Salary Trends, Compliance, and Culture in Law

As we move through 2025, the legal sector across Australia and New Zealand is being shaped by generational change, evolving salary expectations, and shifting retention dynamics. Firms are balancing workforce transformation, regulatory complexity, and market expectations, particularly as early-career professionals challenge traditional career trajectories and demand more flexible, values-driven workplaces.

Retention rates across New Zealand have remained relatively stable, while in Australia, the turnover rate sits at 23%—a drop from 27% the previous year. This decline is welcome but uneven: smaller firms experience lower turnover, while larger firms continue to see significant movement, especially among lawyers in their first five years of practice. Much of this churn is being driven by a cohort that entered the workforce during COVID-affected years, with travel and international moves now back on the agenda.

At the same time, firms face a paradox: they aim to grow headcount annually, but market conditions and generational shifts often limit what’s feasible. Firms must now navigate expectations among Gen Z lawyers for faster mobility, diverse experiences, and more personal meaning in their work—factors that don’t always align with traditional law firm pathways.

Compensation strategies are also evolving. While across-the-board salary increases have softened—averaging 2% in New Zealand and 4.1% in Australia—early-career lawyers are seeing jumps between 5% and 10%. This reflects the intense competition for talent at this level and underscores the need for retention strategies beyond pay alone.

“Our data shows that the one-to-five year PAE has got a significantly higher turnover rate than other levels.”

Emma Elliott, CEO of ALPMA, and Damian Gordon, Principal at DFG Legal, joined Kalinda Campbell to explore how legal firms are adapting to the challenges of 2025. Drawing from ALPMA’s latest cross-Tasman salary and industry survey, Elliott explained that junior lawyers are the most mobile segment of the workforce.

“These younger cohorts went through university during COVID and were starved of travel opportunities,” she said. “We’re now seeing them start to move overseas.” Law firms in New Zealand are losing talent to Australia, and Australians are eyeing roles in the UK. Elliott added that 20% of those leaving firms are exiting the industry altogether—a significant signal of misalignment between workplace conditions and lawyer expectations.

Generational divides are not just about career movement. Gordon, whose small Perth-based firm has undergone strategic generational refreshment, explained the importance of cross-age collaboration. “We have senior lawyers, junior lawyers, and law students. Their ability to utilise the technology is absolutely fantastic,” he said. By bringing younger lawyers into the fold, his firm has unlocked fresh perspectives and improved technological adoption.

Still, cultural differences persist. “One of the biggest challenges is communication,” Gordon admitted. “A lot of younger practitioners prefer to email or text, but I’m old school—I want to talk to people.” This generational disconnect in client and peer interaction styles reflects broader shifts in workplace norms, especially in how relationships are built and maintained.

Salary expectations also remain central to legal workforce planning. Elliott reported a marked change from last year’s widespread increases. “In New Zealand, bands have moved by about 2%. In Australia, about 4.1%,” she said. However, the early-career bracket remains an outlier, with salaries increasing by up to 10% in some cases. Elliott stressed the need to “take money off the table” by paying fairly—enabling employees to focus on value creation rather than financial anxiety.

Gordon’s approach echoes this mindset. “We pay above what is considered appropriate because we hire for the individual,” he said. Performance, attitude, and maturity carry as much weight as formal titles. “If you get that formula right, you are quite happy to pay above expectation,” he added.

Elliott also pointed to the significant regulatory changes coming in 2025, particularly in Australia, where new anti-money laundering requirements will reshape compliance expectations. ALPMA’s focus is now on being a learning and development partner for member firms. “Law firms are good at attracting staff—but less consistent in developing them,” she said. With younger lawyers less likely to aspire to partnership, firms must rethink how they support career growth and retain critical talent.

Practical Takeaways for Legal Employers in Australia and New Zealand

• Expect higher turnover among 1–5 year PAE lawyers; tailor engagement strategies to this group.

• Focus on development and mentoring rather than only title-based progression to retain emerging talent.

• Foster cross-generational communication by balancing tech-enabled methods with direct interpersonal engagement.

• Plan for modest salary increases across the board, but allocate budget strategically to retain early-career talent.

• Prepare for regulatory shifts by investing in compliance education and support systems.