Table of Contents

• EDITOR’S RAMBLE 🗣

• FEATURED REPORT 📰

• 🏢 For law firms

• TOGETHER WITH TLDR* 🤝

• A BIT OF FUN 😄

• IN OTHER NEWS 🗞

• AROUND THE WEB 🌐

• STUFF THAT MIGHT HELP YOU 👌

EDITOR’S RAMBLE 🗣

I love turning ‘online relationships’ with people into ‘in-real-life’ relationships.

We’d spoken a lot online, but last week, I met with Alin in person for the first time.

Alin runs Equal Opportunity, a free newsletter which shares resources for aspiring UK lawyers — check it out if you’re interested.

Have a great rest of your week!

- Idin 

FEATURED REPORT 📰

💷 Why City law firms keep increasing their salaries

There’s been a pay war taking place in London for newly qualified lawyers (called NQs) and more senior lawyers.

Just this week Freshfields upped its NQ pay to £150,000 — so the battles aren’t over yet! ⚔️ 

How do lawyers get paid?

Here’s how lawyers at commercial law firms get paid at different stages of their careers:

👶🏽 Trainees: They’ll get a salary only (generally no real bonuses)

👩🏻‍🦰 Associates: Associates get a higher base salary plus a bonus. More senior associates get a higher base salary. The bonus is usually between 10% and 30% of your salary, based on the number of hours you worked and your general performance.

👴🏼 Partners: When we say partners, we’re talking about equity partners. These are the ones who get paid a proportion of the firm’s profits (firms also have salaried partners who are called “partners” but get paid similarly to senior associates).

The compensation for equity partners is generally structured through a ‘lockstep’ system. This means each partner receives a fixed proportion of the firm’s profits based on their seniority (+ some other factors like whether they brought the client to the firm).

Why are firms increasing their pay for juniors?

The main reason is the rise in US law firms coming to London.

US firms usually pay London lawyers the same as what they’re paying their New York lawyers (which tends to be higher than typical London salaries).

So, UK firms then need to increase their salaries to avoid their staff leaving to US firms.

Here are some of the top salaries newly qualified lawyers make in London (spoiler: they're all US firms). The top ones pay more than £180,000.👇️ 

How are UK firms competing?

In short, UK firms will probably never match the base salaries of US firms (US firms are generally way more profitable).

Also, of course salary isn’t the only thing people think about when choosing where to work.

But some law firms have started to become more creative with how they compensate their more junior staff members.

Pogust Goodhead: This boutique litigation firm has put aside a £200 million bonus pool and says that some NQs will receive up to £2 million over three years from it. They call it a “synthetic equity” model. The way it works is that even the junior lawyers can earn as if they owned a piece of the firm (like equity partners).

Linklaters: The Magic Circle firm calculates partner pay through a “lockstep” system which is scored out of 50 (you get points for experience and performance). Currently, they have a ‘step’ at 30 points and 40 points where your pay increases. But they’re considering adding an extra step at 20 points. This would mean young partners can access higher pay faster so they’re less likely to be lured away by more lucrative offers elsewhere.

What’s the big picture effect?

The ‘pay war’ (or, really, talent war) that’s taking place in the City over the last few years, will affect different groups in different ways.

Let’s break down the impact for each of the players.

👩🏻‍🦰 For junior lawyers

Positives

• ✅ More money: Junior lawyers directly benefit from higher salaries, which is (of course) good news for them.

• ✅ Sense of fairness: The reduced pay gap between junior lawyers and partners can make juniors feel valued and recognised for their contributions.

Negatives

• ❌ Work-life balance: Higher compensation might come with the expectation of longer hours and higher workloads, which could make switching off from work harder.

• ❌ Overemphasis on cash: An increased focus on salary could overshadow other important aspects of a career, like professional development and non cash benefits.

🏢 For law firms

Positives

• ✅ Attracting talent: Offering higher salaries can be a tool for firms to attract top candidates, improving the firm's talent pool and performance.

Negatives

• ❌ Costs to the firm: The financial burden of increased salaries can impact the firm's profitability or lead to higher fees charged to clients.

• ❌ Inflationary pressure: High salaries may cause a pay war spiral where firms keep pushing salaries up, which might be unsustainable.

• ❌ Salary bunching: Big pay raises for junior lawyers might make mid-level associates more frustrated if their pay is not increased proportionally too.

🤝 For clients

Negatives

• ❌ Higher fees: Law firms will probably pass the increased salary costs to their clients by raising their fees, which would make the firm’s legal services more expensive.

TOGETHER WITH TLDR* 🤝

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A BIT OF FUN 😄 

🤑 How to make £180,000 as a first year lawyer

IN OTHER NEWS 🗞

• 🚖 Uber is facing a £250m lawsuit brought by nearly 11,000 London black cab drivers. The drivers, represented by Mishcon de Reya, claim that Uber misled Transport for London to secure its operating license. Uber maintains it operates lawfully in London and disputes the allegations. This lawsuit is the latest in a series of legal challenges for Uber in London, where it has previously faced licensing issues and protests from black cab drivers.

• 💰 Johnson & Johnson (J&J) has proposed a massive $6 billion settlement to address tens of thousands of lawsuits claiming that their talc-based products, including baby powder, caused ovarian cancer. J&J, which has now switched to a cornstarch-based product, maintains that the lawsuits are without merit. This settlement requires approval from 75% of the claimants. If approved, it would resolve nearly all existing and future claims. (of course, we wrote about this long ago)

• 🌍 Clyde & Co has opened a new office in Jeddah. This new office has strengthened Clyde’s presence in Saudi Arabia (it already had an office in Riyadh before). With this addition, the firm now features a team of seven partners and over 24 legal professionals across Saudi Arabia.

• 🍸 Revolution Bars is getting significant interest from 40 potential buyers eyeing its assets or subsidiaries. The UK bar operator, with brands like Revolución de Cuba and Peach Pubs, is exploring strategic options, including a sale, amid its efforts to restructure the company. The company also recently got a financial boost of £12.5 million through a new issue of shares on the London Stock Exchange. DLA Piper is advising Revolution on these moves.

• 🎧 The UK's Competition and Markets Authority (CMA) is concerned over AlphaTheta's planned purchase of Serato, suggesting the merger could crank up costs for DJs. The CMA is worried that if these two brands (each of them a big name in the DJing world) merge, it would reduce competition too much in the industry. That might lead to higher prices and less choice for DJs. The deal is also under scrutiny in New Zealand.

AROUND THE WEB 🌐

• 📚️ Words: Here’s a reverse dictionary — describe a situation and it gives you a word that matches it best.

• 🎥 Movies: Check out the most highly-rated, fairly unknown movies to watch (tagged by streaming service too).

• 🚀 Space: Explore all past, present and future rocket launches (it’s super interesting)

Credit: r/internetisbeautiful

STUFF THAT MIGHT HELP YOU 👌

• 📹️ Free application help: If you're applying to commercial law firms, check out my YouTube channel for actionable tips and an insight into the lifestyle of a commercial lawyer in London.