The pay gap between chartered accountants and lawyers has narrowed to just 13.7%, the smallest gap since the financial crisis, according to an analysis by Nixon Williams, one of the leading accountancy provider to contractors.
According to research by Nixon Williams, average pay for chartered and certified accountants jumped by 2.8% in 2015 to £35,923, the largest annual increase since the global financial crisis. Pay for chartered and certified accountants is now 3% higher than its pre-recession peak of £34,882 in 2007. At the same time, median pay for legal professionals (£41,602) is still 2.4% below its peak of £42,633 in 2009. At that point, median pay for accountants was £34,072, just over 20% less than legal professionals but now stands at just 13.7% less.
Nixon Williams says that accountancy firms have continued to build up legal services divisions and have been able to take work from law firms by offering discounted, fixed fees. Law firms, however, have struggled to make the billable hour model work in the post-crisis economy.
Simon Curry, Chief Executive Officer of Nixon Williams, comments: “Compared to the legal profession, demand for accountants held up reasonably well during the recession and has picked up markedly since. Pay for accountants and finance professionals has pushed past its pre-recession peak and is continuing to rise while lawyers are still struggling to come to terms with the post-recession market.”
“Law firms are facing intense competition from accountants who are moving into process-oriented, high street work. Accountancy firms are increasingly able to undercut law firms by offering a fixed fee pricing model. This is appealing in a market which has become less willing to accept the billable hours charged by many law firms.”
According to Nixon Williams, accountants were focused on cost-cutting and reducing headcounts during the recession, but the emphasis is shifting so that accountants with strong resource planning and change management skills are increasingly in demand as businesses grow. At the same time, large accountancy practices cut back on graduate training programmes during the recession, leading to a shortage of suitably qualified candidates to meet rising demand, which has pushed up pay.
Nixon Williams says that the legal profession has the reverse problem of too many lawyers when demand in many areas has stagnated or fallen.
Simon Curry says: “We are still producing too many lawyers at a time when law firms are closing down or merging, crime is falling and legal aid budgets being slashed. Law firms are getting rid of really expensive solicitors and getting more work done by paralegals, which is driving down average pay.”
“Despite the glut of talent, Brexit may produce a short-term boom in work for lawyers, as well as accountants, as organisations turn to their advisers as they prepare for the post-EU commercial landscape.”