As more lawyers consider relocating to Asia, the Cost of Living Allowance (COLA) stands out as a key benefit offered by some law firms in Hong Kong and Singapore to support associates in this move. This article breaks down what legal professionals can expect from COLA packages, who is eligible, and how these allowances can significantly uplift your take home pay.
What is COLA?
COLA is a valuable financial incentive offered by law firms to attract talent from overseas. It’s essentially a lump sum of cash that you receive in addition to your base salary and bonuses and I have observed some considerable amounts being paid-put over the years! - Sonia Taylor, Head of Asia
Historical Context:
The late 1990s and early 2000s witnessed an influx of U.S. firms and their clients to China. The country's accession to the World Trade Organisation in 2001 marked a pivotal step in strengthening China-U.S. bilateral relations.
When U.S. law firms first ventured into the Asian market, they faced the challenge of appealing to American lawyers, particularly given Hong Kong's notoriously high cost of living. To address this issue, firms began implementing COLA as an attractive financial package.
As more firms established a presence in Asia, competition intensified, prompting an expansion in the number of firms offering COLA to lure top legal talent.
Who Can Get COLA?
COLA is generally allocated to:
- U.S.-Qualified Lawyers: Those who hold a JD degree and are admitted to the bar in the United States.
- Corporate Practice Lawyers: Associates specialising in corporate law due to the intense competition within this sector.
However, some U.S. firms in Hong Kong have provided COLA to all or most of their Hong Kong-qualified associates in the past. While COLA is typically offered to JDs (and automatically to hires from U.S. BigLaw, regardless of JD or LLM status), LLMs usually must be considered U.S. associates on U.S. teams to receive it. It's common for PRC or Hong Kong citizens with U.S. JDs, hired into Asia BigLaw from U.S. BigLaw, to receive COLA, even if they're returning to their passport country. Many non-U.S. taxpayers with JDs also receive it.
In recent times however, firms are being more selective with who receives COLA...
Recent Trends:
The once-thriving relationship between China and the U.S. began to cool with the onset of Donald Trump's presidency in 2017. Several U.S. firms have since closed their operations across Asia due to a challenging economic environment. As a result, China's legal market has undergone changes. Law firms focused on traditional industries such as real estate, capital markets, M&A, and private equity/venture capital have faced market turbulence and adjustments.
Despite these challenges, Sonia observes that:
Demand remains high for services in dispute resolution, bankruptcy and restructuring, intellectual property, cybersecurity, and data privacy. Industries such as new energy, new materials, AI, life sciences, and pharmaceuticals are thriving. The U.S. firms still operating effectively and hiring in China are those with deep roots in Chinese and Asian markets, well-equipped to assist Chinese companies in their global endeavours.
COLA packages have evolved in response to market fluctuations. The COVID-19 pandemic forced many firms to reassess their financial strategies, leading to substantial cuts and adjustments to their COLA offerings. Consequently, U.S. firms now offer COLA only to U.S.-qualified (JD) associates, excluding Hong Kong-qualified associates. With capital markets activity at a low, hiring now focuses primarily on funds, M&A, banking and finance, and disputes, with most COLA packages offered to those in Corporate teams.
In Singapore, COLA is less common than in Hong Kong. To date, only one US firm is offering this allowance to their associates, despite the market their becoming increasingly busier. It remains more common practice across Hong Kong.
What Should an Associate Expect to Receive?
COLA can amount to a significant sum with some firms offering up to $95,000 annually. Currently, we see offers ranging between $40,000 - $95,000. Some firms also provide an attorney (and, if applicable, their spouse and children) with plane tickets “home” once a year as part of the overall offer package.
Sonia Taylor adds:
“Since COLA is considered income, it will be included as part of your taxable income. It’s essentially a lump sum of cash that you receive in addition to your base salary and bonuses. However, with very favourable tax rates, you will likely see most of that money deposited into your bank account
Looking Ahead
We are optimistic about the market outlook for 2025. This positive sentiment is reinforced by the number of roles we are being instructed on across various firms, including those U.S. firms whose strategies continue to thrive in the region and, of course, offer COLA. If you are a mid-level U.S. associate at a top-tier firm seeking a new adventure, you will have opportunities to explore as we move into 2025.
If you are eager to understand how COLA might influence your career trajectory or are contemplating a relocation, we recommend reaching out to an expert private practice recruiter for insights into specific firm packages. As highlighted, these packages are substantial and can significantly impact your take-home compensation.
