New Zealand Law Society - Some trends in the make-up of our law firms

Some trends in the make-up of our law firms

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Growth in incorporated law firms

New Zealand law firms have been able to incorporate since the Lawyers and Conveyancers Act 2006 came into effect on 1 August 2008. While most law firms still operate as partnerships, there has been a steady rise in the proportion of firms which are incorporated. At 1 August 2016, 25% of our law firms were incorporated.

Incorporation is favoured by smaller firms. The average-sized incorporated law firm has 3 practising certificates, while the average-sized partnership has 4.5. The largest incorporated law firm in New Zealand has 28 practising certificates, placing it 29th in lawyer numbers.

Date

% firms incorporated

1 Aug 2016

25.4%

1 Feb 2016

23.3%

1 Feb 2015

21.0%

1 Feb 2014

18.7%

1 Feb 2013

13.0%

1 Aug 2008

0.0%

  

New Zealand law firm structure, 1 August 2016

Partners/Directors

Partnership

% Total

Incorporated

% Total

Total

20+

13

100%

0

0%

13

10 to 19

20

95%

1

5%

21

4 to 9

115

83%

24

17%

139

1 to 3

499

65%

266

35%

765

Sole Practice

785

80%

196

20%

981

Total

1432

75%

487

25%

1919

  

Gender of partners and directors

Just under 47% of lawyers who work in law firms with more than one practitioner are women. However, 26.8% of the partners and directors in those firms are women. This figure is moving upwards by over 1% a year: at the beginning of 2013, 22% of partners and directors were women. It’s important to note that over 60% of new lawyers entering the profession each year are women.

 

Date

% Female Partners/Directors

1 Aug 2016

26.8%

1 Feb 2016

25.6%

1 Feb 2015

24.6%

1 Feb 2014

23.5%

1 Feb 2013

22.3%

Law firms with more than one lawyer

There are differences in the proportion of women in senior leadership roles according to the size of law firm. The largest law firms in the country fare worst, followed by law firms with between 4 and 9 partners and directors.

Proportion of partners/directors who are women

Partners/Directors

1 Feb 2013

1 Feb 2014

1 Feb 2015

1 Feb 2016

1 Aug 2016

20+

20.0%

21.4%

21.7%

22.9%

23.8%

10 to 19

19.0%

23.1%

25.9%

26.7%

27.3%

4 to 9

18.8%

19.7%

21.2%

22.7%

24.9%

1 to 3

25.8%

26.6%

27.5%

28.2%

28.9%

Sole Practice

29.1%

29.9%

31.7%

33.2%

34.1%

The size of our law firms

The average New Zealand law firm is small. In firms with more than one lawyer, the average firm has 7.3 lawyers, and 82% of multi-lawyer firms have between 1 and 3 partners/directors. Overall, 51% of New Zealand law firms are sole practices with a single lawyer. Barristers are not included in this analysis.

Law firms at 1 August 2016

Partners/Directors

Firms

Practising Certificates

% Firms

% Practising Certificates

20+

13

1661

0.7%

21.2%

10 to 19

21

703

1.1%

9.0%

4 to 9

139

1642

7.2%

20.9%

1* to 3

765

2862

39.9%

36.5%

Sole Practice

981

981

51.1%

12.4%

TOTAL

1919

7849

100.0%

100.0%

*Practices with a single partner/director plus at least one other lawyer. 

For comparison, the latest available data from Australia is for October 2014 (The Law Society of New South Wales’ 2014 Law Society National Profile). Remembering that the Australian data is nearly two years old, New Zealand law firms have been converted to match the Australian size ranges:

 

Partners/Directors

Australia 2014

% Australia

New Zealand 2016

% New Zealand

40 or more

56

0.6%

5

0.3%

21 to 39

59

3.1%

7

0.4%

11 to 20

141

1.6%

18

0.9%

5 to 10

403

4.5%

83

4.3%

2 to 4

1696

18.8%

466

24.3%

1

6649

73.8%

1340

69.8%

Total

9004

100.0%

1919

100.0%

Employed solicitors to principals

Overall, New Zealand law firms with more than one lawyer have a ratio of 1.5 employed solicitors to each partner or director. This compares to a national ratio of 1.4 to one in Australia in 2014, with a ratio of 3.3 for firms with over 40 principals. Leverage rates at the top 15 United States law firms range from 2.09 to 5.8, while the rates among three New Zealand’s biggest firms are 3.4, 2.8 and 2.7.

Ratio of Solicitors to Partners

Partners/Directors

1 Feb 2013

1 Aug 2016

20+

3.1

2.8

10 to 19

1.7

1.5

4 to 9

1.2

1.3

1 to 3

1.1

1.2

Total

1.5

1.5

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