When discussing the possibility of an offshore move, one of the first questions we are usually asked is “How much are they paying?”
And quite rightly so, there’s a lot to think about when making any career move, particularly when it involves an international relocation. On both a professional and personal level, it has to be worth the time invested and considerable upheaval involved. The draw factors vary for each individual but when it comes down to it, money is often one of the drivers.
The answer is rarely simple as there is a huge variation in salaries between jurisdictions and individual firms. Demand for specific skills from the market also means that some practice areas pay a premium over others. But even for a well-paid City lawyer, a move offshore could see you maximising your earning potential. For example, at 3 years’ PQE with a leading firm in the Cayman Islands, you could be taking home as much as the equivalent to a salary of well over £250,000 in the UK. There are very few lawyers in the onshore market who could command that sort of money so early in their legal careers.
It’s not just the Caribbean that offers lawyers the opportunity to fast track their earnings. Offshore firms in the Channel Islands recruit from NQ level upwards and the typical starting salary is currently around £70,000, well above the average across most of the UK market.
But which other factors should you take into consideration?
1. Tax (or lack of!)
With high salaries and low – or zero – income tax, it’s easy to see what attracts a lot of lawyers offshore. In the Cayman Islands you can expect to receive the highest salaries in the offshore market and pay no income tax at all. In Bermuda employee payroll tax is just 9%, in the BVI it’s 8% and in the Channel Islands you’ll pay a maximum of 20% income tax.
To give you an example of how this equates: At 3 years’ PQE in the Cayman Islands you can expect to be earning c. USD $160,000 annual base salary. On current exchange rates, a standard taxpayer would need to be on a gross salary of around £230,000 to match this, net, in the UK. In Australia you would need to earn an annual salary of AUD $399,000, and in New Zealand NZD $394,000 to equal this.
Similarly, if you were earning £100,000 in London, an average taxpayer will take home £66,595. Someone on the same salary in Guernsey would net £75,635. This all means that a newly qualified lawyer on a starting salary of £70,000 in the Channel Islands would have a net income to match a lawyer in the UK earning c.£78,000 per annum*.
2. Benefits, relocation and bonus package
Bonuses are typically paid based on performance but there is a more reasonable approach to billable hours than you will be used to at many onshore law firms. Targets are generally lower than at top city firms (one or two don’t use targets at all) and offshore lawyers can expect very achievable bonuses of 20% and even up to 30% of salary for high achievers.
If you are relocating with an offshore firm, you will receive a good relocation allowance. The value of this varies between firms and jurisdictions, but you can expect it to cover the cost of your flights, shipping, temporary accommodation and possibly car hire on arrival. Some firms pay this as a lump sum in your first month’s wages for you to use as you see fit and others will pay it as expenses. All offer some form of benefits packages similar to those at a good onshore firm.
3. Cost of living
There is no hiding the fact that the cost of living in some offshore jurisdictions is high, but it is largely comparable to living in other major international financial centres such as London. When you weigh this up against the numerous benefits that island life has to offer; better work life balance, short commute to work, outdoor lifestyle and idyllic setting, I know where I’d rather be!
In the Caribbean for instance, the expensive rental costs are reflected in the high standard of attractive properties available. Renting a beachside apartment would come at a premium, but if you are happy to compromise on beach frontage and choose a modern apartment block, it is affordable. Factor in the lack of any income tax, and very few people find this to be anything other than a lucrative move financially.
Whilst Channel Islands salaries don’t quite reach the heights of the Caribbean, neither does the cost of living, which is similar to the South-East of England. Add in all the benefits of island life whilst still being only a short flight away from the UK, and for many you have the perfect middle ground between career potential, earning capability, and lifestyle.
All in all, for most lawyers moving offshore, the answer to the question, “how much?” is “more than enough!” And for those who really mean it when they say “it isn’t about the money” there are numerous other benefits in moving to an offshore law firm. The smaller teams and collegiate working environments mean you are likely to experience much greater involvement, increased Partner contact, and more client facing responsibilities, far earlier on in your career. You can expect to work hard but the short commute and island lifestyle means you will have plenty of time to enjoy spending your increased salary!