The oldest law firm in London is Freshfields Bruckhaus Deringer but being old does not make it ‘old fashioned’ in the payments it makes to its lawyers. It has just set a new London legal pay record by agreeing to pay its newly qualified lawyers more than any other Magic Circle law firm. Translated, that means the NQ lawyers will be getting £125,000 a year.
The downside of this for the legal profession is that it is likely to set off a further spike in London law pay rates but – even more to the point – the stratospheric pay rates mean that the law firms stand accused by some of using the money to justify endless work for their legal staff.
The announced pay rate increase puts Freshfields into Goldfields country because it will be paying its NQs considerably more than its so-called Magic Circle competitors such as Clifford Chance, Linklaters, Allen & Overy, and Slaughter & May – which all pay their newly minted lawyers £107,500 a year.
The Freshfields pay hike comes as its first salary rise since the start of the pandemic, after the firm last upped its NQ salaries to £100,000 a year in May 2019.
London managing partner at Freshfields, Claire Wills said: ‘We believe that our package of financial and non-financial incentives, including paid qualification leave and career development opportunities, underpinned by effective work allocation and an inclusive working environment, offers a truly market-leading proposition.’
But Freshfield’s Legal Pay Rise Is Still Below The Top
While Freshfields’ NQ pay is a lofty amount it is actually not the most being paid as the legal pay wars in London rage on. The US-based law firms continue to lead the legal pay pack with substantial pay rates, of which the highest NQ salary is £161,700, paid by Gibson Dunn and narrowly topping the £161,500 offered by US-based law firm Goodwin Procter.
But there have been warnings about ever-increasing NQ pay, which DWF’s chief executive Sir Nigel Knowles has described as ‘only a sticking plaster’ while legal recruitment consultancy Edwards Gibson has cautioned that ‘law firm salary wars don’t tend to end well for associates’.
The legal pay wars have also raged in the US, which we reported on here the other day. The same issues have arisen as with the UK law firms with a highly competitive situation for legal talent combined with booming private equity, M&A and other transactions continuing to provide heady profits for lawyers.