US law firm pay war benefits fresh-faced associates this side of the pond
US outfits Kirkland & Ellis and Milbank Tweed have boosted the pay packets of their London-based junior lawyer talent to an astonishing £124,000. The new pay increase brings their London newly-qualified (NQ) lawyers in line with their New York-based counterparts.
Elite Wall Street firm Milbank, Tweed, Hadley & McCloy — which offers around five training contracts each year in its London office — has just upped its London-based pay to £124,000.
Kirkland & Ellis — which offers 12 City-based training contracts annually — has gone and done the same, upping its pay from a very respectable £100,000, according to legal blog Roll on Friday.
Both firms are responding directly to a recent pay hike by New York-headquartered giant Cravath, Swaine & Moore. Earlier this week Cravath upped junior lawyer pay from $160,000 (£110,000) to $180,000 (£124,000).
Within an hour of Cravath making the announcement, and not a firm to be out done, Milbank’s management were firing off emails to staff confirming the same increase. Matching the new coveted £124,000 figure, the firm — with over 600 lawyers across 12 offices — revealed that their London-based NQ lawyers will also receive the same vast pay increase.
According to Legal Cheek’s Most List, and to provide some contrast, NQs at both Kirkland & Ellis and Milbank Tweed will now walk away with almost £40,000 more than an NQ at Clifford Chance.
It would appear that two other US giants with a London presence Davis Polk — who offer four London-based training contracts — and Simpson Thacher have also adopted what is now being dubbed the “Cravath pay scale”.
With their US-based newly-qualified salaries upped to the same eye-watering £124,000, internal memos sent to staff at both firms revealed that there would be comparable rises for “English law qualified associates”. According to Chambers Student, Simpson Thacher does not currently offer UK training contracts.
Away from the US elite, at least one magic circle outfit has also joined the US pay bonanza.
Above The Law has confirmed that US-based associates at Anglo-German firm Freshfields will receive the new £124,000 figure. In an internal memo (pictured below) thanking staff for all their hard work, regional managing partner, Adam Siegel, confirmed that lawyers at the magic circle outfit’s New York and Washington offices would have extra cash chucked their way.
Allen & Overy, Clifford Chance and Linklaters now have the tricky task of deciding whether to follow Freshfields and remain competitive within the US market. If they do choose to up pay, firm management will have to have a difficult conversation with their City lawyers on why their US counterparts are earning a fair amount more than them each year.
Indeed this US pay influx has the potential to have further inflationary effects in the City. As a new band of super-paying US firms emerges in London, other American outfits — such as White & Case and Shearman & Sterling — may be forced to up pay too. Which in turn may compel magic circle outfits to re-evaluate their own pay grades to ensnare the top legal talent.
Whatever the outcome, it would appear the “100 club” is done with and the new elite “124 club” is the place to be.