The corona period was good for the lawyer market: in the first corona year, contrary to expectations, there were record increases, especially among the lawyers representing the business sector. According to data collected by Adv. Dudi Zalmanovich, CEO of GLawBAL, the average profit then rose by 8% and the average income increased by 2%. In 2021, the boom in the field continued so that there was an average increase of 9.5% in revenue and 7.5% in profits, in all areas of law.
At the end of the corona years, Zalmanovich conducted a sample of the offices’ revenues and profits while comparing the years. In addition, the average salary data of the lawyers and the average salary withdrawals of the partners at the various ranks were examined.
The legal industry as a mirror image of the Israeli economy Interpretation
During the Corona years, the field of law gained a surge in demand. Initially, the law firms went on the defensive and prepared for sharp changes – cutting wages, deferring expenses and expelling workers to the IDF. But pretty soon the vast majority of law firms, especially the large “cream” firms, returned to work and improved performance.
The high-tech sectors, international transactions and mergers and acquisitions have reached a state of critical shortage of working hands, sometimes even to the point of impairing business performance. This situation has led the law firms to a wave of salary increases for interns and lawyers, so that the salary of an intern in large law firms today reaches NIS 11.5 thousand – an amount that is thousands of shekels higher than the public service, for example, or interns in small law firms.
Global data show that the trend that began at the end of 2020 continued into the second corona year as well: the peak was recorded in the capital market with a 17% increase in revenue on average. Mergers and acquisitions recorded a 16% increase in revenue and the high-tech sector also showed a 15% increase in revenue.
The legal industry actually reflects the processes in the Israeli economy. In 2021 trading on the stock exchange broke records. Nearly 100 new companies have registered in the local market, with the most prominent industry being high-tech. For comparison, in 2020 only 30 companies joined the Tel Aviv Stock Exchange and in 2019 there was a lower number of companies. The number of companies traded, including dual companies (traded in Israel and abroad), also broke records. Those affected by the spike in IPOs were lawyers. The high-tech departments have grown and the number of lawyers has skyrocketed.
Another interesting area is real estate, which the situation in the economy reflects the increase in demand. Revenues for lawyers for households in the real estate sector increased by 8%, by a considerable margin from the other areas for households. In the business sector, there has also been an increase in representation in real estate (7%), but in relation to other areas that have jumped, this is a moderate increase. Purchases of apartments broke records in 2021, as did apartment prices. Previously, mortgages were also recorded among mortgage takers.
Use feel
The data relating to revenue and profits in the Corona period were examined using two representative groups: one group consisting of 120 law firms of various sizes that provide representation to the business sector; And a second group of 150 offices that provide representation to the household sector. Both groups serve as an indicator of the activities of the various law firms.
The peaks in the business sector capital market and high-tech
The peaks in revenue growth in law firms in the business sector in 2021 were the capital market (17%), mergers and acquisitions (16%), commercial companies (14%), high-tech (15%) and litigation (12%). In these areas, gaps of 4% -6% were found between income and profits, so that for example in the capital market the increase in profits was 12%. Zalmanovich explains the gaps as a result of the high salary increases for lawyers in this field, which actually lowers the sector’s profits.
On the other hand, the data show that the areas of the business sector with the smallest increase in revenue between 2020 and 2021 are insolvency (3%), family law (4%), and labor law (5%). In the field of real estate for the business sector, an average increase of 7% was recorded and a similar increase was recorded in the field of taxation.
According to Zalmanovich, these days one can begin to see a slowdown in activity. “The legal sector is a key indicator of economic activity, both for better and for worse. Already today, economic activity is showing a slowdown in the high-tech and capital markets. What has not yet been reflected is litigation and real estate.”
As mentioned, there is a significant moderation in the field of labor law – while in 2020 there was an increase of about 14% compared to the year before, in 2021 we see a decrease of 5% in the increase in income.
The intellectual property offices whose activities accompany the world of high-tech, pharma and medical devices prospered in 2020 with an average 9% increase in revenue. In 2021 the trend moderated with a 6% increase in revenue.
In 2020, with the onset of the crisis, a slowdown was felt in the field of commercial real estate, but later the field flourished again. In 2021 there was an increase in demand for real estate offices (7%). In urban renewal projects.
Decreases in households Family and litigation
In the field of households, too, there has been an increase in income and profits in some areas, but still at a fairly large distance from the lawyers who provide services to the business sector. In 2021, there was a 1.4% decrease in revenue compared to 2020, and a 1.1% decrease in profits.
The areas in which there was a decrease in revenue in 2021 are family (4%), litigation (3%) and ongoing civic support (1%). On the other hand, the areas in which there was an increase in the representation of households are real estate with the most significant increase (9%), insolvency and collection (5%) and taxes (3%).
In 2020, the world of insolvency and oblivion was in demand (15%), although less than expected. This is due to the postponement of mortgage payments and business loans, directives of the Bank of Israel and the Supervisor of Banks to act with excessive blessings on debtors, easing the collection procedures towards debtors and enlightenment of “warning” periods.
In 2021, as mentioned, we see a moderation and a 5% lower increase in income in the household sector in insolvency. In the business sector, there was a 3% increase in revenue and a 2% increase in profits compared to 2020 – this is an area where the increase in demand was the lowest and is in a significant gap from most areas of law.
In the field of tax law – the tax ministries were required in 2020 to work in the field of grants and representation before the authorities, and here there is a similarity in demand between all types of ministries (an increase of 3% -4%).
In 2021, this trend continued in tax law and even intensified in relation to the tax offices that lend to the business sector (a 7% increase in revenue).
Salaries in small offices: half of the large offices
The data collected also refer to attorneys’ fees. In the past year, there has been an increase in the salaries of lawyers in large law firms. This, as part of the increase in demand in the business sector and the desire to recruit the best and most outstanding lawyers. Conditions have also been improved and the offices offer a package of benefits to balance work routine and leisure life. Office after office announced salary increases, and the salary of an attorney in his first year in the largest law firms soared to NIS 16,000 (gross).
Global compiled a sample of salary data in offices based on about 5,000 jobs. From the data, it appears that lawyers’ salaries are characterized by great variability – lawyers in sought-after fields receive tens of percent higher salary levels from their members in the same seniority. The level of conditions also varies between different groups of law firms and lawyers, their size, area of expertise and geographical location.
The data show that a lawyer in his first year in a small firm earns on average between NIS 7,750 and NIS 9,750 gross, about half of the salary of a lawyer in that year in a mega firm. In the second year, a lawyer in a small firm earns between NIS 8.5 and 10.5 thousand. Adults will earn between NIS 16,000 and NIS 19,000 a month.
In the third year, the salary will be NIS 17,000-21,000 in mega offices and boutiques. In the small offices, the salary that year will be NIS 9-11.5 thousand. Lawyers with 5 years of experience will earn 20-25 thousand in the giant offices, 17.5-20 thousand in the medium-large, 15-20 thousand in the small-medium and NIS 12-14.5 thousand in the small.
As of the sixth year, salaries in small firms are NIS 13,000-18,000, in medium-small ones NIS 17-25,000, in large-medium ones NIS 18.5-28.7 thousand, while in mega-offices attorneys will earn between NIS 14,000 and 32,000.
Partner withdrawals also reach 380,000
A sample of Global based on about 800 law firms, including law firms with 2 partners, along with firms with more than 100 partners, also provides data on the average withdrawals of partners in law firms – from salaried partners to the most senior, and even the few who attract hundreds of thousands of shekels In.
An examination of the partners’ withdrawals was made in relation to the positioning of the firm. A low-positioning firm is a firm that handles issues of low-priced households with a turnover of between 100,000 and half a million. A high-positioning firm provides service mainly to the business sector and large companies. Pricing is high and revenue cycles range from 800,000 to 1.4 million. The remuneration levels shown express remuneration from a fee only or as a burdensome salary including if it is an employee partner.
According to the Global model, junior and young wage partners with 8-14 years of experience, in low-level, first- and second-level positions, receive a monthly salary ranging from NIS 13,000 to NIS 28,000. These amounts include the cost of the employer. In large and medium-sized offices and high-position boutiques, the junior partner will receive about NIS 31,000 up to NIS 59,000 per month in the first years.
At the third and fourth level – in low-position offices, partners with 13-20 years of experience, attract between NIS 17,000 and NIS 48,000. On the other hand, in large and medium-sized offices and boutiques with high positioning, low-level capital partners or junior partners in boutiques, they attract an average of NIS 51,000 to NIS 108,000.
At the fifth level, the highest in the low position, the average number of withdrawals in small offices for longtime partners is between NIS 32,000 and NIS 66,000. In large, medium-sized and high-position boutiques, withdrawals reach a monthly average of about NIS 92,000 to NIS 151,000.
At the next level, where the seniority is over 25 years, the number of partners is decreasing and the amount of withdrawals increases from NIS 137,000 to NIS 250,000 per month.
At the next level are an even smaller number of senior partners whose monthly withdrawals average more than NIS 250,000 a month. At the highest level there are only a few dozen partners and they attract over NIS 380,000.
Annual GDP: NIS 20.2 billion
In 2022, the number of lawyers ever certified in Israel was over 90,000. Of these, about 75,000 are active: 40,000 men and 35,000 women. 50,000 of all lawyers in Israel were in Tel Aviv and the center. In general, there is one lawyer for about 124 residents in the country, and one lawyer for about 20 residents in Gush Dan.
The legal sector is considered relatively young with 70% of all lawyers being under the age of 40. In addition, 20% of them have only up to 5 years of seniority. According to a sample survey conducted by Global, the distribution of lawyers is as follows: about 55,000 are in law firms, about 13,000 in private legal advice, and about 8,000 lawyers hold a lawyer’s certificate and are not active at all.
According to a sample conducted by the company on the basis of bills for law firms and hourly income, in about 800 law firms, the annual product in law firms in Israel in 2022 exceeded NIS 20.2 billion. The product in the legal departments (private and public) is over NIS 4.6 billion per year.