The Law Society’s Research Unit is in the process of publishing multi-part assessments of the legal services market. The reports often confirm what we already know – for instance, that there are two solicitors’ professions, and aren’t the City types doing well, while those poor devils in the small and medium-sized firms are struggling somewhat?
I shall focus on a single aspect of the research, relating to the profitability of small and medium firms. We know that City lawyers’ earnings are generally in the stratosphere, but what do the rest earn? This is of particular interest because I have recently seen comparative lawyers’ earnings figures from a number of continental jurisdictions. It is instructive to see how solicitors in small firms fare in relation to their European counterparts.
Of course, comparisons should compare like with like, and that is one of the advantages of the continental study, which uses the same definitions across various countries. It has been undertaken by the bars of six member states - Germany, Belgium (French- and German-speaking lawyers), Spain, France, Italy and Luxembourg. A small working group of their representatives was established in 2010. The data relates to around half a million lawyers, roughly half the total number of European lawyers.
To start with solicitors, sole practitioners (if I understand the tables properly) had ‘mean profits’ of £40,000 in 2009/10 (which signifies the gross figure before deducting notional salaries and notional interest). This rose to around £60,000 per partner in firms with 2-4 partners; £100,000 in firms with 5-10 partners; and £140,000 with firms of 11-25 partners.
Of course, figures for lawyers on the continent are in euros (currently £1 equals around €1.16, although the ratio would have been different for the period in question.) The average annual taxable income in 2009 of lawyers in Belgium (French-speaking), Italy and Spain stood at between €46,000 and €48,000, where ‘average annual taxable income’ means gross fees minus expenses paid to third parties, operating expenses and reimbursements (employees, lawyers, bailiffs, experts, translators). It is interesting to note that the figures for these three countries stood within the same narrow band – and that the figures compare roughly with the figure that solo practitioner solicitors earned in the same period (of course we need to bear in mind that there will be differences of definition).
The UK is not alone in having two professions working side by side. The splits are somewhat different in other countries. So the German figures for 2008 show that the gross annual income of lawyers was €52,000 in western Germany but only €40,000 in the east. And in France, the average income figures are pushed up because of the earnings in Paris, which are 60% higher than elsewhere in the country. So, France’s average income did not sit within the €46,000-€48,000 band, but rather at €74,586.
There are other interesting outcomes. France has the most women lawyers among the six countries surveyed (at 50.9% in 2011), Germany the least (32%). Statistics like these might induce policymakers to consider why there are such wide differences among neighbours. There are 165 bars in Italy (161 in France), but only 28 in Germany – all the six have national bodies, but the local bars retain important regulatory functions. The number of lawyers per 100,000 inhabitants meanwhile was the lowest for France in 2011 (84 – but France has traditionally had a lower number of lawyers than its comparably sized neighbours), while there were 278 per 100,000 for Spain – and 359 for Luxembourg (which is thought to be due to the size of the country, its banking sector and its hosting the headquarters of the European Court of Justice in Luxembourg).
I would urge the Law Society to join the group of six, not only to bring its research expertise to the pool, but also to ensure that in future we have comparable figures from a wider swathe of Europe. Then we will really know whether we would be better off as lawyers in France – and, if so, we could ask the Law Society what it intends to do about it.
Jonathan Goldsmith is secretary general of the Council of Bars and Law Societies of Europe, which represents about one million European lawyers through its member bars and law societies. He blogs weekly for the Gazette on European affairs