“No, when I say nothing, I don’t mean next-to-nothing,” says S, a junior associate at a prestigious law firm in Lahore, speaking on the condition of anonymity about his salary at the firm. “The next-to-nothing guys are still lucky enough to be able to cover their fuel costs. Me, I’ve had to mooch off my folks, even for petrol.”
“Look, I’m not running an episode of Suits in my mind. I live in the real world. I’m not comparing my salaries with what my classmates at university in the UK are now making,” he said. “But the next-to-nothing guys aren’t even making a legal minimum wage. And I am not making any wage at all.”
“The guy who serves tea at the office, nice fellow; we all play cricket in the street behind us whenever we get free early. I hope he gets a raise, specially with his wedding coming up in a couple of months. I’m just saying that between the two of us, he’s the one earning a wage, not me, with my fancy degree that my folks paid through the nose for.”
S is not alone. Consider M, a fresh graduate of the law program at LUMS, working at a similar top firm. It’s a nine-to-nine workday for him, the lulls in between which he squeezes in his work as a research assistant for a previous professor. But it doesn’t stop there. He works as an InDriver driver at night after work and on any Sundays he has free time. Three jobs just to be able to have a roof over his head.
Despite the fact that he had paid a total of almost Rs 60 lakh for five years of law school, his seniors deemed him unable to contribute sufficiently to his workplace and therefore, he earned Rs 5,000 less than the minimum wage mandated for unskilled workers– even though he is very much a skilled professional: a junior lawyer in Pakistan.
M, however, seems to have internalised this scheme of things. When asked whether he felt exploited by the partners at the firm, he defended them, by saying they were kind to him. An example of the aforementioned kindness? His water geyser broke down last week, which he obviously couldn’t pay to fix. “So the seniors let me shower at the office.”
The eminence of wage exploitation in law firms became a prominent topic of discussion earlier last month when junior associates and lawyers began revealing the disproportionate nature of their remunerations at leading law firms on social media. Quoting an average of 10 hour work days, sometimes seven days a week, junior associates said they were barely paid minimum wage for their contributions.
This piece is about the wages at leading law firms in the country and not the single-lawyer small outfits which form the bulk of the manner in which law is practiced in the country. It is necessary to point out that the term “leading law firm” is not used loosely but refers, throughout this piece, to the category of Pakistani law firms with international accreditations and rankings on the Legal500 and on the Chambers and Partners.
However, in conversations with Profit, as well as through their own opinion pieces in newspapers, the senior partners of these firms seemed to reassure us that there were actually good reasons for these almost exploitative underpayments. For instance, according to Abdul Moiz Jaferii, senior partner at HWP Law, junior lawyers are underpaid because law firms simply can not afford to pay them. According to Waqqas Mir, senior partner at Axis Law Chamber, the nature of exposure and learning provided by firms compensates for the absence of a minimum wage. To a senior associate at ABS, the nature of payments received poses logistical restraints to payments. And to Feisal Naqvi, senior partner at Bhandari Naqvi Riaz (BNR), the cyclical payments and inexperience of junior lawyers made them difficult to reward, as written in his article, “Lawyering and its discontents”.
Overall, Profit recognized three overarching categories of reasonings: the size of the market for legal services in Pakistan, the nature of payments and unaffordability, and the inexperience and inefficiency of junior lawyers. In line with the legal industry’s embedded culture of seniority, we will begin by verifying these reasonings first.
- Size of the market
One of the underlying arguments surrounding this debate is that there is inadequate demand for legal services in Pakistan.
Intuitively, this makes sense. Consider not only the costs and inefficiencies associated with the country’s judicial system but also the alternative avenues available for conflict resolution. A large majority of the cases filed in court, from civil litigation matters of land grabbing, to corporate cases of financial transactions can be resolved or achieved through either implicit payments to third parties or through out of court arbitration, amongst other ways.
This, according to some members of the legal fraternity, means that not only are legal services undervalued but there are also very few people and organizations willing to take the legal route and pay for the service. Therefore, since the size of the pie is small to begin with, the portion cut out for junior lawyers has to be even smaller.
However, Profit did a small exercise to assess if the legal services market is actually as miniscule as is famously insinuated. The financial reports of five top companies listed on the Pakistan Stock Exchange, namely: Fauji Fertilizer, Habib Bank, Mari Petroleum, Millat Tractors, and Indus Motors reveal an aggregate of Rs 1.6 billion spent on legal and accounting services. Even if we were to assume that half of this amount spent by these five companies is spent on accounting and audit reports, the remainder is still a substantial figure of around Rs 844 million for only five companies – which does not necessarily make for a small pie.
There are some caveats to this approach, most prominently that this ballpark figure does not reveal whether the Rs 844 million is being paid to one, five, or twenty law firms. Instead, this exercise only helps encapsulate the overall size of demand for legal services. As law firms have numerous branches of legal practice and specialization, it is common for businesses to hire more than one law firm for their tasks. Resultantly, the amount of money a company pays for legal service does not necessarily equal the amount of money a particular firm earns.
- The unaffordability of law firms
Another more compelling, but equally difficult to verify claim by senior partners is simply the unaffordability of law firms to pay their junior associates.
It is imperative to note that in his conversation with Profit, Jaferii clarified that unaffordability stemmed from the nature of payments and not the overall amount received. He explained, “law firms receive cyclical payments instead of constant payments, as pointed out by Feisal Naqvi as a result of which attempts to keep overheads as low as possible need to be made.”
Naqvi elaborates on this in his article as well. Apparently, the litigation fees paid to law firms in Pakistan are paid on a lump-sum basis, meaning that the entire payment is received before the case begins and therefore, as the overhead costs increase, the amount taken home by the senior counsel decreases. It would be a fair assumption to make that these lump-sum payments that Naqvi was referring to were specific to the business model of his own law firm, BNR. But that is not necessarily the case.
Trying to understand all the income streams of law firms is like playing with a Matryoshka doll. The lump sum and cyclical payments referred to above, therefore, are only one of the many wooden dolls in a very extensive stack. Lets look specifically at Naqvi’s firm. To assume BNR is potentially unable to fairly compensate its junior lawyers because they are not recipients of an unimpeded revenue stream is not only an incorrect statement, but also one that is unfair.
This is where we introduce you to a retainer agreement. A retainer agreement is a work-for-hire contract wherein an advanced retainer fee is paid by a client to a service providing firm to reserve their services for any future requirements. This means that not only is it paid on a monthly basis, but it is also paid regardless of if any work is carried out by the firm and without the firm sustaining any overhead costs. Interestingly, not only does Naqvi’s law firm BNR have a retainer agreement, but more importantly, they have it with META, formerly known as Facebook Inc, with a fixed monthly income of approximately Rs 1.5 crore.
Additionally, senior partners at law firms are also advocates of the Supreme and High courts of Pakistan, which command high representation and consultation fees. Profit was able to quantify and specify the amounts by reaching out to some clients who had hired such lawyers for either their Supreme or High court cases. Resultantly we found that in 2020, a very popular senior advocate charged a minimum fees of Rs 50 lakhs, a figure that is likely to have increased substantially since, while a former attorney general’s minimum fees is currently set between Rs 1.5 to 2 crore per case. According to BNR’s secretary, the hourly consultation fees for the firm’s senior partners – Feisal Naqvi, Uzair Bhandari, and Iftikharuddin Riaz – is set at a minimum of Rs 50,000 per hour for a fresh case of arbitration at the civil court.
Moreover, when Profit spoke with over 10 junior lawyers currently working at Pakistan’s leading law firms, they all disagreed with the claim that their low salaries were associated with the problem of high costs and low revenues. One of them explained why he believed there was a disproportionate relationship between the inflow and outflow of cash at his firm. “My firm quotes $ 250 USD (Rs 69,218) per hour– yes, you read it right, to foreign clients for us junior lawyers working on the project. We don’t even get paid Rs 69,000 per month let alone per hour, so where does that money go?”.
Lets build on this information. If one of these top law firms has three senior partners, each of whom take up a minimum of two Supreme court cases per year, even this could guarantee a minimum baseline figure of Rs 1 crore coming into the firm. Additionally, if that firm also has a retainer agreement, that guarantees a fixed monthly revenue without any simultaneous costs. Foreign clients such as the World Bank Group, International Finance Corporation, and Saudi National Bank – all of whom work with Haidermota & Co Advocates – are not only likely to pay a fees higher than Pakistani clients, but are also receptive to hourly billable charges as was revealed by the junior lawyer.
The absence of verified, exact figures is due to the fact that the law firms we are investigating are private entities who are not required to disclose their financial statements. This makes it difficult to assess precisely the gap between what senior and junior lawyers make, as data remains primarily anecdotal. Salman Ijaz, from the law firm KhanIjaz refers to this as the culture of secrecy within the legal profession, explaining that it’s normal for lawyers working together to be unaware of each other’s monthly take home salary.
However, conclusively, this problem highlighted by both Jaferii and Naqvi seems to be a very simple oversight in the business model law firms follow. Even if we were to assume that the only inflow of money in law firms was through cyclical lump sum payments, following a cost-plus model wherein the selling price of a product is determined by adding a specific fixed percentage or markup to the product’s unit cost could solve the issue of unaffordability.
Perhaps hiring a financial analyst or accountant could help achieve this, but that would be an ironic recommendation to make while investigating the case of underpayment and exploitation of employees at these firms.
- Junior lawyers bring nothing to the table
The third point of contention is the inexperience and inefficiencies of junior lawyers. This translates further into two problems: according to Naqvi, since junior lawyers are unable to save time or decrease any overhead costs, their contributions to the firm are limited making it difficult to remunerate them more generously. Moreover, according to Mir, this inexperience also means that firms spend the first few years investing resources and time into training a junior lawyer and getting them more experience in the field with very little returns.
In his conversation with Profit, Ijaz explained why he believed that this alleged inexperience of junior lawyers could not be responsible for the skew in law firm salaries. Ijaz confirmed there is a plethora of different types of tasks carried out by junior lawyers when they first begin working, from less skill based work like arranging files and securing a court date from the judge, to more skill based work like legal research and writing. In both cases, he explained, junior lawyers must at least be paid minimum wage– Rs 32,000, without question.
- What can be done?
Underpayment on the basis of inexperience has long been a trend in the legal industry. The Practitioners and Bar Council Rules of 1976 lay out the requirements for attaining a legal license, which includes a six month unpaid pupilage which must be completed to become eligible for a license.
Jaferii claims that something similar must be reintroduced, like an apprenticeship where, unlike a formal employment contract, junior lawyers receive a fixed monthly stipend. This could help bridge the gap between their theoretical learnings at law school and the real legal practice in the industry.
However, Ijaz’s support for such a scheme was layered in skepticism over its potential to be exploited with students working full time as apprentices without any wages. He recommended strict regulation.
According to Mir, he worried that imposing a minimum wage would create structural unemployment in the more widespread practices like the law chambers. instead the wage flooring should be set according to the law firm’s market size. This means that the wages paid should be reflective of the proportion of the market that the law firm leverages.
Moreover, in his comments to Profit, Dr. Ikram Ul Haq, Advocate Supreme Court and Partner at Huzaima Ikram and Ijaz, had a few bones to pick with the Pakistan Bar Council and the Senior Partners in question. According to Haq, “If the problem of inefficient junior lawyers is so widespread, then a structural change within the profession needs to happen where law firms provide internships to enrolled law students to make sure they have experience before they graduate.” He further added that the legal industry should look towards the structure of chartered accountancy in Pakistan, but the Bar Council’s sole concern is raging politics and creating more lawyers who can partake in vandalism during the riots and marches mandated by the council.
Firm vs Corporation
A firm, in business terms, is an enterprise or company that is widely associated with a partnership model. On the other hand, a corporation is a company or organization that is authorized to act as a single business entity. A corporate structure, therefore, consists of various departments that all contribute to the company’s overall mission.
As an overarching solution to the presence of exploitation and underpayment in law firms, Haq suggested that an adaptation of a corporate structure has become integral in Pakistan’s legal industry– particularly in its law firms. The notion of law being a one man show must end in order for junior lawyers to be paid what they deserve, because as of now, Senior partners believe they run the show because that is how people have made them to feel. “These big lawyers want no change either. They know law is a service based on face-value and so even if they (lawyers) take 10 cases a year they can make up to Rs 10 crore, some of which is given to their clerks, some to cover fixed costs, some to junior lawyers, and a majority to themselves.”
A corporate structure prevents this from happening as it recognizes the designated work for each department and allots remunerations accordingly. However, since this would also prevent partners from taking home the bulk of the money, it is unfortunately overlooked.
- Why is this even important?
From the beginning of this debate, there was an underlying attitude amongst senior partners that the conversation around junior lawyers getting underpaid at top tier law firms was not only insignificant, but also a non-issue.
When Profit spoke to Mir, for instance, he expounded that the debate was elitist and that elite law firms made up a very small proportion of legal services in Pakistan. For Mir, complaints made by junior lawyers about getting paid Rs 40,000 per month stemmed from sheer privilege that needs to be revisited.
When asked about the absence of a set career trajectory at law firms that would help junior lawyers manage their wage expectations, Jaferii stated, “Yes there’s a lot of conversation that needs to happen in the legal profession but a lot of it is far more important than a young lawyer’s career trajectory. We must discuss that there is a consequence to lying in court, a consequence to delaying cases for years…”
While the claims of both Mir and Jaferri are important, to categorize this debate as insignificant because law firms are a niche practice or that the junior lawyers in question come from a particular socio-economic class is inequitable. To put it in legal terms, it sets a terrible precedent of exploitation amongst the top of the legal profession hierarchy, which normalizes the culture of underpayment in the rest of the industry.
Ijaz surveyed 139 respondents to gather the remuneration figures at over 40 of Pakistan’s leading law firms. The data is compiled in this spreadsheet and it largely confirms the claims of wage exploitation.
Let’s be clear. The term wage exploitation does not simply mean a junior is not paid according to what he/she deems sufficient, rather it is used in comparison to the minimum wage set for unskilled workers released by the Employment Federation of Pakistan.
Profit reached out to Naqvi for clarifications on the matter of the applicability of the minimum wage in the legal industry. Naqvi replied stating “The short answer (to this question) is that I do not know… I do not know if the minimum wage applied to lawyers. And assuming it does apply, I am not sure how other lawyers justify paying less than minimum wage.” He was further able to confirm that BNR now offers starting lawyers Rs. 40,000 and above.
In his comments to Profit, however, Salaar Khan, associate partner at AJURIS, explained that the absence of a minimum wage was just the tip of the iceberg. According to Khan, many regulations, such as the Provincial Shops and Establishment Ordinances and Acts which provide for how long a work week must be, the rules around sick leaves and so on are also not applied to law firms despite their applicability. He explained that the problem was fundamentally of a disinterest in enforcing these regulations, including the minimum wage, as is depicted in the informal nature of employment in law firms where sometimes even a formal contract is not used for junior associates and also in the absence of any supervision by the Bar Council– which as Khan explained, under the Legal Practitioners Act does have some responsibilities in this entire matter.
The truth is, that the irony of hiring a law firm for matters of labour exploitation would be glaring unless these practices are improved. As of now, legal practice in Pakistan remains exclusive and inaccessible to women across all socio-economic backgrounds owing to its deeply patriarchal structure. Further barriers to entry imposed by the absence of a minimum wage or fair remuneration only make matters worse and lessen the already few opportunities available to young Pakistanis for upward financial mobility.
Conclusively, although law firms are privately owned entities, a unanimous recognition of the merits of introducing transparency in their financial structures would aid great improvements in the ecosystem. Haq’s comments on moving towards a corporate structure is one way to achieve this, but greater regularization of the legal fees and maintaining the sanctity of the contract could also be helpful steps in the right direction.