Towards Better Remuneration for Nigerian Legal Practitioners: A Market-Based Solution – Reginald Aziza

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In the evening of Sunday, February 16, 2020, I visited the Lagos campus of the Nigerian Law School. There was a good sense of gaiety in the air. The excitement was understandable: lectures were scheduled to commence the following day. As such, it was a good time to set expectations; to commence strongly in the jostle for good grades; and to plan the first steps of a long career in the noble profession. For several minutes, I tried (unsuccessfully) to keep out of sight and observe the students. I reflected on the future careers many of them would have. Undoubtedly, in their ranks are future Senior Advocates; Judges and Justices of superior courts of record; Doctors and Professors of law; Partners in top-tier law firms; and political and business leaders. But rather unfortunately, if current realities reflect future probabilities, some of them (either for short or long periods, and with no assurances that their situations will improve) will work under extremely difficult conditions and be paid wages significantly below a dignifying living wage. This commentary is for the benefit of these ones and current members of the profession living under the scourge of poor remuneration.

To be sure, the legal profession can be extremely rewarding. For all the diversification taking place in the global economy, law has found a way to remain relevant, and will undoubtedly remain so in the future. The reason for this is not far-fetched: as human society evolves, so too does the law. In this process, law expands existing rights and obligations into new areas of human endeavour, thus remaining relevant as a tool for social engineering. Thus, whether society’s preoccupation is in agriculture, manufacturing, sports, technology, financial services, or outer-space exploration, the dynamism of law means that law (and its practitioners) will continue to be relevant.

But whilst law may be dynamic, its practitioners may be static; and whilst law may evolve with and reflect the yearnings of society, its practitioners may remain fixed in their traditions and hallowed ways of doing business. The rigidity of legal practitioners (and to a large extent, the legal profession itself) in Nigeria can be observed in a number of places, but two are very important for the purpose of this commentary: the poor remuneration (and general welfare) of many young practitioners; and the typical cycle of bringing the poor welfare conditions to the fore of debates as the Nigerian Bar elections approach, and moving swiftly from the topic when elections are over.

In this sense, elections into the Nigerian Bar uncannily resemble elections into Nigerian public service. As elections approach, politicians seem to understand the problems facing the voting constituencies (power, security, transportation infrastructure, we all know the common list) and make copious promises to endear themselves to these constituencies. But time and again, the electorate is left disappointed. The politicians seem to pursue a different agenda from what was promised at the elections, and suddenly, too many unforeseen problems hinder the delivery of the promises made to the electorate. Disillusionment and voter apathy thus pervade the public space, leading many to question the utility of going to the polls if we can all predict post-election performance. But the serious problems which hold back the public need not hold back the NBA, and the inability to hold politicians to account for campaign promises need not impede our ability to hold aspirants to office in the NBA to credibly committing to improving the welfare conditions of members of the profession.

In this commentary, I create a voluntary, self-enforcing model to address the remuneration problem. Of course, the model has its challenges, and is not intended to be a silver-bullet to the remuneration problem. My explicit intention in putting out this commentary is threefold. First, it is to directly challenge the lazy, laboured and uncreative notion that nothing can be done on the issue of poor pay of legal practitioners in Nigeria. Second, it is to spark broader debates about the commitment of candidates for the Presidency of the Bar in addressing this serious issue. Third, it is to guide my own choice of the candidate I will support and encourage my networks and connections to support in the forthcoming elections. As a personal commitment, I will actively mobilise my personal contacts and resources in galvanising support for candidates for offices in the Nigerian Bar who substantially share the views expressed in this commentary and are able to credibly commit to implementing a framework to address the remuneration problem.

Given that this is a fairly lengthy commentary, it will be useful at the onset to briefly sketch its structure. First, I conceptualise the problem, briefly explaining some of the reasons for poor remuneration in the profession, I then provide a brief anatomy of the markets in which law practices compete and thereafter present my proposed model for getting these markets to punish/incentivise firms based on their performance in the area of remuneration. Thereafter, I anticipate and respond to two key objections that may be levied against my proposal and thereafter offer concluding thoughts.

It should go without saying that the views expressed in this commentary are my personal views and do not necessarily reflect the views of any organizations or institutions I am or have been associated with.

Conceptualising the Problem

That there is a serious problem with the remuneration of young lawyers in the Nigerian legal profession, is not news. Friends and colleagues share sad stories about their treatment in the hands of more senior members of the profession, and social media is awash with similarly heart-rending stories. The coronavirus pandemic brought to the fore the true magnitude of the problem as many legal practitioners who either did not earn a monthly pay (some colleagues are only paid stipends for court appearances) or who were paid extremely poorly fell into destitution. To get a scale of the problem and dispel any ideas that it might be overstated, the NBA (or any of its constituent sections or branches) need only invite young practitioners to anonymously share their stories.

Broadly, there are 3 causes of the remuneration problem. The first is what we might call a ‘distribution problem’. Here, the problem is that the firm’s revenues are substantially channelled to its Partners or owners. This problem is largely seen in the larger commercial law firms in Nigeria’s commercial centres. To understand this problem, consider an oversimplified example of Firm A. The firm has an annual revenue of N1billion. Assume further that the firm has 10 Partners and 50 other lawyers and spends N200 million (20% of revenue) in remuneration and another N300 million in overheads. The balance is shared amongst the Partners as profit (with the possibility of an end of year bonus at the discretion of the Partners). Taking only averages into account, if the firm were to distribute N500 million amongst its 10 Partners, this will lead to a N50 million pay per Partner, against a N4 million pay per associate (of course, the reality is that some Partners will earn more than others and the lowest paid associate will earn substantially less than N4 million). Thus, the firm deploys 50% of revenue to the service of 10 people and 20% to the service of 50 people, and the ratio of average associate to Partner pay in the firm is 1:12.5.

The second is what we might call a ‘revenue’ or ‘scale’ problem. Here, the problem is that the firm is simply not making enough revenue to pay better. This is typically a problem of mid-sized firms. To understand this problem, consider the case of Firm B. Assume that Firm B is half the size and earns half the revenue of Firm A. Thus, Firm B has 5 Partners and 25 lawyers and an annual revenue of N500 million. If firm B has the same cost structure and pays in the same ratio as Firm A, the average associate in Firm B will earn N2 million per annum, with the lowest paid associate potentially earning substantially less. In this situation, Firm B may resist a request for higher wages on the basis that it is deploying a commensurate proportion of its revenues to remuneration as a larger firm, and to pay additional remuneration, it needs to achieve more scale or earn more revenues.

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The third is what, for want of a better description, we may simply call an ‘inhumanity problem’. Here, the problem is typically one of culture or perception of the leadership of the firm and can typically be found in small firms and sole practitionership models. The inhumanity problem is an extreme version of the distribution problem and will exist where there is an enormous gap between the earnings of the firm’s owner and the average associate pay. To visualise this, consider Firm C. Assume Firm C makes the same revenues as Firm A, but has only 2 Partners, spends 10% of its revenues in remuneration and another 10% in overheads. The earning per Partner in this situation will be N400 million and the average earning per associate will be N2 million, leading to an average pay ratio of 1:200.

Firms A, B and C present simplified models to help us conceptualise the problem. In reality, the three examples often interact with and reinforce one another.

The key question has always been what to do about the remuneration problem. Several suggestions have been proffered. Some have called for more direct regulation of the problem, perhaps by the NBA explicitly enforcing a minimum wage for legal practitioners or establishing a non-binding wage recommendation, considering the cost of living in different states of Nigeria. Others see the problem as one of scale: many of the law firms paying poorly will want to pay more if only they were of similar scale as the bigger law firms. Addressing the scale problem is likely to be a long-term solution, meaning little can be done in the short to medium term. Some others see the problem as emanating from the number of legal practitioners admitted in Nigeria annually, thus calling for a seeming return of the profession to its elitist roots by increasing the barriers to entry. Some others have simply chosen to be silent about the issue.

I do not propose to deal with these suggestions in detail in this commentary. Suffice it to say that there has been significant opposition to NBA’s direct regulation of the problem, and in any event, it raises difficult questions about enforcement. Similarly, the recognition that addressing the scale problem can only be a long-term solution has led some to relegate the issue to the back burner of debates. Whatever may be the merits of raising the barriers to entry, it is also a long-term solution seeking to amend the structure of the profession or the means of admittance into it. As every student of policy by now recognises, structural changes are extremely risky unless the cause of the ailment is clearly understood and there is reasonable certainty that the medicine proposed will not simply aggravate the sickness.

But what if we could come up with a solution that achieves the same functional results as a minimum wage or wage recommendation without the direct regulation of the NBA? What if we can enforce such a system through the market and so bypass the limitations of an NBA enforcement regime? And what if we can achieve these results completely voluntarily and not through compulsion (i.e. we can use the market to incentivise law practices to pay their attorneys better)? This is what my recommendation hopes to accomplish. To understand how it works, we must briefly reflect on the anatomy of the legal market.

A Brief Anatomy of the Legal Market

In very broad terms, law practices compete in two major markets: the market for legal services and the market for legal talent.

The market for legal services is understandably the more important market for most law practices. The reason is fairly obvious. When a client needs legal services, it has a menu of law firms to pick from. Law firms must therefore be able to showcase the quality of their offerings to attract high quality clients and big-ticket matters, all whilst complying with restrictions on advertising and soliciting for business. These big-ticket matters and high-quality clients in turn act as a signal on the quality of the law firm, which in turn attracts even higher quality work and bigger clients. This creates a cycle in which prestige leads to more work, more revenue and ultimately, more prestige. A law firm may choose one or more industries or economic sectors to compete in, and the biggest and most competitive law firms must be able to achieve this cycle of prestige across different industries and sectors of the economy.

The market for legal talent is the second market most law practices have to compete in. Intuitively, the founders or Partners of a law practice cannot hope to personally do all the work that comes into the law firm. They must therefore have a sufficient number of attorneys who are able to service the clients that the practice attracts. Indeed, as the law practice develops, Partners and founders may be seen to gradually evolve from doing the work to winning the work, providing strategic direction and quality control. At a certain point, it can be fairly expected that the founder or Partner will only personally work on the most significant matters or for the firm’s biggest clients. This means that law practices must compete to attract legal talent able to do the work won by the practice. There is, however, a curious fact about the market for legal talent amongst Nigerian law practices. This market only seems vibrant in the very top end of the spectrum i.e. amongst the very best lawyers or law graduates. A person working in one of the 10 biggest law practices in Nigeria is disproportionately more likely to have applied to, and been interviewed by more than one of these firms. Such a person is very unlikely to have considered pursuing career opportunities in other law practices. These law firms are therefore more likely to compete amongst themselves for the very brightest talents coming out of undergraduate studies, the Nigerian Law School, returnees from the best universities internationally or practising lawyers seeking a change in trajectory. In doing so, they are likely to showcase perks and incentives which they can provide but their competitors cannot. These perks often range from pay to bonus payment, foreign exposure, trainings and career development prospects. Many ‘smaller’ sized law firms may be able to pay considerably well, but since they do not have the same amount of prestige in the market for legal services, they may be punished in the market for legal talent by their lack of visibility.

The Market-Based Solution

At its core, my suggestion for a market-based solution to the remuneration problem is very simple. It relies on information and incentives, two key foundations for well-functioning markets.

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Every year, law firms will be asked to register their practices with the NBA. This registration will be entirely voluntary, but subject to one important caveat: if a law firm chooses to register, its disclosures must be truthful; otherwise, the Partner certifying the disclosure may be disciplined for professional misconduct in disclosing false information to the Bar. In registering, the law firm will be required to self-classify its practice as belonging to one of several tiers (let us take these to be Tiers 1, 2, 3, 4 and 5). The tier classification will be based on two factors applied conjunctively: annual firm income, and the monthly remuneration of the least paid lawyer in the firm (i.e. the lowest paid lawyer who has completed the mandatory NYSC service year). Upon receiving the disclosure, the NBA will publicly display this information for free to the entire legal community. If a law firm that has previously registered moves in its tier classification, it will come under an obligation to immediately notify the NBA so that the record can be updated. Inaccurate disclosure can be easily detected since members of the firm in question will see the firm’s disclosure when it is publicised to the market and can raise a red flag on this to the NBA.

In the table below, I present an example of tier thresholds that may be used in the classification and how the system will work in practice. It is important to note that this is only an example. My hope though, is that it can clearly present the idea behind the system and how it will work in practice.

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Three things are immediately obvious from the table. Firstly, as pointed out above, the thresholds are to be applied conjunctively. This means that if a firm has an annual income of over N1billion but pays its least paid attorney N100,000 monthly, it can only be classified as a Tier 5 law firm. Similarly, if a firm pays its least paid attorney N180,000 monthly but has an annual income of N100million, it can only be classified as a Tier 4 law firm. In the first example, the classification punishes a law firm with significant revenue that pays poorly; in the second example, the classification incentivises a law firm paying better to address its scale problem so as to move higher in the tier classification. I should reiterate yet again that these are just examples and the specific thresholds and finer details can be fleshed out subsequently. Secondly, some law firms create career ladders to track, remunerate for, and incentivise career development. Some have associate cadres (Associate, Senior Associate, Managing Associate), some have rankings within associate cadres (e.g. Associate 1, 2 or 3) and some have pay distinctions applying to associates within the same cadre (e.g. Associate 1A, 1B, 1C, 2A, 2B etc). The proposed system does not interfere with or require the disclosure of these internal firm practices. It only requires the disclosure of the very least paid post-NYSC attorney, howsoever classified. Thirdly, even without formally legislating a minimum wage for lawyers, the system will have functionally established the least pay of a Tier 5 law firm as the minimum pay of a legal practitioner, and armed the market with the tools to self-enforce it.

Given that registration is entirely voluntary, what is the incentive for firms to register under this system? The answer to this question is fairly simple: incentivise the two markets discussed above to clearly and credibly punish non-registration. Without making registration compulsory, the NBA can create systems to achieve widespread registration. A few examples bear this out. First, the NBA can work with the LPPC to make registration in the system one of the requirements for conferment of the rank of Senior Advocate of Nigeria. Every practitioner seeking to take silk must therefore have registered his/her firm on the platform and possibly must have been registered in the system for a minimum number of years. By so doing, such a practitioner communicates to the market that he/she is not paying below the least threshold. Second, the NBA can work with client groups to get clients to require registration on the system as a condition for instructions. As an example, the NBA can work with the Oil Producers Traders Section of the Lagos Chamber of Commerce and Industry (OPTS) to get oil companies to require law firms to register on the system as a condition for getting instructions from OPTS members. Given that OPTS membership includes the International Oil Companies operating in Nigeria, non-registration effectively rules out non-registering law firms from providing legal services to these companies and effectively eviscerates the energy practice of such law firm – a significant punishment that very few law firms will be willing to voluntarily endure. Similar initiatives can be pursued across other client groupings and industries including the financial services industry, the power sector, and ministries, departments and agencies of government at both state and federal levels. Requirements of this nature are not uncommon and are consistent with current practice. Many large clients today require international law firms to submit diversity statistics (for instance on gender, racial and sexual identity diversity in the firm’s partnership) and take this information into account in instructing and retaining law firms, thus incentivising law firms to take issues of diversity seriously. Thirdly, given that the ranking will be publicly available and can be assessed both domestically and internationally, registration improves the visibility of these law firms in both of the markets discussed above, and can meaningfully be considered by foreign ranking agencies when issuing law firm rankings, and by legal talent when exploring career opportunities.

The key point to note here is that requiring a law firm to register does not limit a client’s choice of the law firm to engage on a particular matter. Clients understand that whilst they may require a Tier 1 law firm for a complex matter, they can engage a Tier 4 or 5 law firm for a fairly routine matter. Thus, from a client’s perspective, the system punishes on two fronts. First, it punishes non-registration by removing non-registering law firms from the pool of consideration for new work. Secondly, it incentivises registering law firms to improve their tier ranking. This is because as alluded to above, a firm’s tier ranking is likely to influence both the quality of work a client instructs the firm to handle, and the amount of fees the client is likely to be willing to pay to the law firm. Thus, a law firm suffering from the inhumanity problem is likely to find itself very severely punished if its ranking (and thus the quality of work it is hired for and the fees clients are willing to pay it) is affected solely because of its unwillingness to improve the pay of its lawyers.

Criticisms of the Market-Based Solution

There are at least two major criticisms that can be levied against the proposal discussed above. I briefly sketch them out and respond to them below.

The first criticism is what we may call the imperfect proxy problem. This means that the pay of the least lawyer in a firm is an imperfect proxy for the quality of legal services provided by the firm. Thus, a classification system which ranks law practices based on revenue and remuneration says little to nothing of the quality of the firm. Admittedly, there is some merit in this argument, but it does not go anywhere near enough to provide a robust counter to the suggestions offered here. The reason for this is quite clear. Consumers of legal services (myself included) understand one simple fact: although the instruction letter is addressed to a Senior Advocate or a Partner, the addressee is very often not the person who has day to day responsibility over the matter. Thus, the Senior Advocate or Partner is unlikely to be the person conducting the research; preparing fresh drafts of opinions, processes or other documents; or attending court. The result is simple: although the addressee of the instruction may be able to provide strategic direction and quality control, the quality of legal services provided critically depends on the quality of the attorney who has responsibility of daily management of the matter. A client is therefore likely to be interested in the quality of this attorney, and will be unconvinced that a lawyer who struggles to make ends meet will be the most fearless in advocating the client’s position. In addition, poor remuneration gives an indication of cost and efficiency of services likely to be provided by the law firm. Given that a poor paying law firm will be unable to attract and retain the best legal talent, it is likely to rely more on the skills, experience and knowledge of its Senior Associates and Partners (either in reviewing the work done by the younger attorneys or in personally attending to the matters themselves). The cost of the increased time spent by these people is likely to be passed on to the client in the form of increased fees irrespective of whether the agreed fee structure is a lump sum or on an hourly basis. In any event, the tier classification system suggested here only provides an additional data point in the set of information a client will consider in making its selection determination and it does not aim to override the client’s personal experience of the law firms or the influence of the global ranking agencies that can provide additional insights into firm quality. Thus, even if pay is an imperfect proxy of quality, it remains a very useful one from the perspective of the client, and the client can take this information and others into account in making a selection and fee determination

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The second major criticism against this proposal is that it does not go far enough. Whilst it may affect competition at the top of the spectrum to secure the biggest clients and the best quality work, it does little to change the plight of a lawyer working in a law firm at the very bottom of the spectrum (i.e. a very small law firm that is unaffected by the punishment that may be imposed by the market for non-registration or low tier classification). Again, this criticism has some merit, but is ultimately unconvincing as a response to suggestions proffered in this commentary for at least three reasons. First, as noted above, the solution contemplated by this commentary is not a silver bullet but a pragmatic step to address an immediate concern, whilst avoiding the intractable issues that have paralyzed the NBA from direct action in this area. Second, the criticism fails to consider the three types of problems discussed above (i.e. the distribution, revenue and inhumanity problems). If the system is well designed and deployed, the punishments imposed by the market is likely to be too severe for law firms suffering from the distribution and inhumanity problems. This is because they will either be completely shut out of some types of legal work or only offered low quality work or low fees in circumstances where they can compete for better quality work and earn more fees if they simply distribute their resources better. The revenue problem is therefore likely to be the most important reason why a firm either fails to register or is ranked low in this system, if the incentives and punishments are properly calibrated. Third, the criticism fails to sufficiently consider the market for legal talent. Where a lawyer is working in a law firm that is paying poorly, but is now provided with free, publicly available information on better paying law firms practising law within that jurisdiction, it is the responsibility of that lawyer to use that information to good effect in improving his/her situation. The NBA would have provided the lawyer with the ammunition he/she needs and can take the view that it cannot reasonably be expected to do more in this situation. If the feedback from seeking a change is that the lawyer does not have sufficient skills or experience to make a transition, then the lawyer can address these problems and thus improve his/her lot in the marketplace.

Conclusion

Writing in 1914, Louis Brandeis, an Associate Justice of the Supreme Court of the United States famously argued: ‘Publicity is justly commended as a remedy for social and industrial diseases. Sunlight is said to be the best of disinfectants; electric light the most efficient policeman’. Justice Brandeis saw the role information can play in addressing social diseases and advocated for beams of light to be shone on them. The same is easily true of the issue before us. Light can disinfect the legal market considerably and guide the invisible hands of the market to more meaningfully punish poor remuneration, thus incentivising a race to the top in quality and welfare of legal practitioners.

Admittedly, the solution proposed in this commentary has its limitations. Specifically, whilst it may contribute to addressing the distribution and inhumanity problems, it may not fully address the scale problem. Long-term solutions towards deepening the legal market thus remain inevitable, but in the short/medium term, the framework presented in this commentary may incentivise firms to consider mergers to achieve sufficient scale and thus compete for more work. In any event, by imposing costs on firms suffering from the distribution and inhumanity problems, it should engender a fairer and more humane NBA. Whatever our leanings may be, I think we can all fairly accept that a more humane NBA is a better NBA.

In concluding, I should note something. A number of people who comment on my public commentaries often applaud the thinking behind them but then ask: ‘Can this work’ or ‘Will the powers that be allow the proposal to fly’? Whilst I appreciate the positive feedback, I shall not respond to any such comments. My challenge to you is simple: if you think this is a proposal that can work, critique it, present it to your preferred candidate for the NBA elections, spark off a debate about it. If you think it will not work, write a rejoinder and present a better proposal. But whatever you do, do not fold your hands in self-conceit! Whether or not you are someone in need of the protections presented in this commentary, you too can show where you stand on the issue. Then, and only then can we move from rhetoric to concrete action.

Reginald is a doctoral student of law in the University of Oxford.

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