Three of the U.K.’s highest-grossing law firms raised salaries for London lawyers, who can earn as much as 65,000 pounds ($99,000) in their first year after qualifying to practice.
Clifford Chance LLP said yesterday it would increase pay for newly-qualified lawyers by about 3 percent, to 63,500 pounds, while Linklaters LLP raised those rates 4 percent to 64,000 pounds. Slaughter and May also raised pay for that level about 2 percent to 63,000 pounds. Allen & Overy LLP and Freshfields Bruckhaus Deringer LLP kept salaries unchanged.
“The London office has had another successful year,” said Clifford Chance partner David Bickerton.
The Magic Circle, comprising the five largest and most profitable British law firms, cut or froze pay over several years as deal work dried up during the financial crisis that began in 2008. While the salaries of junior lawyers are rising again, they lag behind their New York counterparts, who make as much as $160,000 in their first year.
About six in 10 U.K. lawyers received a pay raise in 2012, according to a survey by recruitment firm Robert Walters Plc. Nearly 70 percent of those got an increase of less than 6 percent.
“It’s certainly looking up,” said Nick Shillinglaw, a legal recruiter at Michael Page International Plc in London. “There’s more confidence in the market now.”
Finance and niche practices, such as intellectual property litigation or tax, are attracting the highest salary offers, he said.
Freshfields offered the highest pay for newly-qualified lawyers. Rates for those in its first salary band, which include newly qualified and attorneys with less than two years of experience, started at 65,000 pounds. The firm doesn’t pay its associates by years of experience, instead dividing them into bands it calls Career Milestones, Alexa Highfield, a Freshfields spokeswoman, said.
Allen & Overy LLP offered 61,500 pounds to newly-qualified attorneys, rising to 68,500 pounds after a year of experience, the same rates as in 2012. Clifford Chance increased pay slightly for all its salaried lawyers. Those with three years of experience could expect a salary of 87,000 pounds, compared to 89,000 pounds at Linklaters, 87,500 pounds at Slaughter and May and 86,000 pounds at Allen & Overy.
Law firms are under pressure to pay junior lawyers competitively while not angering clients, who have had increased leverage during the economic downturn to pressure firms to lower their bills.
“We believe this strikes the right balance between rewarding our associates with increased scales at the same time as recognizing that economic conditions remain tough,” Richard Clark, the executive partner at Slaughter and May, said in an e-mail.
Clifford Chance, the only Magic Circle firm to disclose bonuses, said lawyers with three years of experience can earn as much as 27,000 pounds in added compensation in the coming year. Linklaters’ bonus plan “will continue to reward exceptional performance,” firm spokesman Rupert Winlaw said in an e-mail.
Excluding bonuses, Magic Circle lawyer wages are comparable to those of investment bankers with similar experience, said John Purcell, managing director of London-based executive search firm Purcell & Co. Bankers with two years’ experience can expect salaries of as much as 65,000 pounds, or about 80,000 pounds for those with four years of experience, he said.