It may well be a grind, but if you can make it to the top of the English solicitors’ profession, a pool of cash awaits
Moves by several City of London law firms to boost trainee and newly-qualified solicitor wage packets have triggered speculation that a salary war is about to break out at that end of the profession.
But Square Mile solicitors were reminded yesterday that the money on offer to junior lawyers looks like peanuts when compared with the dosh being thrown at elite grey hairs. (Although, considering that most top firms adopt the view that lawyers are washed up by the time they hit 50, not that many actually need of a daub of the old Just for Men or L’Oreal.)
Global firm Allen & Overy announced yesterday that it is adding a performance-related bonus pool to its partner remuneration scheme. The firm’s current profit-per-equity partner figure — the average annual drawing a full equity player will take home — rose by 7% last year to an eye-watering £1.12 million.
Now global managing partner — Belgian Joe 90 look-alike Wim Dejonghe — is slipping into his Father Christmas suit and preparing to shower the heavy-hitters with even more cash, depending on their ability to make it rain, of course.
The move comes as the City still awaits an announcement from Allen & Overy on trainee and newly-qualified solicitor pay rises. So far, Slaughter and May and Linklaters have announced significant boosts for junior lawyers, but Clifford Chance and Freshfields Bruckhaus Deringer join A&O in keeping their youngsters on tenterhooks.
According to a report yesterday on The Lawyer website, 90% of A&O partners agreed to add the pool on top of the firm’s lockstep structure. That is the traditional scheme that many English firms use, which effectively rewards equity partners for time served by bunging them guaranteed increases at the beginning of each financial year.
But lockstep systems have faced increasing criticism and pressure — not least as a result of enhanced competition in London from muscular global US firms. The Yanks — somewhat predictably — are bigger believers in rewarding individual performance and are not that keen at all on universal locksteps.
As a result of US firms in London luring big-swinging rainmakers from English rivals on the promise of tasty eat-what-you-kill remuneration packages, modifications to lockstep regimes at City firms have been gaining pace over recent years. A&O’s move is just the latest.
The Lawyer report says that strictly speaking A&O claims it will not be amending its lockstep, but simply adding a “discretionary points pool” for performance-related bonuses.
Some might suggest that once a partner is raking in north of a million quid a year, it’s difficult to see the point of a bonus. But the annual cost of sending the fruits of one’s loins to Eton mount up — the best part of £70,000 a year in fees alone to board two sons, for those interested.
Stateside, the numbers are even bigger. At the beginning of this year, the American Lawyer magazine reported that the elite group of US law firm equity partners wheelbarrowing home more than $10 million (£6.53m) in annual drawings was increasing dramatically.
Indeed, the magazine went on to point out that the top group was opening an ever-wider gap between it and other equity partners. And it’s all a by-product, according to the experts, of law evolving away from a profession and into a business.
One driver of the rocketing top-level drawings, Steven Slutsky, an analyst at PricewaterhouseCoopers told the magazine, is that “law is following the trends that we see in almost every other business”.
All of which means, that while most students doing law degrees and even those on the Legal Practice Course are unlikely even to practise top-flight commercial law, those that do and that claw their way to the top, can still coin it.