Quote:
Originally Posted by skydiver
I'm a 3rd year PQE in a Big 4 law firm. I'll be hitting Senior Associate within the next 3 months. I'd like to take this opportunity to clarify the salary structure within local firms. Here goes:
(1) Salary Culture Whilst local firms tend to set a low basic monthly salary, the annual remuneration is by no means unattractive. The annual remuneration mechanism is a very, very bonus-centric one, which involves a bonus component which pushes up the base wage by a minimum of 50%. A minimum 6 month bonus is given to flat-out average performers. Better performers typically get 7-8 months, while star performers (very rare) may get up to 9 or more. Anything less than a 6 month bonus is typically the firm’s signal telling an associate to leave.
In order to bring monthly take-home paychecks more in line with those offered by offshore firms, part of the 6 month bonus is set aside, divided by 12 and "front-loaded" into monthly paychecks. These are set out below in Paragraph (3).
The easiest way to calculate your annual pay is to take the following formula: (12 + no. of months bonus) * Basic Salary. Typical annual packages based on a ballpark average performance are set out below in Paragrapsh (3).
(2) Basic Salary schedule for the first 4.5 years:
Year 1 (NQ, 1st 5 months) - $4,000
Year 2 - $5,000
Year 3 - $6,000
Year 4 (SA1) - $7,200
Year 5 (SA2) - $8,500
(3) Take-home Salary schedule for the first 4.5 years (pre-CPF):
Year 1 (NQ, 1st 5 months) - $5,800
Year 2 - $6,800
Year 3 - $7,800
Year 4 (SA1) - $9,000
Year 5 (SA2) - $10,500
(4) Aggregate Annual Salary schedule (based on 6-8 months bonus, ie 18-20 months basic salary)
Year 1 - $30,000 over 5 mths.
Year 2 - $90,000 to $100,000
Year 3 - $108,000 to $120,000
Year 4 - $129,600 to $144,000
Year 5 - $153,000 to $170,000
It is thus clear that the yearly increment in annual pay is not $12,000. Since local firms pay typically 18-20 months of the basic wage within a year, the true average annual increment ranges from $18,000 (years 1-3) to $24,000 (year 4-5 increase), often outstripping the annual increment offered by offshore firms. As a result, the income gap between a Big 4 associate and ann offshore associate shrinks every year, and by the time a local Big 4 associate hits Year 5, his annual pay really isn't too far below what his peers in the offshore firms are taking. Furthermore, the move to offshore firms starts looking less and less attractive, given the better prospects of making partner within the next 3 years.
Final Note: These figures exclude the monthly S$650 employer CPF contribution as these are useless funds that go into your Medisave and Special Account. They can't be used to pay for housing (or anything for that matter), and in most cases, you will only smell these funds when you're way too close to your deathbed... Nevertheless if you wish to include this, you can add about $12,000 to each of the annual income figures stated above. |
Is this A&G's pay structure?
A 3rd year in offshore terms should equate to around NQ (2 years training contract).
Estimates for offshore associates in brackets:-
(4) Aggregate Annual Salary schedule (based on 6-8 months bonus, ie 18-20 months basic salary)
Year 1 - $30,000 over 5 mths.
Year 2 - $90,000 to $100,000
Year 3 - $108,000 to $120,000 [vs NQ 135,000 to 140,000 excluding bonus]
Year 4 - $129,600 to $144,000 [vs Y1 155,000 excluding bonus]
Year 5 - $153,000 to $170,000 [vs Y2 175,000 excluding bonus]
Bonuses for offshore firms should range from 2 to 3 months.
Year 3 - 22,500 to 33,750
Year 4 - 25,800 to 38,750
Year 5 - 29,100 to 43,750
What's nice in offshore firms is that there isn't the concept of front loading. A clawback may happen if one didn't work the entire year and left a big 4. This is because the front loaded component is also technically part of one's bonus but advanced in monthly terms to bump up one's take home salary. If one left before bonus was declared by year end, one technically ain't entitled to this front loaded component. It becomes naturally painful to leave late into the work year.
Depending on how one looks at it, one may say a bird in the hand is worth two in the bush. The idea of a basic salary supplemented by front loaded bonus and year end bonus, may not appeal to everyone. After all, bonus is discretionary and it would be clearer to compute and compare basic salary excluding bonus.
Remuneration aside, it probably still is easier to make partner in a local firm though. And culturally, local colleagues would be of similar minds. Whether an offshore firm is suitable or not, is also a matter of being the right fit and having the right character.
Also interestingly, of recent, some local firms appear to be getting top heavy and have faced an exodus of young associates or SAs. As part of this trend, some offshore firms are getting localised in turn. Maybe the good old days of guaranteed partnership after working a fixed number of years in a local firm are over? It remains to be seen. What is sure is the legal arena is changing, and it would probably be quite interesting in the next decade.
Young lawyers of today are probably quite lucky too - they have more options today.