Changing of the Guard. A SMALL FIRM MAKES BIG CHANGES TO GET BIGGER RESULTS: “We’re changing our name, a rebranding to reflect the major changes we’re making,... Leading Successful Practices Through COVID-19—Learn from Your Peers and Pay It Forward: Recently, LawVision hosted a webinar for the members of its Practice Group Professionals... Standing Out in the New Norm: Be the Solution ...: The past few weeks have bombarded us with a constant stream of information—not only... COVID-19: How to Prepare for Potential Future Disputes. Pandemic-Related Uncertainty Means Business Decisions Will Be Highly Scrutinized.: As the COVID-19 pandemic continues to develop, guiding a business through this time of... Don’t Let Your Blogs and Content Fall Victim to COVID-19: With so many business and personal challenges brought on by the COVID-19 pandemic, it’s... Eight Ways to Keep the Business Development Engine Running During COVID-19: By now, most of you are settling into your new work environment. Some have greater... 16 Easy Ways to Network, Connect with Clients, and Build Brand While Social Distancing: ... your job right now is to lay the foundation for when things return to ‘normal’ -... Community News – May 2020: Snell & Wilmer is pleased to welcome new employment partner Gina L. Miller and new... A CORE VALUE of Giving Back: A LIFELONG TRADITION LEADS TO A LIFE - CHANGING CAREER - “My mom is a lifelong YMCA... 12 Productivity Tips When Working from Home: As I write this, many law firms are shutting down their physical offices and having...
Executive Presentations-468x60-1

What Is the Average Pay Raise?

When you employ law firm employees, the question often arises about what is the kind of raise employees should be given. Oftentimes, the question can arise at the end of the year because many employees expect yearly raises.

The question of “what is the average raise?” is problematic. Law employees often have expectations. Many of these expectations are not realistic when looking at national data and the finances of the firm.

It is true as well that while clients want to pay less in fees, employees want to make more. This is a catch-22 that is almost impossible to resolve.

Many of these employees who also want raises do not meet their billable hour or accounts receivables numbers, either. Still, if they do not get what they seek, many will be upset. Some will just grovel about it. Others may leave.

To know whether your raises are within the norm, looking at national averages can be helpful. Recent studies show that the average raise is in the 2.6 to 4.7 percent range. While this might not warm the hearts of some employees, the numbers make sense when you really think about it.

After all, how does a company generate more money to pay raises larger than that? To pay even 2.6 to 4.7 percent raises, they have to minimally increase the company’s net income by the same 2.6 to 4.7 percent. That’s not easy for most law firms. Some law firms might have net income that is steady (versus increasing). Some law firms could even have down years when it drops. For those firms, how do they give any raises?

Expenses also go up yearly in most law firms. For example, rent can increase. Overhead can go up as other outside vendors raise their rates and charge more on a yearly basis. Thus, to give a 2.6 to 4.7 percent raise, the net income of the firm probably needs to exceed 2.6 to 4.7 percent growth. To give bigger raises than 2.6 to 4.7 percent, the net income of the firm would need to follow the growth of the increased salaries (at the same rate at least).

In the end, you have to try to set reasonable expectations within your law firm. You also cannot raise salaries above a number where the firm will not be able to or will struggle to pay it. If you do, you will put the firm in a bad financial footing that can ultimately impact all the employees if the firm’s obligations cannot be met.

If some employees choose to leave, or grovel about it, it sort of goes with the territory of having a law firm. Try as you may, this is an area where it’s almost impossible to make everybody happy.

Kirk C. Stange

Kirk C. Stange is a founding partner of Stange Law Firm, PC. Stange Law Firm, PC has offices in the Midwest in Missouri, Illinois and Kansas. In addition to practicing law, Kirk spends time educating attorneys and other law professionals at CLE Seminars through the Missouri Bar, myLawCLE, the National Business Institute and other organizations. Learn more at: https://www.stangelawfirm.com.

More Posts

Digg This
Reddit This
Stumble Now!
Buzz This
Vote on DZone
Share on Facebook
Bookmark this on Delicious
Kick It on DotNetKicks.com
Shout it
Share on LinkedIn
Bookmark this on Technorati
Post on Twitter
Google Buzz (aka. Google Reader)
www.pdf24.org    Send article as PDF   

Filed Under: Business ManagementFeatured Stories

About the Author: Kirk C. Stange is a founding partner of Stange Law Firm, PC. Stange Law Firm, PC has offices in the Midwest in Missouri, Illinois and Kansas. In addition to practicing law, Kirk spends time educating attorneys and other law professionals at CLE Seminars through the Missouri Bar, myLawCLE, the National Business Institute and other organizations. Learn more at: https://www.stangelawfirm.com.

RSSComments (0)

Trackback URL

Leave a Reply

  • Polls