Large mid-tier firms in the UK were some of the first to feel the sting of the UK’s decision to leave the European Union, with Berwin Leighton Paisner (BLP), Trowers & Hamlins, Addleshaw Goddard and Gowling WLG all putting their summer salary reviews on hold.
In July, BLP postponed all UK staff pay reviews to November 2016.
The decision came on the back of a sluggish financial performance for 2015/16, with fee income falling 2% to £254m in 2015/16. The firm said in a statement: ‘Following market uncertainties arising out of the recent EU referendum vote, BLP has decided that the responsible and prudent thing to do is to defer making UK salary decisions for a further four months.’
Addleshaws also froze salary reviews for staff and delayed its annual review of partner remuneration for both fixed-share and full-equity partners. The firm said the decision would be postponed ‘until early autumn, when we will have clarity on anticipated improvements in activity’, although performance bonuses would still be paid.
Similarly, Gowling WLG pushed back its August pay review for all staff excluding partners, with a decision expected in November. Bonus payments and summer promotions will go ahead as planned.
On top of the salary woes, Simmons & Simmons laid off lawyers in its commercial, banking and real estate practices. A senior partner at the firm would not be drawn on the number of redundancies, but said: ‘The numbers are not big. It’s largely in real estate.’
Real estate practices have experienced a marked slowdown since the Brexit vote, with many citing cancelled deals. The vote resulted in an exodus of capital that has caused some funds to halt trading, with retail investors withdrawing £1.4bn from property funds in June according to the Investment Association. While pay freezes have been the preserve of mid-tier firms in particular, some posted salary increases and stuck with their plans.
Macfarlanes and Travers Smith both posted updated pay increases in July. Travers’ newly qualified pay was increased by £1,500 to £71,500, while atMacfarlanes it increased by £1,000 to £71,000.
Nabarro also confirmed its annual pay review had gone ahead as planned. The firm saw turnover growth of 3% for 2015/16 to £130.4m and posted salary increases of a similar level, with trainee pay increasing by as much as 5% and one-year post qualification pay up 3%, by £2,000 to £68,500.
Managing partner Andrew Inkester told Legal Business: ‘It was the right thing for us to honour pay increases and bonuses following the vote for Brexit. Yes, there is uncertainty in the market, but we are seeing pluses and minuses.
‘Like other firms, we’re closely scrutinising costs, investing in efficiency and considering recruitment carefully, but it is important that you balance caution with optimism in these circumstances.’