The war for talent at top law firms shows no signs of slowing down as experts predict young people’s salaries could soon top £200,000 a year – far more than the Prime Minister.
A select group of US companies have increased pay for newly qualified staff in London by up to £180,000 as wages soar on both sides of the Atlantic.
And UK rivals in the so-called Magic Circle – five of the most prestigious London-based firms that have historically dominated the legal scene – are offering young lawyers up to £150,000 a year as competition intensifies.
It means that many newly qualified lawyers – who are in their twenties and only a few years out of university – earn four or five times the average London salary of £35,000.
And many are paid more than the £165,000 that Prime Minister Rishi Sunak earns.
Good start: an elite group of US companies has increased the pay of new staff in London to £180,000
Legal industry experts believe there is no end in sight to rapidly rising salaries as businesses prosper from private equity deals and lucrative litigation.
“Top-tier U.S. firms always want to maintain their edge in the market,” said Christopher Clark, director of legal headhunter Definitum Search. “I think £200,000 salaries in corporate America will be in place as we move into the new year, if not sooner.”
A partner at a major London law firm said salaries were “driven by private equity at the top end of the market”.
He said: ‘The economy only works if you can charge young people $500 an hour.
‘The only clients willing to pay very high rates are private capital. You would have thought there would come a point where they would say no. But we’re not there yet.’
Aspiring lawyers must generally pass a series of professional exams and complete two years of training or work experience before qualifying.
Apprentices at Magic Circle companies can earn more than £60,000 a year. Then your salary increases rapidly based on the rating.
A&O Shearman (formerly Allen & Overy) and Clifford Chance increased salaries for newly qualified staff by 20 per cent last month. The firms’ junior lawyers will enjoy £150,000 a year after the pay rise.
It follows rivals Freshfield Bruckhaus Deringer and Linklaters, which increased their packages by a fifth earlier this year.
Slaughter and May are the only members of the Magic Circle who have not increased their newly qualified salaries to £150,000. However, it is speculated that they will do so in the coming months.
However, the battle for talent in London remains dominated by the deep pockets of its American rivals.
US legal giant Quinn Emanuel Urquhart & Sullivan said last month it would increase salaries for newly qualified London lawyers to £180,000.
That put him on a par with his American rival Gibson Dunn, while many others pay their lawyers more than £170,000.
Charlie Simpkin, director of JMC Legal Recruitment, said: “The financial power of US law firms is formidable.”
He added that fear among British firms about American rivals was justified as “many lawyers choose to move to American firms where they may face only a slight increase in pressure but can achieve a substantial increase in profits.”
