English firm now paying close to US levels for rookies — but bonuses are slashed
Global law firm Allen & Overy has issued a robust message to magic circle rivals by giving its junior lawyers pay rises of up to 25%.
Along with being handed their practising certificates, freshly minted solicitors at the £1.23 billion revenue firm will bag salaries of £78,500, an increase of £12,000. Associates in the year above will see salaries rise from £72,500 to £92,000. Those at two years post-qualification experience (PQE) go from £82,500 to £104,500, while three-year PQEers jump from £93,500 to £115,000.
Trainees also get a boost, albeit of much more modest proportions of about 5%. From this September, first-year trainee pay rises from £40,000 to £42,000, while second-year salaries also rise by £2,000 to £47,000.
While the NQ and associate pay rises appear at first glance to shake the City market, A&O’s move is not as straightforward as the firm’s junior lawyers might initially think. Firm managers have stirred the pay pot in a different way, binning the lowest level of the three-tier bonus scheme.
The upshot is that while NQs and other junior lawyers trouser a significant rise to basic pay, fewer associates will be handed bonuses this financial year.
A&O’s global managing partner, Belgian lawyer Wim Dejonghe, attempted to sweeten the pill of shrinking bonuses, commenting:
By adding our standard bonus to base salaries we provide our associates with more certainty as to their pay and more consistent recognition for the work they do every day.
Nonetheless, from the all-important recruitment market perspective of NQ starting rates, the move puts the Spitalfields Market crowd at the top of the English law firm pay table — £8,000 above magic circle competitors Clifford Chance and Slaughter and May.
The gap between A&O and the rest of the magic circle is even greater at one, two and three PQE level, with the firm paying around £16,000 more than its rivals.
The magic circle firm’s munificence comes on the heels of release at the beginning of the month of the firm’s latest financial results. Those figures showed turnover had increased by 4%, or £47m.
However, pre-tax profit rose by 7% to £570m; while profit per equity partner — the average amount senior equity individuals lug home in their wheelbarrows every year — also rose by 8% to an eye watering £1.21m.