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Pay trainees and NQs less; pay mid-level associates more, argues influential commentator

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Rookie lawyer remuneration in London may have reached unsustainable levels

Those entering the corporate legal profession are being paid too much, and the money that’s being given to them should go to mid-level associates instead, an influential legal commentator has argued.

The bold assertion — one that is bound to cause a stir among rookie lawyers — is made several paragraphs into an opinion piece by the editor-in-chief of Legal Business, Alex Novarese, who has the ear of many managing partners in the City.

Legal Cheek understands that those at the top of London’s big corporate law shops are becoming increasingly frustrated with the pressures they’re under to keep raising trainee and newly-qualified (NQ) lawyer pay — which has reached nearly £150,000 at some US firms’ London offices and pushed up magic circle money towards £90,000.

The salary inflation has been largely generated by US firm expansion in London (US firms pay young lawyers at much higher rates because in the States they arrive fully qualified burdened by higher levels of debt, and in recent years the Americans have rolled out standardised global pay scales). Since the Brexit vote, the trend has been exacerbated by the fall of the pound relative to the dollar, making the UK feel cheap to incomers from across the pond.

But a backlash against soaring NQ rates is gathering pace. Last month, in a move that implied client frustration with the rookie pay rises, Deutsche Bank announced that it would no longer pay City law firms for legal work undertaken by trainees and NQs. While such hardball tactics are a long way from being the norm, some see Deutsche Bank’s metaphorical two fingers to big-earning millennial solicitors as an inflection point.

Picking up on this theme, Novarese argues:

Trainees and junior lawyers should be paid a little less and correspondingly charged out at lower rates. Mid-level associates — the backbone of a high-quality law firm — should be paid more and charged out a little higher. Partners are paid enough but should generally be charged out at higher rates. The reason why clients always want partner time is obvious: it is subsided in terms of cost to the law firm. Client expectations of free training and discounted secondees only aggravates the pricing inefficiency and sees bluechip clients that can get the freebies effectively subsidised by the smaller clients that cannot.

Doubtless these words will find favour with many. But law firm bosses should be careful about lumping together NQs and trainees. Pay for the latter is typically in the high but not unreasonable range of £40,000-£50,000 — and if it were to drop the legal profession could quickly find itself losing top graduate talent to other City employers. That could prove an even bigger headache for those busy partners.

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