Lack of lawyers to curb firms' growth

Demand for lawyers is still outstripping supply and this threatens growth in the UK's legal market more than recession, according to a survey released this week.Michael Page recruitment consultants canvassed 150 UK law firms and 340 in-house departments for its first national salary survey, which found that dramatic salary rises were over, but pay was still increasing at roughly half the rate of recent years.The fall-out from the 11 September terrorist attacks on America could putfurther brakes on salary rises, especially in-house, the company predicted.In London, newly qualified salaries rose by 11% in the top ten firms last year, by 5% in other large City firms, and by 10% in the West End.The average increases over the previous two years for the same categories respectively were 20%,11% and 21%, according to the survey.It found that the average newly qualified lawyers in a top ten London firm earn 50,000 plus bonus - compared with 32,000 in 1995.

The charge out rate for that lawyer has risen from 110 per hour to 160 per hour over the same period.In Leeds and Manchester, a three-year qualified lawyer's salary has jumped from between 29,000 and 31,500, to between 38,000 and 40,500, with charge-out rates rising from 100 to 140 per hour during the same five years.The majority of respondents (55%) found that a shortage of skilled lawyers was the principal threat to growth in the legal sector; only 6% considered recession to be a potentially limiting factor.However, the optimistic outlook indicated by the survey may be exaggerated as the data was collected before 11 September.Peter Thompson, legal operations director of Michael Page, said the events in the US have had no effect yet on salaries, but he said in-house salaries might be frozen shortly because of the general downturn.In addition, private practice lawyers who enjoy two salary reviews a year may see that drop to one, with a maximum 5% increase imposed on City salaries next year.He added that the provinces are less likely to be affected by recession, as they were insulated from some of the City's larger salary rises, and the speculation in the technology sector of the past couple of years.

By Jeremy Fleming