Newly Qualified Lawyer Salaries Reach $182,000 p.a.
Posted By Rob Millard - 0 Comments -
The price war for newly qualified attorneys (solicitors) in London seems to have heated up to the same intensity as New York. See 2007 Pay Round: a Legal Week Wiki Special with a table of who is paying what and a long string of comments from individual contributors. Who is paying newly qualified associates the equivalent of $182,000? According to a comment posted on 6 June, that's what Cleary Gottlieb's London based newly qualifieds get. £92,000. Plus bonus.
The comments string provides interesting insights into how firms are balancing the demand/supply driven need to pay top rates for top entry level talent with the need to make "money in exceed money out" and also to retain that talent for long enough to turn a profit. Herewith some unedited snippets:
"Since A&O's bonuses do not vest until nearly 4 years PQE they are paying junior associates much less than most other firms."
"Think there is something in the first comment. All comes down to retention of bonus of juniors. For last year we had increase in total remuneration of 15% (half through increase for six months, other half probable bonus). So did CC with a 15% bonus. Only we have to wait up to 3 years for bonus element to be paid. Similar for future, while others have a similar increase in base salary, they pay a bonus to juniors after the end of the financial year. We might have to wait for 2 or 3 years longer to get that."
"After three years PQE it becomes more difficult to identify a set rate because lockstep is breaking down at more senior levels. However, people are welcome to post guideline rates as well as throwing more light on the extent to which firms are moving away from lockstep pay."
"In response to the comment that the extra pay at US firms is not worth the additional hours - all I can say is that since moving from a magic circle firm at the beginning of the year I've worked quite a lot less hours (ave 2,200 hours billable p/a rather than 2,700 hours), I'm paid a lot more and I have great work to do. What's not to like?!"
"The White & Case increases are interesting as until now there has been a fairly clear tiering of NY rates, then mid-Atlantic, then MC then chasing pack. The difference between mid-Atlantic and NY rates seems to be collapsing, while MC rates are narrowing the gap on mid-Atlantic. All this is bad news for the chasing pack which will now be obliged to introduce significant hikes across the bands. More interesting is the question whether Manhattan firms will for the first time factor in the London market when next reviewing associate remuneration. Perhaps the London dog will finally wag the US firm outpost tail." ("MC" = "Magic Circle")
"Now that Norton Rose has matched the Clifford Chance salaries it will be impossible for any top 20 firm not to follow or move beyond. Significant increases in assistant pay are long overdue give unstoppable increases in house (or more realistically, flat) prices and the profits of firms in recent years. The rule of thumb is said to be that you earn one-third of what you are meant to bill. I earn less than one-fifth of what I am meant to bill and that seems common upon checking with friends in other firms. The question is not whether the remaining large firms will match the rises as much as how, given the deliberate policy to restrict entry to the partnership while keeping salaries fairly static for the past five or so years, firms have got this far without having to give assistants some real pay-back. My personal view is that attrition to other careers/clients has taken its toll and City partners have realised the model was creaking under its own inequitability."
From somebody commenting on the workload that is expected of associates in return for the increased compensation: "True enough. The hourly rate is more like £15-25/hr. But is that a whole lot better? Compare to the following on Legal Week today... "The biggest revenue rises so far have come from SJ Berwin and Ashurst, which are both set to increase billings by more than 20% to hit £191m and £275m respectively." Someone is making a killing and it ain't the junior associate working 15hrs a day for £15/hr!!"
"This isn't about complaining, or greed (well ok, it's a little bit about greed, so sue me). It IS about firms finally being forced to apply a little tranparency to their salary reviews. Nobody objects (much) to London being paid more than the regions, or to understandably "peppy" partners taking home a salary equivalent to the GDP of a small country, provided that they feel they are being fairly paid for the work they are doing and that the differential between the two remains about the same - particularly in firms where the regions generate more profit than their London offices do. What was fair last year may not be fair this year, if the market has shifted. It's not necessarily moaning to discuss these issues in an open forum. Are London lawyers really worth TWICE (ouch) what their counterparts in other regions get paid?"
"Working as I do at a Magic Circle firm, I have to admit that Linklaters have got the best salary structure (I don't work there incidentally!). Compared to most other quoted bonus schemes, where only a handful of people actually achieve what is stated, theirs, from what I know, is genuine. I know a number of people there and they are all getting hefty bonuses. Of the people I know, two are 4.5 years PQE and both now on 6 figures and got over 30% bonuses. Another is 1.5 PQE and got 35% bonus. The 1.5 PQE did an astonishing number of chargeable hours admittedly (about 2,700) but one of the 4.5 PQEs got a 32% bonus off the back of just over 2,000 hours. They do seem to value the contribution overall and the quality of the individual not just the number of hours. Their lockstep salary also doesn't plateau noticeably (many other firms start to flatten out at around 5-6 PQE as this tends to be just above the publicised rates). Links publish all their salaries internally through to 10 years PQE and have no banding at any level."
Posted by Cleary Gottlieb: "Salary details. No recent pay rise, but prevailing rates NQ £92,000, 1st year £97,000, 2nd year £106,000, and 3rd year £120,500. Figures include a 3% salary contribution paid at the conclusion of the year, and are therefore slightly inflated (max contribution is, I think, £3,000). Also get bonus."
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