Commercial lawyers bring home big bucks

It is an unfortunate reality but lawyers the world over are caricatured as fat cats, in a league with politicians when it comes to making money.

But how close is that to the truth, especially in Africa?

Africa Legal tried to find out how much lawyers on the continent are earning.

There is obviously no accurate, comprehensive data to draw on, but there is some reliable data.

Darius Zeederberg, is head of global recruitment at GRM Legal.

His company’s research showed that, in 2018, lawyers weren’t better off than two years earlier.

A variety of metrics affect earnings, notably what education and experience they have, where they work and what law they practise.

GRM surveys lawyers in the three major centres of South Africa, namely Johannesburg, Cape Town and Durban.

Zeederberg said a legal firm’s business development initiatives, its embrace of technology and reputation also impact on earnings.

In a survey of practice areas, the corporate/commercial practices had the highest income, followed by dispute resolution and real estate lawyers. Within corporate and commercial, banking and finance law paid the most, with consumer/retail and mining coming in second and third.

Zeederberg said earnings were also linked to the performance of particular economic sectors.

GRM found that, based on information provided, the average earnings of lawyers in South Africa were:

Junior Associates earn on average R537 781 (US$38 210) per year.

Senior Associates earn on average R750 148 ($53 300) per year.

Partners/Directors earn on average R1 997 244 ($141 905) per year.

Equity Partners earn on average R2 880 370 ($204652) per year.

Managing Partners earn on average R3 203 375 ($227602) per year.

(The amounts are the total cost-to-company, including benefits but excluding taxes)

“While South Africa is seen as the gateway to Africa, one should be cognizant of the fact that other jurisdictions like Zambia, Botswana, and Morocco are showing consistent growth. For this reason, more international firms can afford to pay English and American qualified lawyers to relocate to Africa and work on cross-border deals 'locally' and/or open offices locally and compete with the typical remuneration structures,” Zeederberg said.

Mugambi Nandi, a senior partner at Kenyan law firm KN LAW LLP says big firms generally pay better and lawyers doing commercial work traditionally make more because the field is specialised.

“There is a factor of complexity, and less commercial lawyers, hence the demand.”

Andrew Turner, a partner with the global law practice Eversheds-Sutherland in Durban, South Africa, says that the firm is at the forefront of developing alternative fee models to offer clients value for money, specifically if transactions are multi-jurisdictional.

“I believe that reliance on the billable hour concept is diminishing...clients are particularly wary of the risk of runaway train bills. There are a number of alternative billing models designed to give clients budgeting certainty and more assured value for money.”

Fixed or capped fees for a project is a popular fee arrangement.

“This gives budgeting certainty to the client and forces lawyers to carefully scope out the work which they will be required to do so that only a variation in scope will trigger an increase or decrease in the original fee. This type of arrangement can be combined with a sharing of risk between the client and the lawyer. For example, if the project is successfully concluded then the lawyer will get a success fee, and if the transaction fails to close, then the client will receive a discount.”

Retainers are also popular for high volume, low-risk work.

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