendes Pinto said
there were partners in Portugal with bigger incomes.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.