Megafirm follows UK arms of Kirkland and Milbank into ‘MoneyLaw’
Growing numbers of English law graduates who are barely out of university will be handed massive amounts of money as the effects of a US pay war hit London.
Yesterday it was Kirkland & Ellis and Milbank Tweed Hadley & McCloy that upped pay for newly qualified (NQ) solicitors fresh out of their training contracts to an incredible £124,000.
And overnight news has reached us that the London office of another American giant, Latham & Watkins, has followed suit — ramping up its previously market leading NQ pay from £101,000 to the new £124k figure (rising by nearly £15,000 a year to £216,500 for an eight-year qualified associate).
See the photo of the internal Latham memo leaked to US legal blog Above the Law below. And note that it includes London!
With Latham offering a chunky 20 training contracts each year — substantially more than Kirkland’s 12 and Milbank’s five — the move is significant in that it will put pressure on other firms to follow.
Why is all this happening?
Well, as we explained yesterday, it began earlier this week when elite New York law firm Cravath Swaine & Moore hiked its new starter salary from $160,000 (£110,000) to $180,000 (£124,000), sparking a host of other firms to do the same — in the US.
Where things got a bit crazy was when Milbank opted to apply the rises in London too. This was unusual because pay for very junior lawyers in America is typically much higher than in the UK — as law school takes longer in the States, doesn’t include sponsorship and sees graduates enter firms without having to do a training contract but carrying heavy debts. So Milbank’s English NQs, who will have had the cost of law school covered by the firm, are getting a great deal.
Within hours Kirkland & Ellis London had followed Milbank’s lead — and now Latham has done the same. What happens next is anyone’s guess.
Interestingly, yesterday afternoon Freshfields brought in the same pay rises in its US offices but not in London. However, with three US firms now paying English NQs £124k, the magic circle and other elite law firms in London will come under huge pressure to up their pay.
A new tier of law firms, which the US press has already dubbed ‘MoneyLaw’, is being created. Who joins, and where this leaves those that don’t, remains to be seen.