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2018 Legal Salaries - A Summary

Summer in London this year hasn’t just been about the UK’s biggest heatwave in decades - the temperature has also been turned up on the legal market as we’ve entered into one of the most radical pay wars in the history of the City. Back in 2016, it was Cravath, Swaine and Moore who first made the decision to ramp up global associate salaries to an unbelievable $180,000 dollars (then £110,000). From that point on it was not a matter of if but when, the rest of the US firms were going to follow. American firms are to the UK legal market what Donald Trump is to American politics - aggressively corporate, fiercely competitive, and willing to do whatever it takes to get what they want. But whilst Trump might be resenting the pay cut he took upon becoming President, associates who decide to change up their careers will find that this is certainly not the case with US firms. In an unprecedented move in June 2018, elite US law firm Milbank, Tweed, Hadley & McCoy declared their intentions to boost their associate US salaries to $190,000, effective in August - unifying the pay rise across all their international offices by pegging payments to the dollar. This means that the UK lawyers will be paid the same as their US counterparts, according to the prevailing exchange rate at the time. In the wake of Brexit, this is particularly beneficial for UK associates, as the current robustness and future fate of the sterling continues to be uncertain. The resulting effect is that UK associates found that their pay scale began at a huge £143,000 and rising steadily with increased seniority. Milbank has since triggered a domino effect amongst US firms including Simpson Thacher, Kirkland & Ellis, Latham & Watkins, Akin Gump and maybe Paul Hastings who doubtless wanted to play catch up. Indeed, the pay rise reflects a sentiment widely felt within the legal sector - with clients more demanding than ever, it is the most talented associates who are going to keep driving their firms forward and cope with these client demands. Whilst Kirkland and co are jumping to match the ‘Milbank salary scale,’ other US firms with London offices have remained steadfast and have decided not to do so. They have, however, hiked their salaries to a number that still dwarfs their UK rivals. This is particularly notable when it comes to newly qualified (NQ) salaries. NQs at Dechert can now expect a respectable £110,000, Davis Polk £120,000, and Skadden £125,000. These firms and other US firms have also bumped up the salary marginally for trainees, reflecting a desire to recruit top talent early. Whilst this cohort of US firms are not hitting the skyscraper heights of the Milbank scale, it does now mean that there are few US law firms in London who pay under £100,000 to their NQ associates. This is not to say it’s all doom and gloom for associates at top UK firms - and predictably, it was the Magic Circle firms who were the first to cave under the pressure. Allen & Overy were the first to raise their NQ salaries to a respectable £83,000, a small increase on the £2000 pay rise they received in the preceding year. Throughout the firm, associates have also seen a modest rise of 2% - a figure that may be seen as unsatisfactory by employees. This contrasts with longstanding rival Clifford Chance who have increased their NQ salaries to £91,000 which includes a discretionary ‘binary bonus’, and the closest a Magic Circle firm pays out compared to their US rivals. Freshfields and Slaughter & May have kept their respectable £85,0000 NQ salaries, whilst Linklaters is yet to give any indication of movement. Even firms below the Magic Circle are sweating in the heat of the salary war, determined to solidify their place within the market. Traditional Silver Circle firms Norton Rose and Hogan Lovells have lifted their salary to £77,000, inching just ahead of competitors Dentons and Mayer Brown. Within the top 25 UK firms, the pressure has trickled down quicker than expected, most likely to the delight of associates working at firms such as Addleshaw Goddard and Ashurst. And thanks to the deep salary pressure put on by Milbank, the lines are more blurred than ever for UK firms in maintaining their traditional reputation within the London market. For example, Travers Smith NQs now earn the same as Magic Circle firm Linklaters NQs. The reality is that whilst associates at top tier Magic Circle firms such as Allen & Overy, Clifford Chance or Linklaters might be working similar hours to their contemporaries at US firms, the renumeration at UK firms is much less rewarding. Though the shockwaves from Milbank have doubtlessly rocked the core of the top 25 US and UK firms in London prompting widespread salary bumps, the difference between the highest paying UK firms and the highest paying US firms remains incredibly stark. Given that it is unlikely that these elite UK firms will ever match the Milbank scale, UK firms will have to do more than issue modest pay rises to hold up against their stateside rivals. If you are interested in hearing more, please contact Hamish Drake. Hamish is one of the Experts behind Third Way Legal - an online platform which gives lawyers a confidential forum to browse fully-branded jobs at top law firms and in-house legal teams in London and abroad. Having spent time as a banking and finance lawyer at leading national and global law firms he is well versed in his market and is an expert at advising lawyers on existing and upcoming opportunities available at law firms and supporting them through the challenges involved in moving firms. Whether you are actively looking or just keen for a nosey, sign-up at www.thirdway.pro Alternatively, Hamish’s details are: E: hamish.drake@thirdway.pro T: 02036916036 M: 07400346101 W: www.thirdway.pro
Added by Hamish Drake on 05/09/2018