Magic circle top payer opts against raising NQ pay above £85k, dashing ‘100 Club’ dreams

Freshfields to stick rather than twist

Magic circle outfit Freshfields Bruckhaus Deringer has confirmed that the pay packets of its junior and trainee lawyers will remain unchanged, all but ending hopes of a magic circle firm reaching the £100,000 mark for rookie pay in 2017.

Last year we reported that the firm had bumped newly qualified (NQ) salaries by a staggering 26% to £85,000. Meanwhile, trainee pay enjoyed a modest 4% uplift across both years, taking pay packets to £43,000 and £48,000 respectively.

Following a review of salaries over the summer, Freshfields has now opted to keep its NQ and trainee remuneration at its 2016 rates. Nevertheless, associates — who are eligible for bonuses of up to 20% of their salary at 2PQE level and above — will continue to move up through the pay bands and collect their rises as normal.

So how does Freshfields’ NQ salary stack up against it magic circle rivals? Well, thanks to a series complex bonus structures, it’s not actually that clear.

Clifford Chance’s NQs can earn up to £85,000. This figure includes a bonus that the firm says the “vast majority” of its junior lawyer talent will receive. The Canary Wharf-based giant has yet to disclose whether whether it will be upping NQ pay this year, but the chatter is that any rises won’t be substantial.

Meanwhile, Linklaters (matching Allen & Overy’s 2015/16 increases) bumped junior lawyer pay to £78,500 back in June, but says “high performers” could pull in northwards of £90,000 with a bonus. Finally, Slaughter and May — which boosted NQ salaries to £78,000 (up 9%) at Christmas — confirmed that it had frozen pay this summer.

Julian Long, Freshfields’s London managing partner, said:

After the major revamp and increases in 2016, we have continued to review our competitive position, which, in terms of total compensation, remains strong in the market. We will continue to review and update, taking account of the market, in order to make sure our approach properly rewards our people for the work they do and the high standards they consistently achieve.

The magic circle are facing increasing competition from US rivals, which are increasingly bulking up in London. As the Legal Cheek Firms Most List shows, there are at least 15 American outfits offering London rookies over £100,000. The members of this ‘100 Club’ include Kirkland & Ellis, Akin Gump, Latham & Watkins, Milbank, Cleary Gottlieb Steen & Hamilton, Sidley Austin, Skadden, Ropes & Gray, Weil Gotshal & Manges, Davis Polk & Wardwell, Gibson Dunn, Shearman & Sterling, White & Case, Sullivan & Cromwell and Jones Day.

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88 Comments

Dr Patel

Tommy, you posted this at 9:02pm – is Legal Cheek going 24 hours now? Please put Katie King on the night shift after a few glasses of rosé, I wonder what tenuous content she’d come up with then…

(31)(1)
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Robert Kiyosaki

My poor dad said, go to school, and get a high paying job. That’s not wealth, that’s a job. You can get fired.

The richest young guys today start companies. It’s called Facebook, Google, stuff like that.

(6)(10)
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Anonymous

No, training at K&E is a shit idea. 2 years slave labour while earning less per hour than a Starbucks barista. You might get 5-10k a year more than trainees elsewhere who are working 30-50% fewer hours.

Your firm is only worth it for the associate salary. All the associates know this, and pity you motherfucker trainees. By the end of the two years, half of y’all will be too spiritually raped to want to carry on anyway. If you think the NQ retention rate is poor, you should factor in all the people that leave before 2pqe

(4)(1)
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Anonymous

This just proves you’re a mug if you work for an MC firm when U.S. firms offer the exact same work for a much higher pay. Even prestige is arguably a poor reason to choose the MC firms, given that it is a subjective factor and in any case the U.S. firms have prestige too

(11)(11)
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Anonymous

I train in a US firm, it’s horses for courses. MC would probably have better partnership prospects, loads get made up within having spent more or all of their careers there. The US trainee to associate, senior associate to US partner is not a particularly well trodden route probably due to the fact that most firms have only been recruiting trainees in the last 10 years, numbers of which have only increased in the last 5 or so, and most are barely at critical mass and buy star partners from MC/SC firms. Given most people who go into this are risk adverse and like well trodden career paths, US firms are probably less attractive coming straight from university with your whole career ahead of you. And that being said, most don’t last very long in PP anyway whether UK or US firms; most will end up IH anyway at c.3 PQE and with after tax figures being taken into account, it’s probably not particularly life changing differentials in the long run.

Also if you’re coming straight from uni and especially if you’ve done a non law subject as c.50% do, you’ll probably have very little idea of what you want to practise. I would say at most US firms, trainees have done law degrees. It is true you will probably end up qualifying in corporate/banking/finance by a long way if you work for a US or MC firm, but unless your US firm has a reasonable e.g. litigation practice, you’ll probably find yourself doing a course in it to satisfy the SRA. Personally, I think lit is as dull as ditchwater and I knew I wanted something transactional so US made sense beyond the cash.

(18)(0)
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Fairly Middling Expert on Proctological Geometric shapes.

The Gnostic Tetrahedron firms with bonus laxatives are best , so as you can slip out easily once qualified as a proctological lawyer.

(2)(0)
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SandM trainee

“Finally, Slaughter and May — which boosted NQ salaries to £78,000 (up 9%) at Christmas, but failed to mention any bonus scheme — confirmed that it had frozen pay this summer.”

Except in the press release, where SandM explicitly mentioned a bonus scheme applying to all trainees and associates and even confirmed its level.

(5)(0)
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Anonymous

The training at MC firms (particularly Freshfields) is the best in the country. Partnership prospects are also slightly better than at US firms.

(10)(2)
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Anonymous

FFS Freshfields don’t need to increase their salaries. Are you all mad? Why would they, when their MC rivals haven;y? They have what like 100 high calibre (mostly) grads/trainees a year? How many lateral associate hires do the likes of K&E and Akin Gump make per year? Ff are happy to lose the odd few junior/mid level to US firms, it keeps the pyramid intact and staves off redundancy rounds. When partners start leaving en masse, a la Ashurst, that’s when you need to react.

(8)(0)
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Anonymous

^ This is the arrogance that keeps Freshfields complacent while all the top law students are increasingly choosing to train at either Slaughters for the rapid partnership track or K&E / Latham for the better visibility and responsibility at junior levels. I’m not sure university students see their colleagues going to Freshfields as ‘high calibre’.

(6)(9)
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Anonymous

Broadly the same (although given the whole Magic Circle are intent on having pay scales which make it impossible to work out what one would actually earn, it’s hard to tell).

You would leave FBD for CC if you were a banking or capital markets lawyer…

(3)(3)
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Anonymous

Of course FBD won’t increase the NQ salaries when they’re the highest paying MC! I’m assuming they do the same amount of work as Links and SM who are paying weak amounts in comparison. Noone is jumping £15,000 in a salary review, come off it LC! Haha

(2)(2)
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Freshfields trainee (unemployed)

hmm… prestige is career capital for lawyers. it attracts the most sophisticated clients and matters so that you can get that branding on your CV. this leads to theoretically improved exit options, either to another law firm, elsewhere in the city, or another career entirely. it also attracts students with a genuine interest in law, who want to work on the most challenging matters early on in their career, and are happy to accept good but unextravagant salaries in the short term so that their skills and training prepare them for a long term career in the profession.

(7)(1)
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MC Trainee

We all know that’s bollocks though, unless you’re a stuck up twat I don’t believe trainees care about prestige. Although admittedly a lot of MC trainees are exactly that.

(2)(0)
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Curious FF employed trainee

Curious – after you train at FF where can you go that’s non-law but in the City (excluding journalism, design and writing for legal cheek (which isn’t journalism as they rip articles off from other websites)? I can only envision in-house roles (which are pretty boring + limits your exit options) or compliance (which you really don’t want to do)

You can’t do banking (advisory) as a direct hire – you’ll have to go through the pipeline.

You can’t do Trading/Asset Management as you have no experience.

You could do consulting – one Bain AC trained at S&M but your wages will probably be either the same or lower so do you really want to? 2-3 years then you jump to a PE firm…

(2)(0)
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Anonymous

The only exits from being a city lawyer is more law. Or back to the bottom to do something else. If you want to leverage your experience into a new role, it’s a hard sale, but there are exceptions to every rule e.g. you’ll always hear about lawyers turned financiers and lawyers turns startup guys with a lead role, but these are exceptions. Maybe you will be one too.

(0)(0)
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Anonymous

You could get a six figure salary by around 3PQE in the silver circle/global law firms and pretty much do a 9-7 working day with the odd late night + a lunch hour. This versus an extra 40k at a US firm working until midnight every night on the same sh## different day. I know which I wouldn’t prefer. There is more to life than this boring law stuff and to get a six figure salary for what isn’t that difficult a job works well for me.

(8)(0)
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Anonymous

I’m an associate at one of the above 100 club US law firms (trained at the MC). My experience is that associates at most (a couple of exceptions) of those US firms are currently working significantly fewer hours than MC and SC equivalents. Much weaker deal flow.

(1)(0)
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US Associate.

Impossible to say, but I’d wager 50% not profitable (my shop isn’t) and 50% just about break even. London partner PEP nearly always never supported from London revenue, ie US subsidised.

(1)(1)
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Anonymous

Is that not unsustainable? US firms are indisputably having it all their own way at the moment; the belief that this will continue indefinitely is surely a misplaced one? This sparkly for the reason that, as you imply, US firms may realise that operating in an unprofitable way in London (inflated associate and partner salaries) is not something they wish to continue.

(0)(1)
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Anonymous

These FF 85k NQ salaries – they include bonus, right?

When the 85k figure was announced back in May 2016, I’m pretty sure this was essentially (i) a small rise from the 67.5k (?) base NQ salary, and (ii) inclusive of bonus.

(1)(0)
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Anonymous

Thanks Kirkland NQ. Can you shed some light on what it’s like to work there? Can’t be that different to MC firms during busy periods.

(0)(0)
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Anonymous

$180k = £140k actually. Watch that number tumble. In any case, it’s not really worth the lower prestige/later career opportunities, lower quality of work in London and less business support etc. is it

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Anonymous

Thank you this is really sensible. I must say I take the quality of work in the strong practices of my MC firm for granted. That said, Kirkland has a good PE/Lev Fin practice – doesn’t that lead to reasonable exit options for those who work in those teams? Also, are the rumours of the harsh work environment exaggerated? I think all elite firms are very demanding so I can’t see how Kirkland is ‘ruthless’ while Freshfields is ‘nice’, despite its recent drop in retention.

(2)(0)
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Anonymous

I get the impression that it’s either to move MC –> US than US –> MC. IS this a valid impression? If so, that says a lot in itself.

(0)(0)
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Anonymous

Pretty much accurate – certainly possible to move from US to MC but not many people bother because you’re pretty much taking a pay cut for the same hours.

(3)(0)
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Anonymous

I think you’re also losing progression in terms of the number of years of PQE, because the quality of work at a US firm is not recognised as that of a ‘peer firm’ when you’re moving from US firms to the MC. My impression is that if you want to make partner / senior associate, it’s best to train at an MC firm with a strong practice in your area of interest, stick around, accumulate as many high profile matters as possible on your CV so that when you’re tapped on the shoulder, you can take your golden ticket (CV) and get promoted elsewhere. The fact is most MC partners have their favourites who they groom for partnership. The favourites are well advised, rewarded for their efforts, and offered special privileges so that they are retained. If you’re not a favourite, you’re seen as a resource and are expected to get the memo and leave at some point. Otherwise you’re seen as a bit of a loser for sticking around – many do, and they reek of desperation.

(0)(1)
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Anonymous

Although it’s also true that many US firm associates carry out work beyond work their PQE peers at an MC work would be doing, because the attitude is more that if you’re capable of something, they’ll let you do it, rather than the MC handholding approach

(0)(0)
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Anonymous

You are deluded.

Kirkland and other elite US shops are more prestigious globally than the MC. Only S&M competes on PEP.

The MC, while strong in their respective practices and with obvious amounts of prestige in their home turf in London, are eclipsed by the elite firms which dominate the US legal market. The most profitable legal market in the world by a mile. And then some.

Top dogs are US elite shops and that’s not to include many us firms in London which may pay more than the MC but do not fall within that bracket. Ie. Shearman

(5)(1)
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Anonymous

Top dog elite shops who are all more prestigious globally than the UK Magic Circle:

– Skadden
– Sullivan & Cromwell
– Davis Polk
– Kirkland
– Simpson Thacher
– Latham

Roughly in that order and definitely more prestigious than any of the magic circle firms.

You could potentially add Weil, Gibson Dunn, Cleary and Milbank to that list also.

(7)(0)
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Anonymous

Really depends on which part of the world you’re talking about. In Asia, its hard to see how Skadden, S&C, DPW, STB, LW, Weil, Gibson Dunn, Cleary or Milbank is more prestigious than the UK MC firms in terms of being mandated on the biggest deals (although some of them pay Cravath + COLA).

(1)(0)
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Anonymous

The math works out for trainees too in HK/Asia.
First year trainee in US top-tier firm: ~ 55,000 HKD
Second year trainee in US top-tier firm: ~ 60,000 HKD

Comparable to MC assoc salaries in london.

(0)(0)
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Anon

Math works out for MC assocs in HK v MC assocs in London too

HK MC NQ: 960k HKD (80k per month) = 94800 GBP
London MC NQ: 85k GBP

After tax, an MC NQ in HK earns close to what a Kirland NQ earns in London.

Imagine what a Kirkland NQ in HK earns vs a MC NQ in London after tax

(1)(0)
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