As more and more global firms enter Australia, the country’s law firm hierarchy has shifted and the gap between top-tier and mid-tier salaries is closing.

According to Mahlab’s 2011 Survey, global law firms are poaching lawyers from national firms. As a result, Australia’s large law firms are having to reshape their o_x001E_ffering and make dramatic changes to their equity holding and partnership as a whole.

A candidate-short market has meant that firms across all tiers have had to do more than offer a good salary to attract talent in 2011.

"A competitive salary is critical, but it’s no longer enough,” says Mallesons Stephen Jaques executive director of people and development Cathi Bawden._x001D_

“It’s the broader offering, the career care, individual support, flexibility for different career and life stages.”

But while Australia’s national firms are fighting off_x001E_ the onslaught of global firms, Australia’s mid tier is quietly creeping up on the country’s top-tier firms when it comes to salaries, quality of work and firm culture.

With the current candidate shortage across the legal industry, particularly in the energy and resources and banking and finance areas, the recruitment market is becoming more and more competitive, generating stronger salaries as well as the use of sign-on bonuses in

some cases. And the mid-tier fi rms are putting up a good fight in the war for talent.

“The Australian private practice market is redefining long-held beliefs of what constitutes ‘top tier’,” the Mahlab report states. “Market-leading remuneration has traditionally been o_x001E_ffered by only top-tier firms. Those firms are no longer the only firms offering market-leading remuneration.”

In 2011, several mid-tier law firms snapped up a number of high-performing partners from the top tier, with the lure of competitive salaries, high-quality work and an attractive firm culture.

Carter Newell’s chief executive o_x001D_fficer, Dr Peter Ellender, says while the firm has had di_x001D_ culty finding the right people over the last 12 months, given the significant candidate shortage across the market, the mid tier is increasingly competitive when it comes to salaries.

“We certainly have experienced the war for talent in the resources, construction and engineering areas in particular,” says Ellender. “It’s more access to people rather than a pure salary move, but it obviously does put pressure onto that side of the market.

“I think there’s a closing of the gap or a leveling o_x001E_ff, certainly,” he says, “The mid tier has the advantage of the cultural benefits and the higher retention rates, but still some very excellent work that good quality specialist candidates can sink their teeth into.”

As the hierarchy of firms shifts, Mahlab notes the number of partners which have relocated from the top tier in favour of smaller firms, often taking clients and teams with them.

“In the last 12 months, many mid-tier firms have benefited from this shu_x001C_ffling for position at the top, recruiting partners and teams and applying traditional ‘top-tier’ remuneration to new and existing staff,” says the Mahlab report.

According to JLegal’s Private Practice Overview, the mid tier’s high standard of work which has been attracting top talent this year is due to an increasing focus on cost-cutting amongst clients.

“It is not only due to the mid-tier firms and boutiques paying their lawyers market-leading salaries that they manage to attract the best lawyers; these firms also attract the ‘big players’ as clients,” says JLegal. “With a focus on cost cutting and saving, large clients are transferring their

work from the top fi rms to mid-level firms and as such, boutique and mid tiers can now also guarantee the highest quality of work that once only the top tier could o_x001E_ffer.”

According to the Mahlab Survey, Sydney senior associates and special counsels can earn up to $250,000 in top-tier/major firms and $195,500 in mid-tier firms, while at small/boutique firms they can earn up to $180,000.

In Melbourne, senior associates/special counsels can earn $200,000 in the top tier, $183,000 in the mid tier and $160,000 in smaller firms.

At the partner level, Perth partners earn $1,325,000 at the top tier, while mid-tier partners rake in about $745,000.

In Sydney, the gap between the top and mid tier is slightly smaller, with partners at top-tier firms earning $1,380,000 and $856,000 in the mid tier.