Just a day after Allen & Overy (A&O) revealed it was standing firm with its £107,500 newly-qualified (NQ) salary, Herbert Smith Freehills (HSF) has announced an eye-catching 14% uptick in NQ pay from £105,000 to £120,000.
The remuneration jump became effective today (Friday 1 July), with scope for further payouts as it does not include bonuses. While this spike in NQ pay has attracted immediate attention, the firm has also vowed to make ‘significant investment’ throughout its associate salary bands.
Alison Brown, HSF’s executive partner, said: ‘It is key that we continue to attract the very best talent. We also want to recognise high-performing lawyers at all levels, so prioritising fairness and equity across the whole associate population is key for us. These new salary increases reflect the real depth of talent we hold in our NQ and entire associate population and demonstrate that we value their contribution, as next generation leaders of our firm.’
It is an early indication that firms are split on investment appetite as a market shift potentially looms: A&O took a gamble yesterday by freezing its associate salaries, citing a ‘more challenging business environment.’
All eyes now are on the remainder of the Magic Circle, and their own conclusions on associate pay due to be announced this year. As things stand, Clifford Chance and Freshfields Bruckhaus Deringer have only a slight edge on HSF, with the pair offering novice lawyers £125,000.
Linklaters meanwhile currently matches A&O’s £107,500 payout, while Slaughter and May offers its NQs £115,000.
The timing of HSF’s move, one day after A&O’s own announcement, suggests that firms nipping at the heels of the Magic Circle have spotted an opportunity in the war for talent. While boosting pay is often a reductive approach to swaying junior talent, resting on the assumption that budding lawyers are overwhelmingly motivated by money, the £12,500 disparity between HSF’s and A&O’s rates is not an insignificant one.