With an upturn in the economy leading to an increase of instructions at law firms, there is a real demand to secure and retain the best talent amongst the associate pool at City law firms. This has been reflected by recent increases in salary at the majority of private practice firms, with Magic Circle firms setting the bar, Allen & Overy being a particular case in point by incorporating chargeable hours led bonuses into their base salaries and therefore offering the highest salaries amongst their peers. However this has still not held back an increasing number of associates deciding to move either immediately upon qualification or post qualification to a US Law firm in London, with New York firms still putting together the most competitive packages to associates, some of which offer 100k+ starting salaries to a Newly Qualified lawyer.
Whilst some associates can’t escape the lure of US salary increases, the salary gap is narrowing between US and UK law firms for a number of reasons. Firstly, UK firm’s turnover and profitability is up and so they have more resources to compete with US Law firms. Secondly, whilst US firms have sought to increase salaries, the level, mainly on a lockstep basis until senior associate counsel level is still dictated by the founding US offices, allowing for less flexibility to restructure packages.
The New York market is still increasingly competitive however because of pre-existing high salaries, but the increases to levels have been at a much smaller percentage than UK firms. With the exception of White & Case (who increased their NQ salaries by almost 30% to compete with other Wall Street firms) most White Shoe US firms have marginally increased salaries, whereas UK Magic Circle and top international firms have made much larger percentage increases. As mentioned above, A&O now offer base salaries to their associates that bring them very close to the equivalent salaries at US law firms plus they may also offer a more comprehensive pension and benefits package than their US counterparts. The overall impact will mean that the lure of high salaries at US law firms is not as strong as it used to be, keeping top talent at UK law firms until a further change to salary structures. Despite this, US Law firms do offer a very attractive route to ambitious associates, however the landscape is not as clear cut as it has been in previous years and therefore associates are best pressed to really consider their options carefully before deciding on the best platform for their longer term career.
If you are looking to make a move at this stage, want a consultation on the market as it stands, or perhaps just have a chat to reaffirm the decision you have already made, please do feel free to give me a call on 0203 815 6809.