Baker McKenzie has become the latest law firm to put its newly-qualified (NQ) solicitors in line for a six-digit pay package with an eye-catching 23% increase to its starting rates.
The firm announced today (17 July) it is raising its basic NQ package from £77,000 to a minimum of £95,000, with performance-related bonuses bringing earnings to over £100,000.
Bakers is the latest to follow in the footsteps of Freshfields Bruckhaus Deringer, which in May announced one of the largest real-term pay rises in the City for a decade amid increasing pressure for associate talent from US rivals.
Bakers’ package will now include a £90,000 base salary with a £5,000 sign-in bonus for all its NQs, while top performers will be eligible for a further bonus of more than £5,000.
A spokesperson said the firm had raised its NQ package ‘in line with the London market’ as part of its commitment to remunerate people ‘fairly and competitively’ but declined to disclose the range for performance-related bonuses.
The move is particularly significant coming from a firm that over the last few years has focused on cutting costs amid a push to increase profitability, with an unofficial goal to bring its profits per equity partner (PEP) to $2m.
In October last year Bakers announced a review of its London professional and business services (PBS) staff, with its chief operating officer Jason Marty saying the firm’s priority was to become ‘a more efficient organisation with competitive and sustainable profitability’.
Last month it cut 46 PBS roles, with another 33 still at risk, while in previous months it announced the opening of low-cost hubs in Florida and Buenos Aires.
The firm’s latest financial results in August last year showed PEP increased 13% to $1.44m in the year to 30 June 2018 as revenue hit $2.9bn.
That even a firm which repeatedly stressed its focus on profitability felt the need to increase its starting rate by more than £15,000 shows how intense the war for associate talent in the City has become.
A few weeks after Freshfields raised its starting rate from £85,000 to £100,000 plus bonuses, all four of its Magic Circle rivals followed suit. Clifford Chance (CC) announced a £100,000 package including bonus at the beginning of June, matched by Slaughter and May, Allen & Overy and Linklaters shortly afterwards.
But the war for talent soon widened well beyond the Magic Circle, with Ashurst announcing a 9% pay increase to £105,000 last week after firms including Macfarlanes, Travers Smith and Herbert Smith Freehills made similar moves.