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Allen & Overy ups London-based US NQ lawyer pay packets to £124,000

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MoneyLaw reaches the City’s magic circle

Money

Elite magic circle outfit Allen & Overy has today revealed that a number of US newly-qualified (NQ) lawyers within its London office will pocket a staggering £124,000 a year.

The international giant — which offers around 90 UK training contracts annually — revealed that a handful of freshly minted lawyers based within its City office will receive the new six figure “Cravath pay level”.

London-based US NQs will now — like their counterparts across the pond — pocket a whopping “base salary” of $180,000 (£124,000). With a London NQ currently walking away with very competitive £78,500, this still puts the fresh-faced US lawyers on £45,500 more, despite working out of the same office.

The incredible move comes as MoneyLaw mania continues to sweep the US.

Earlier this month New York giant Cravath, Swaine & Moore took the lead, hiking starting salaries from $160,000 (£110,000) to $180,000 (£124,000). Since then many of the top legal players in the US have followed suit, happily flashing the cash in order to attract and retain the top legal talent.

However a handful of firms have also been generous enough to chuck the pay increases at their US associates based in the City.

Akin Gump, Kirkland & Ellis, Cadwalader, Latham & Watkins, Milbank Tweed Hadley & McCloy, Davis Polk and Simpson Thacher have all upped City-working US NQ pay packets to the coveted Cravath-level of £124,000.

In terms of the magic circle, Allen & Overy now joins both Clifford Chance and Freshfields in upping US pay packets. With Slaughter and May not having a US office, the only firm yet to unveil a massive pay boost is Linklaters.

With a huge pay divide emerging internally across the magic circle, it won’t take long for the firm’s young legal talent to question why the US NQ across the office is pocketing almost £50,000 more.

As Notorious B.I.G once said, “more money more problems.”

19 Comments

Trainee

It would be poor journalism on your part not to report such things, but I’m getting seriously bored of “salary chat”

(5)(10)

Anonymous

It’s a shame someone forces you to read it with a gun to your head.

(14)(0)

Tommy's putrefied grandma

Giant here, giant there, I’m starting to think we’re trying to compensate for something here little Tommy!

Luv ya,
nana xoxoxo

(11)(5)

Anonymous

I can’t imagine UK NQs in the London office would be too happy about that.

(18)(0)

Anonymous

(1)(0)

Anonymous

This will only breed contempt.

(3)(0)

Anonymous

US qualified lawyers in the magic circle (and other City firms) have always been paid US rates. This story: yawn. Will only affect a handful of HY debt monkeys anyway.

(7)(1)

Anonymous

A&O has a large ECM/DCM team, so …

(0)(0)

Anonymous

Have Ashurst upped UK NQ salaries ?

(0)(0)

Chazza from JonesDay

No. They won’t either, quit asking like a lil’ bitch.

If you want big dolla, join Skadden, SullCrom or Weil, not a second rate outfit like Ashurst.

(6)(5)

Lord Harley of Council

While you dub-tub strugglas keep sucking corporate c*ck, I’m up here in Preston f*cking coining it – get in!

(5)(1)

Anonymous

This post has been removed because it breached Legal Cheek’s comments policy.

(1)(0)

Future Trainee

Hopefully Jones Day will increase salaries soon

(1)(7)

Anonymous

Heh, dream on baby.

(3)(1)

Gresham Street

Why should they do that? Where’s the value in splashing an extra £10-20k+ on some bloated rugby-lad NQ associate?

Plus the firm didn’t yet match salaries to the Cravath scale in the US either, so there’s hardly any impetus to do so in the Tudor Street muppet house.

Seems to me like all the second-rate chaps crowding JD in hopes of gash and US-rate riches are about to experience a rude awakening.

(10)(3)

Anonymous

Why is Jones Day a muppet house?

(2)(8)

Anonymous

Do your research son, the answers will soon come forth.

Hint: RollOnFriday & Legal Cheek is a good place to start.

(3)(0)

Anonymous

Can someone please tell me why US lawyers get paid SO much more than their UK counterparts (even within the same office!)?

(2)(0)

US NQ

A number of suggestions:
– far greater market, more clients and thus more money to go around – the US is the world’s largest economy after all

– savage work culture: there’s a reason the pay packets are called ‘compensation’ and not salary – they literally compensate you for the 2,000+ billable hours they require you to churn out per year. This becomes approx. ~3,000 hours per year when you factor in commuting, things like having lunch or going to the toilet during a workday or just taking vacation – the year is only so long. It’ll quickly make an 80-hour work week a possibility.

– vast quantities of student debt: unlike in the UK where law school is a mere three years + 1 year LPC (if regular and not fast track), in the US you need 4 years of college together with three years of law school. This is seven years of potentially private university tuition, which in most cases totals some $45,000+ per year on fees alone, not including rent, associated living costs and so on. Given most AmLaw 100 firms recruit from T14 law schools, you need a good degree from a good college/university to get into such a law school, which further propagates the need to spend more tuition money. All in all, some graduates entering their firms as associates may accumulate in excess of $500,000 for their 7 years of university education, repayable at 5-6+% interest p.a. In other words, you need a massive salary just to repay what is in essence a mortgage you took out to get an education.

– competitive legal market: when one domino falls, other follow. Cravath can easily pump up its base pay given its low leverage ratios/high profits/few offices. Other comparable firms will feel pressured to adjust their pay to attract top talent, and this sets the whole ball rolling. The UK never had a tradition of paying such large salaries and bar a random pioneer in putting down a huge raise for NQs (like SJ Berwin did in the early 2000s), the market is very slow to adjust. So far, any indication of ‘salary matching’ only extends to the MC and then trickles down in small amounts to less prestigious firms in the City

– in reality, few US firms pay such large salaries: you need to remember that the US is home to literally thousands of law firms, both big and small. In the grand scheme of things, only the top 100 firms can afford to pay such vast salaries and even then, they often extend only to NYC/DC/Boston, etc. Smaller firms or less profitable offices are often left behind. Indeed, most regional US offices weren’t even on the original $160k rate before the raises came.

TL;DR: I’m in a cab getting a lift home from the office so I needed to kill time. ‘Twas my two cents.

(28)(0)

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