Law firm Slaughter and May maintains a junior lawyer salary at £150,000.
New Legal Talent War in City of London Might Be Sputtering
In a potential shift, it seems the infamous struggle for the best legal talent in the City of London could be easing up for the first time post-Covid pandemic. This perceived cooling off is due to a mix of lowered dealmaking volumes and escalated salary costs following the pandemic.
Take, for instance, Slaughter and May, a prominent firm known for advising some of the UK's premier companies. They've decided to maintain the base salary for their newly qualified (NQ) solicitors at £150,000 after conducting their semi-annual associate pay reviews.
This decision comes as their "Magic Circle" peers, who usually evaluate pay levels at the end of the financial year, are treading cautiously in a climate of increased market uncertainty. With steep wage increases in past years, they're waiting to see how their competitors move.
Significantly, Slaughters has never left NQ lawyer salaries unchanged since the Covid-19 crisis, with a sharp increase in wages in recent years. The intense competition between top City law firms and deep-pocketed US rivals, coupled with healthy deal-making activity, plunged freshly qualified Magic Circle lawyer pay from approximately £100,000 in 2019 to £150,000 last year.
However, this year, reduced dealmaking volumes stemming from Donald Trump's U.S. trade war and higher salary costs following considerable increases could potentially quell the wage battle.
Ria Karnik, a managing director at legal recruiter Major, Lindsey & Africa, notes a sense of law firms reluctant to act first. This hesitancy could be due to the current demand not necessitating a raise in NQ salaries. If change does occur, it might be more about keeping pace with competitors, she suggests.
Londongrad "Magic Circle" firms such as Linklaters and Freshfields announced 20% pay increases for NQ lawyers to £150,000, effective May 1 last year, kickstarting a salary bonanza for junior lawyers. US firms in London, known for offering NQ salaries up to £180,000, have set a hefty benchmark. However, the market is now reconsidering the feasibility of such aggressive wage levels in light of dwindling transactional activity.
So far, no top City firm apart from Slaughters has disclosed their new pay levels for this year. Post the substantial increases in 2021, Slaughters opted to maintain NQ solicitor salaries at £150,000 in September, having increased their NQ pay every year since 2021. They were among several leading firms to take the unusual step of lowering rates in 2020, a move triggered by the onset of the pandemic.
- In light of reduced dealmaking volumes and increased salary costs, the escalating competition among top City law firms for the best business talent, particularly in finance careers, may be slowing down.
- Despite the tradition of the Magic Circle firms matching or exceeding salary levels at the end of the financial year, the current uncertainty in the market due to lowered dealmaking volumes and higher costs could lead to cautious approach in finance careers salaries, with firms possibly following competitors' moves rather than initiating wage increases.
