According to this article? in The Asia Lawyer? Employee salaries in Hong Kong are now catching up with those in New York. We recently reported huge affiliate salaries, and it seems that this is now reflected in the lower echelons of large companies with offices in Hong Kong. Some companies have chosen to reduce wages at all levels and reduce or eliminate bonuses to maintain the company`s cash flow during this period. We found that, in some cases, companies have decided to reduce salaries for support staff and employees to protect partner compensation. However, there have been cases where partners have borne the financial burden of the company in order to reduce the impact on the rest of the employees. EJ: Sometimes employees who make a side entry may negotiate to have COLA in their new company for the first time, even though their original offer may not include COLA (which is not uncommon for an LLM who is qualified in the US but does not receive COLA in their current company). We have seen a reduction in partner distributions due to lower profits and/or uncertainties regarding future settlements and recoveries. These reductions in partner payments are approximately 10-50% due to our field findings and have also sometimes differed between equity and non-financial partners. We will most likely continue to see some financially affected partner companies bear the financial burden of the company. On the other hand, we have seen many companies protect their partners and put the burden of financial pressure on junior and support staff. On the debt collection front, we typically see Hong Kong lawyers collecting an average of 80-90% of invoices. An interesting trend we`re seeing in 2021 is that some lawyers are recording higher revenues than bills as their clients have recovered and are now paying off their overdue accounts. There is an increase in the number of young lawyers focusing on less «traditional» legal models, including new developments such as; Legal technology, LPO and non-traditional law firms.
This would mean that there is currently a battle for the best lawyers. We have seen since 2009 that lawyers who are unable to achieve goals or build a credible registry are more likely to leave more traditional forms of private practice, take on more advisory roles, or even leave the practice of law in general. To retain talent in these uncertain times, we`ve seen companies choose to move associates to partners, presumably prematurely with little or no raise or other forms of compensation. Often, it`s more about paying employees with prestige because there is a lack of money or security to accept pay raises. Of course, we have also seen that partners in some law firms have made careers in a more profitable law firm as senior partners, but despite promoting the title, receive a higher salary and more benefits. YV: In Hong Kong, Mainland China and Korea, standard COLAs range from $50,000 to over $90,000 (all amounts are listed herein unless otherwise stated). A minority of companies reimburse 100% of tuition fees; And a smaller handful will provide partial school reimbursement to employees with school-aged children. Some firms give lawyers a COLA mark-up for each child (limited to two children), but this is not standard. We`ve seen countless high earners leave long-term positions due to salary cuts, requests to refinance the company, etc. As a result of salary cuts, benefit cuts and unreasonable increases in targets, the number of high-level lawyers moving to other law firms or becoming self-employed has increased.
Large international law firms have the capital to be more structured in their approach to compensation and overall partner performance. In some cases, we find that some associates` costs are higher than their bills, but they bring necessary or additional benefits to the business, such as additional employment equity points or skills shortages. EJ: Since COLA is income, it is considered part of your taxable income. It`s literally a lump sum of money you receive on top of your base salary and bonuses. As with any special or COVID bonus or additional signature that a lawyer receives, they must pay taxes on any COLA received. EJ: The main trend we have observed is that COLA is not explicitly included in the lists. However, many companies omitted COLA in their offer letters before the pandemic – perhaps they didn`t want to put their COLA amounts in writing for fear that such information would be shared with their competitors – but it`s something we`re seeing more post-pandemic experience. We`ve found that there needs to be a little more proactive questions about COLA in the supply discussion to ensure it`s part of the offer. Wage cuts have been observed across Asia.
Among law firms that make salary cuts, most companies opt for around 5% to 10%, but some firms have found that they implement cuts of up to 30-50%. There have been instances where these cuts have been described as temporary rather than permanent. Given the Covid restrictions, law firms have in many cases been forced to hire certain employees, such as: Administrative staff, to work from home/remotely. As a result, many companies have taken a more flexible approach to office design and working hours. Since actual physical office space is less critical for fee revenue, we correctly predicted an increase in the number of partners managing smaller teams within a larger corporate banner. Law firms have placed more emphasis on communicating with partners who are able to provide a transferable ledger that shows both their past and current holdings and future projections. This makes the process of hiring partners more rigorous and time-consuming than junior hiring, as companies need to ensure that the partner is able to add value to the business. «Some companies reimburse tuition fees (partially or totally). Some companies also give a lawyer (and possibly their spouse and children) «home» airline tickets once a year as part of the package package. There are many cases where some companies have been able to maintain their annual bonus (whether it is a reduced amount or based on performance), salary increases, as well as promotions (which we have already mentioned, such a promotion was not necessarily associated with a salary increase). We spoke to many partners who pointed out that payments have been reduced and, in some cases, even reduced to affiliates to protect cash flow during this time.
Law firms in Asia and law firms around the world immediately had to find ways to protect their income and profitability and find various cost-saving measures. As we now enter a period of acclimatization to constant disruptions, lockdowns, riots and the like, we are seeing many law firms continue to recover from the initial negative effects of the Covid-19 pandemic. Evan Jowers: COLA stands for Cost of Living Adjustment. This is usually a lump sum paid in addition to a lawyer`s base salary and bonus. Traditionally, COLA has been paid to employees on a monthly basis or in addition to each paycheck, but some U.S. companies in Asia are starting to pay COLA as a special annual bonus (i.e. paying an annual lump sum). Percentile wages tell us how much a certain percentage of a total sample is in a particular geographic area or industry or field. In other words, percentiles indicate the percentage of wages that fall below a certain value. Percentiles are useful for understanding salary ranges because they tell you where a salary compares to other salaries.
«The norm for the majority of U.S. companies abroad is to have a fixed COLA number, regardless of factors such as seniority, whether or not an attorney moves with a spouse joining them, or whether or not an attorney has school-age children.» AL: No.