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Allen & Overy’s top-earning partner earns more in a week than its trainees do in a year

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Fat Cat Thursday

The highest earning partner at magic circle outfit Allen & Overy is set to earn more in a week than the firm’s trainees do in a year.

Reports filed with Companies House show one partner at the global law firm earned a staggering £3.52 million in 2016/17 — £68,000 a week or £9,600 a day.

With Allen & Overy’s trainees earning £44,000 in their first year and £49,000 in their second, this means the undisclosed highest-earning partner raked in more in a week than its aspiring lawyers will get in 2018. Newly qualified (NQ) lawyers at the firm can, we’re sure, take solace in the fact it takes a little longer for their £81,000 yearly salary to be reached: 8.5 days.

This high partner pay has been born out of what’s been a great financial year for Allen & Overy: revenue is up by 16% to over £1.5 billion and profit before taxation has increased by 27% to £716 million.

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A scan of these figures now is particularly fitting given that today is known as Fat Cat Thursday. This ‘celebration’ marks the point in the year when FTSE 100 chief executives will have earned more money than the average worker will do over the whole 12 months (£28,758). The ratio of CEO pay to the pay of the average full-time worker is 120:1. The ratio of top-earning A&O partner to average first-seat trainee is 80:1.

It is of course worth stressing the £3.52 million sum is not paid to all the firm’s partners, just the single highest earning (and that it included an unquantified retirement payment). The average profit per equity partner (PEP) at the London-headquartered outfit is £1.51 million (up about £300,000 on the previous year). If we use this sum to work out our partner to trainee ratio, it’s 34:1 for first years and 31:1 for second years. For NQs, who are paid £81,000 a year, it’s 19:1. Legal Cheek has contacted Allen & Overy about its partner pay and the firm has declined to comment.

Allen & Overy is, perhaps unsurprisingly, far from an outlier in the magic circle for paying its partners big bucks. In fact, Freshfields’ and Linklaters’ equity partners earn more, raking in £1.55 million and £1.57 million a year respectively. PEP at Clifford Chance is £1.38 million, while Slaughter and May’s remains undisclosed.

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34 Comments

Does not know Katie King

That’s Slaughter AND May.

(11)(2)

Anonymous

Never stop going big dick.

(4)(0)

s.32 Salmon Act 1986

I, for one, appreciate the use of the Jones Day motto in this post.

(3)(0)

Anonymous

So ? That’s why all trainees and associates aspire to be partners

(17)(3)

Anonymous

Except they don’t. Some prefer to make 200-300k a year, have a life, a family and no stress over the success of your firm and retention of your clients.

(10)(2)

Anonymous

Where do they earn such figures? Serious question.

(0)(0)

Anonymous

Much more lucrative than even the commercial bar. No wonder big names like Falconer and Goldsmith left the bar to go to big firms.

(8)(3)

Junior Barrister

I don’t agree. Those people left the Bar because they were “over the hill”, as the saying goes. The top 10 silks at the commercial, tax and corporate insolvency Bar earn about the same amount.

(12)(1)

Anonymous

From which you then have to deduct large Chambers expenses and overheads

(5)(2)

Junior Barrister

That’s about 12%, which is often capped at higher levels (basically you don’t usually pay any expenses above roughly £1m to £1.5m in earnings). It’s really not that much, after income tax is taken into account. Partners at solicitors’ firms have to make all sorts of other contributions (to the firm’s capital etc.) which are not required at the Bar.

(8)(2)

Anonymous

At some “commercial Chancery” sets you’re looking at 25% chambers contributions.

(3)(1)

Anonymous

You obviously know very little, that’s hardly surprising as you are a junior Barrister. Falconer and Goldsmith are far from “over the hill” and both regularly appear in court on long running mega disputes.

(10)(4)

Junior Barrister

Nice try. I’ve appeared against both of them in recent years.

(2)(5)

Anonymous

And obviously lost

(11)(0)

Junior Barrister

Lost once and won once.

Ask anyone at the Commercial Bar: these guys are not considered to be silks at the top of their game. (Both were excellent several years ago.) If you don’t believe me, ask any of your friends who have appeared against them.

(3)(6)

Anonymous

If that is the case, very canny of them to go somewhere where they earn as much as silks who are at the top of their game.

(2)(0)

Junior Barrister

Agreed.

Anonymous

Agreed. Barristers of any level only join a law firm when their practices have tanked. As for Goldsmith and Falconer, they once earned substantial sums at the Commercial Bar but, having done stints as AG and LC respectively on comparatively very low pay, they needed to earn proper money. But having been out of private practice for so long, it would have taken several years to rebuild their careers in Chambers. So they took positions at law firms.

(3)(0)

Anonymous

Or they can’t stand the di(kheads around them in chambers any longer ….

Anonymous

By “they” I mean barristers, not the former AG and LC

Anonymous

Or perhaps they wanted a decent pension

magicc

That’s simply not true. The average commercial barrister far out-earns the average commercial solicitor.

A commercial barrister takes home 85%+ of what he earns (subject to tax). You have to remember that the vast majority of solicitors are employed and earn a fraction of what they bring in to the firm. Law firms operate under a pyramid structure whereby you transfer what you bring in to those above you (the equity partners, i.e. not all the partners) who, in turn, pay you a salary.

(10)(0)

Anon

How much business did the partner bring into the firm? Must be a massive amount – enough to keep a whole army of associates and trainees gainfully employed. That, I am afraid, is why the partner in question earns so much. You call it “capitalism”; I call it common sense.

(17)(2)

Anonymous

Since when has capitalism been a dirty word? Do kindly eff off.

(4)(1)

Addleshaws are ace

So, magic circle partners earn more in one week than Irwin Mitchell Partners earn collectively per year.

(12)(0)

Anonymous

Magic circle partners have more excellence in their little finger than …

(0)(0)

Anonymous

That’s £3.52 million before tax.. And as mentioned already, this Partner must be bringing in at least 3-4x that amount for him to be taking home that kind of money.. Touche I say..

(8)(0)

Junior Barrister

I would guess that the partner has longstanding relationships with a few blue-chip companies or funds. He or she will have been retained on a number of big-ticket M&A/PE deals, or nine/ten-figure commercial litigation battles, or massive corporate restructurings, or some combination of the above. On any view, the partner will have indirectly earned at least £12 to £15 million for A&O. If A&O won’t pay the partner properly, someone else in the City would happily do so. By contrast, a trainee doesn’t have any relationships with clients and really has no ability to leverage his practice at all. You can’t change the laws of supply and demand. Redistribution of wealth can be achieved through taxation, but you can never stop star performers from earning lots of money.

(17)(1)

Anonymous

Lol, “he or she”… I see what you’re trying to do but come on now, they’re an A&O equity partner. It’s a “he”.

(14)(2)

Anonymous

Meanwhile, the real heavy swingers are at Kirkland who just hired a Freshfields partner for £7.5m p/a

(11)(0)

Anonymous

Ah yes, KE, the shop where the only route to partnership is via lateral hire from an established UK firm. They can’t even trust their own internally-trained associates.

No wonder every solicitor worth their salt uses them as a stop gap to rake in the big bucks whilst they wait for another spot to open up at Latham, Bakers, a decent regional firm near their hometown, or just plain old retirement. Those Freshfields lawyers will not be at KE in two years’ time.

(7)(10)

Anonymous

They’ve been trying to hire him for a while. The real question is why he’s decided to leave Freshfields.

(4)(0)

Anonymous

The real answer is: £7.5m per annum.

(3)(1)

Anonymous

Nope – that amount’s been on offer to him for years. I don’t think he cares about money enough to leave a partnership over it, especially since Freshfields voted in changes to its lockstep to reward high performers like him.

Something strategic/qualitative at Freshfields has caused him to move.

(0)(0)

Comments are closed.

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