A further reminder comes this week that despite much talk of the pressure on the legal market (see Comment: Things I would have said about the future of law if I hadn’t forgotten my notes), leading City players continue to be highly profitable with Linklaters announcing on Tuesday (7 May) that it is raising its salary bands for associates.
The move sees Linklaters increase newly-qualified pay from £61,500 to £64,000. Year one post-qualification experience (PQE) associates see a more modest £500 rise to £69,500. Years two and three PQE respectively earn £78,250 and £89,000, a rise of £2,250 and £1,000. Trainees see a £500 rise, increasing in seat one to £39,500.
The rises put Linklaters just ahead of magic circle rival Slaughter and May, which last week announced modest increases to its underlying pay bands.
The review is separate to the annual increases in pay associates gain as they move up the qualification ‘ladder’. Linklaters also operates a bonus scheme for ‘exceptional’ performance. The rises at Linklaters and Slaughters underline expectations that most City firms will agree modest increases in associate pay in 2013 after three years in which market rates for associates have largely been frozen.
Salaries for City associates have fallen around 15% in real terms since 2009, when many firms effectively dropped the salary for newly-qualified lawyers from around £66,000 to £60,000 in response to the banking crisis.
While some voices have argued that junior associates are over-paid given the prolonged slump in Western economies, pressure remains on leading City firms given the higher compensation on offer at the UK arms of many US rivals.
One solution to this tension firms have hit upon is bringing in a stronger element of discretionary promotion to associate progression and pay, a shift from the traditional ‘associate lockstep’ model in which lawyers are paid strictly on years of post-qualification experience.
While that trend is set to continue, and City firms continue to modestly downsize their UK intakes in response to the sullen domestic economy, pay for those lucky enough to gain a training contract is likely to be maintained or modestly increase in the years ahead.
alex.novarese@legalease.co.uk