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Register as a LocumLocum Hourly Rates and How To Set Them
We have seen a huge increase in hourly rate proposals from certain locum solicitors looking for residential conveyancing roles. The current rates we get pitched for locum roles in office range from about £40-£55 per hour. For remote working it goes from £30-£50 per hour.
When we recently sent out an assignment to locums and noted that £55 per hour was unaffordable for a lot of smaller firms, I did get a few responses from locums to ask why. Quite often locums reference their experience – it is a common assumption that a locum with 20 years PQE and extensive experience will earn more per hour than a locum with say 10 years PQE, but this doesn’t tend to be the case – firms look at the economics quite often and decide that either candidate could do the work required.
Affordability – Small High Street Firm Example
As business brokers and recruitment consultants, we regularly get sight of a lot of law firm accounts. We conduct well over 100 valuations a year for law firms of all shapes and sizes, and as part of this we get to scrutinise accounts.
I’ll use a small high street practice as an example to explain our reasoning as to why £55 per hour is unaffordable for a lot of firms. Take a 2 solicitor practice generating £250k of turnover. They undertake conveyancing & wills and probate work on a 50/50 split. In this firm, it would be likely that there would be 2 support staff costing around £55k (1 secretary, 1 administrator/legal cashier) and overheads will probably be another £50k on top. Assuming a corporation tax rate of 20%, the owners would be generating a profit after tax of c£116,000. Each owner would therefore be taking home c£58,000 gross.
Looking at these figures, if a locum agrees to cover a 2 week holiday for £55 per hour, the cost would be £3,850 plus agency fee of £693. This means that to go on holiday for 2 weeks each owner has to pay £2,271.50. Their annual pay drops to £55,728.50. If they take two x 2 week holidays in any year, their annual pay will fall to £53,457.
£35 per hour has the effect of a 4 week holiday costing each owner £1,225 per fortnight. Four weeks in a year will result in their annual pay falling to £55,550.
The difference is quite substantial. Each week at £55 per hour compared with £35 per hour costs £700 more, something that is probably unaffordable for a firm of this size.
Advice on Setting Locum Rates – Be Flexible
Look at the firm or employer. If you are interested in the assignment, what do you think can they feasibly afford to pay? The next question has to be what can you offer that will generate a good margin of profit for you- how much is accommodation & travel going to cost for example? Speak with our consultants – we tend to have a handle on the rates being proposed by other locums and we can give you a steer on a competitive rate. After all, its in our interests to get you decent rates – our pay depends on the amount you get paid. Similarly however its also in our interests to suggest realistic rates for each assignment – there is no point pitching at levels we know a firm are simply not going to pay or be able to afford to pay.
Office based assignments are still attracting considerably less interest from locums than remote or hybrid roles. London tends to be a lot easier to attract office based locums, holiday destination areas tend to be a nightmare. A locum covering in Cornwall in August is going to have to charge a high hourly rate to make it feasible, but the same principle does not apply to assignments in Cornwall in January.
In the summer there is always a lot less availability from locums, which pushes rates up, but if levels get to rates that a firm simply cannot afford, then the partners often make the decision to try to struggle on without external assistance.
I suspect I will write this article and get a lot of replies to say that my example for fees generated above is too low, but this is realistic based on the small firms we see. Medium & larger firms are of course completely different.
