The war for talent at leading law firms in the UK and US shows no sign of slowing as experts predict starting salary for juniors could soon top £200,000 a year (€235,000) – far more than the UK prime minister, writes Emily Hawkins.
An elite group of US firms has increased pay for newly qualified staff in London to as much as £180,000 (€211,000) as salaries 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 historically dominated the legal scene – are offering junior lawyers up to £150,000 (€176,000) a year as competition intensifies.
It means many newly qualified lawyers – who are in their 20s and only a few years out of university – are earning four or five times the average London salary of £35,000 (€41,000).
And many are paid more than the £165,000 (€194,000) that Prime Minister Rishi Sunak earns.
Legal industry experts believe there is no end in sight to rapidly rising pay as business booms on the back of private equity dealmaking and lucrative litigation work.
“The top tier US firms always want to keep their market edge,” said Christopher Clark, director of legal headhunter Definitum Search.
“I think £200,000 salaries at US firms will be in place as we run into the new year, if not sooner.”
A partner at a leading London law firm said pay was being “driven by private equity at top end of the market”. He said: “The economics only work if you can charge the jun- iors out at $500 per hour.
“The only clients willing to pay very high rates are private equity. You’d have thought there would come a point where they say no. But we’re not there yet.”
Would-be lawyers typically must pass a series of professional exams and complete two years training or work experience before qualifying.
Trainees at Magic Circle firms can earn more than £60,000 a year (€70,000). Their pay then rises rapidly on qualification.
A&O Shearman – formerly Allen & Overy – and Clifford Chance raised salaries for newly qualified staff by 20pc last month. Junior lawyers at the firms will enjoy £150,000 a year after the pay bump.
It follows rivals Freshfield Bruckhaus Deringer and Linklaters, which both raised their packages by a fifth earlier this year.
Slaughter and May stands as the only member of the Magic Circle not to have increased their newly qualified salaries to £150,000.
However, there is speculation they will do so in the coming months.
The battle for talent in London remains dominated by the deeper pockets of their American rivals, however.
US legal giant Quinn Emanuel Urquhart & Sullivan said last month it would increase salaries for newly qualified London lawyers to £180,000.
That put it on a par with US rival Gibson Dunn while a host of others are paying junior lawyers more than £170,000 (€200,000).
Charlie Simpkin, director of JMC Legal Recruitment, said: “The financial power of US law firms is formidable.”
He added that fear among UK firms about American rivals was warranted as “many lawyers opt to move to US law firms where they may face only a slight increase in pressure but can achieve a substantial increase in earnings”.