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💷 Why City law firms keep increasing their salaries


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The salary wars for junior lawyers are largely a response to US firms setting up shop in London and offering higher wages than UK firms. This has forced UK firms to up their salaries to keep talent. They can't match US base salaries, but some are trying creative compensation methods (like synthetic equity) to keep their people happy and motivated.


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💷 Why City law firms keep increasing their salaries

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What's going on here?

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.👇️ 

Data from The Lawyer

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


  • ✅ 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.


  • ❌ 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


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


  • ❌ 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


  • ❌ 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.


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