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Top City firms freeze junior lawyer pay in response to virus pandemic

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HSF, Freshfields and A&O among outfits to introduce belt-tightening measures

A growing number of City law firms have frozen the salaries of their junior lawyers as the profession braces itself for any potential financial repercussions from the COVID-19 pandemic.

Herbert Smith Freehills yesterday announced that it had frozen pay for all employees and suspended salary reviews for at least six months. The belt-tightening measures, which apply globally, will also see partners receive reduced profit distributions.

The global law firm did add that it intends to award bonuses for the 2019-20 financial year but paid 50% in July and 50% by the end of the year.

“This is a global and evolving crisis, with major human and economic impact,” a spokesperson for the firm said. “We cannot predict how long it will last, or how deep it will be. Like all businesses, we have carefully considered the prudent measures we need to take to protect the firm and our people.”

They continued:

“We have already taken a range of steps to reduce costs where we can, and we are in a strong financial position following a partner capital increase and a strong capital focus over the last twelve to eighteen months. To ensure we remain resilient, we have decided to take some additional measures.”

Freshfields has taken similar steps to protect its financial position. The magic circle player confirmed this week it had frozen pay across the firm and suspended its latest quarterly partner distribution. It has also deferred decisions on staff bonuses, which usually take place this month, until later in the year.

A Freshfields spokesperson said: “We are focused on supporting our people and continuing to serve our clients as we all adapt to the social and economic uncertainties. We are managing our business responsibly and will continue to invest in our business for the long-term.”

Meanwhile, fellow magic circle player Allen & Overy (A&O) said it too was freezing salaries and deferring some bonus payments in repose to the pandemic. The firm was due to undertake annual salary reviews for associates and support staff in the first quarter of the forthcoming financial year, but this will no longer go ahead.

The 2020 Legal Cheek Firms Most List

A&O will still award bonuses for this financial year, with bonus payments for assocaites and more senior support staff split between July and October. It also confirmed it was making “adjustments” to partner profit distributions, increasing partner capital levels, deferring certain investments and recruitment, and cancelling events.

“The COVID-19 global crisis is an unprecedented situation for us and our clients,” a spokesperson for A&O said in a statement. “The firm is in a very strong financial position but given the unknown nature of the evolving challenges, and their long-term impact on our markets, it is sensible to introduce some prudent management measures as part of our ongoing scenario planning.”

Other City players have adopted similar measures in the wake of the virus. Last week Norton Rose Fulbright confirmed it was in the process of asking “eligible personal” to drop down to a four-day working week and take pay cuts in “pre-emptive action” to protect jobs and revenues throughout the virus crisis.

Elsewhere, Pinsent Masons has deferred its first quarterly partner profits and furloughed some of its non-fee earners. The firm said it will top up by 20% the salaries of all furloughed staff on the government’s emergency scheme, which covers 80% of an employee’s wages up to £2,500 per month.

Pinsents’ senior partner Richard Foley said:

“Businesses around the world are trading in circumstances that none of us have faced before; we’re no different. We are only making decisions today where we have to. If we can wait to allow those decisions to be better informed by taking them tomorrow we are doing so.”

Taylor Wessing today confirmed it, too, was withholding distributions of profit to partners and furloughing staff “whose roles have been impacted by the move to remote working”. The firm said it would topping up salaries to 90-100%.

“Each of these measures is being taken with a view to the long-term preservation of jobs and sustainability of the business”, the firm said in statement. “Each decision is difficult to make, but all are being made because they will best serve our firm during this challenging period.”

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90 Comments

A&O toiler

Freezing pay > cutting pay/redundancy.

(65)(1)

Jez Corbyn

Brothers! Sisters!

Taxes will rise to pay for the inevitable Universal Basic Income, and full pensions for teachers and nurses!

We also need to tax City Greed to pay for artists and intersectional activists! Free trans ops for all!

VOTE LABOUR

FOR THE MANY, NOT THE FEW!!!

(11)(48)

Shame

When will LC “journalists” realise that “top” is not the only adjective they can use? So diminishing to English language.

(31)(2)

Pot kettle

Diminishing?

(3)(1)

Anonymous

Let’s be real, these firms are relieved to freeze salaries and bonuses and not because of the coronavirus. Top city law firms are now hovering around the 6 figure salary mark, they don’t really want to keep increasing the NQ or associate salary. They reluctantly brought it up just to keep up with the US firms and this is the perfect excuse to hold off on increasing it again under the guise of financial uncertainty during this time

(92)(1)

Anon

The lines between the silver circle, magic circle and US firms are becoming very blurred as you could distinguish them before based on the salary which was equated to the the hours and intensity of work but it’s not so straightforward anymore

(19)(7)

plant-based

hopefully lets reach a point like in NY where every firm pays exactly the same and the difference is genuinely firm culture

(15)(0)

Aaron

Agreed!

City firms in the UK could easily match US salaries. There are so many miscellaneous costs which aren’t needed. Paying to maintain a brand new in-firm restaurant and gym and everything else is unnecessary. Lawyers would much rather be paid a large six figure salary than care about all these extra firm amenities which they could get externally anyway

(10)(0)

Aaron

Agreed!

City firms in the UK could easily match US salaries. There are so many miscellaneous costs which aren’t needed. Paying to maintain a brand new in-firm restaurant and gym and everything else is unnecessary. Lawyers would much rather be paid a large six figure salary than care about all these extra firm amenities which they could get externally anyway

(0)(0)

Corrector

Well that’s only partially true. In NY, it’s only the Big Law firms that pay that standard amount, and Big Law is (though informally / colloquially) a pretty well defined term. Everyone knows what firms are Big Law firms, and it is quite a large category – much larger than US / MC / SC in the UK. A UK equivalent would probably have to encompass all of the above + global firms like Dentons / Bakers / NRF + more UK-centric yet still international firms like Eversheds or Pinsents.

Moreover, the 190k salary is, at the moment, merely the base minimum for all Big Law firms. While most stay around that mark, with bonuses bringing it up to ~200k, there are some notable exceptions where more frequent than usual bonuses, topups, and pay reviews bring it closer to 300k – Wachtell being the main example, with Cravath having been up there but now standing closer to the average Big Law packet of 200 – 210k.

(1)(7)

Toby

What did you actually correct? The point made by plant-based was essentially that the top city UK firms could set the base salary at minimum of six figures and then go as high as they want to from there (like in the US where the pay can vary from 120k to 300k+). And it would also help stop differences in pay where BAME partners are paid the bottom end of the money whereas the white male partners are in the millions

disgusted of tunbridge wells

Ah but that would never work. You forget that the UK has a far far snobbier legal culture than America.

(0)(0)

City Associate

To be fair, freeze of your 6 figure salary (when you are aged 26-27) is not the worst thing that can happen to you during pandemic and financial crisis. I would be perfectly fine with a 1-2 year freeze.

(45)(9)

lol

That assumes there are no additional measures being brought in at a future date. If it’s freeze with a guarantee of no future pay cut or redundancy, then fine. Otherwise it would be a bit irritating.

(8)(2)

Anon

It makes so little difference at the end of the day, I don’t really see the problem. In that bracket just over £100k you’re paying income tax at effectively 60%, NICs and in most cases student loan contributions – so a £10k gross salary increase is probably going to translate to at most £3k net (some of which I assume most people are putting in to a pension rather than taking as cash). It’s not going to tip the balance for your average junior – and yet the firm probably saves about £12k by not paying the extra, which in the current climate is the sensible move.

(2)(3)

Anon

The lines between the silver circle, magic circle and US firms are becoming very blurred as you could justify the differences in salary based on the hours and intensity of work but it’s not as transparent nowadays

(7)(1)

Joe

It’s interesting when you look at firms like Macfarlanes and Travers Smith who are mid size firms doing similar hours to the Magic Circle and Macs/TS trainees are probably handed much more responsibility due to the size of the firm and they’re not paid a 6 figure salary when the Magic Circle and top silver circle firms are

(6)(38)

Seasoned Horse

Having worked in the silver circle, magic circle and now for a US firm, I can categorically tell you that the notion that silver circle firms like TS/Macs give juniors more responsibility is categorically not true. Further to that- TS/Macs are consistently the top payers at all levels in the silver circle and are certainly the most elite (unless you count Slaughters as SC).

(26)(2)

Kieron

Having worked in all 3 types of firms, what’s your take on the current salary war? Have you noticed much difference in terms of work, hours, social life balance etc or are they all pretty much the same tagged at quite different salaries?

You hear stories about some going off to US firms and then coming back.

I think an honest conversation ought to be had about the change in the dynamic of law firms at the moment and in the foreseeable future

(9)(0)

anon

Lmao imagine comparing a shet ferm like Asshurts with TS or Macs

(55)(7)

Rozzer

Stfu, you wish you worked at a powerhouse like Ashurst matey

Elle Woods, JD. Harvard

J Papi is that you ?!

Finlay

Slaughters shouldn’t even be considered the best of the silver circle firms but that is a conversation nobody wants to have

(40)(3)

Harry

The reputation of slaughters is the only thing that’s kept it going and maintained its place in the magic circle.

Besides from M&A they don’t have a great amount of variety in great work

Lord Farquad

When you look at the downfall of slaughters it makes you question how they can set a salary of six figures when Macfarlanes and Travers Smith are on a 20k lower salary when they are all on similar hours and level of work.

The only difference is the Magic Circle and Silver Circle label which seems quite artificial anyway

Chad

Are you having a laugh? Slaughters in consistently instructed on the highest profile M&A deals and disputes.

Brad

@Chad… you’re basically agreeing with the comments said above! Besides from M&A slaughters aren’t known to have quality work in other areas

Chad

@Brad – the firm boasts market-leading practices in Tax, Competition and financial crime.

Joe King

Good point, Jasper.

Joe's older brother

Stick around there for a bit more work/life balance and that sweet, sweet equity (probability-wise you’re in a far better place at those shops).

(21)(0)

hahah

LOL yep, someone referring to the virtually-impossible attainment of actual partnership as “sweet, sweet equity” is definitely gonna get it.

F*ck right off you first year LLB choad

(8)(15)

Mindfulness

Deep breaths my friend. Quarantine will be over soon.

http://www.headspace.com

Frank J

Even when you take I to account revenue and other factors the disparities in pay are becoming increasingly difficult to reconcile.

Take DLA Piper for example, they’re still in the late 70k threshold in the UK even though the US offices and elsewhere are on six figures.

Considering it’s the UK biggest law firm in revenue you’d think they would match the six figure salary in London or at least pay a decent amount to those in the regional offices

(7)(2)

£78k, top dollah

Different profit pools, different legal structures, completely different firms in effect. DLA is a mid-level firm and always has been in the UK, much like SPB or Eversheds.

(18)(10)

Tia

DLA is not on the same level as SPB or Eversheds

(18)(5)

infonews

Pays the same as SPB though, £78k NQ

Anon

DLA is a slightly more prestigious Dentons or CMS conglomerate-type firm, but less prestigious than NRF.

Fuzzy Bear

“DLA is a slightly more prestigious Dentons or CMS”

Whatever helps you sleep at night, former future vac schemer at DVLA Pipper

Seasoned giraffe

Having worked at both DLA in London and a top dollah firm, I can say the two are worlds apart. The team structures, client demands, general attitude and culture are just not comparable. At DLA (in a transactional team) it would be rare for anyone to still be in the office past 8pm. Weekend work was even rarer and you weren’t expected to be overly responsive to clients. Nobody worked during their holiday and the deals took a lot longer, not through any fault of anyone but more the type of clients and deals involved it would all just run at a far slower pace. At DLA, the teams, hierarchy and bureaucracy are also far greater and decisions have to go through multiple levels. I’d say the current salaries for DLA are about right versus the hours targets and general working culture there. It’s a much different beast to its US side.

(18)(0)

Greg

Having worked in both… which would you say you preferred in all honesty?

Did you find there was better work-life balance at DLA as a result of the different dynamic in the firm or do you prefer the “top dollar firm”?

(1)(0)

Seasoned giraffe

DLA is a great place to train. It has hundreds of trainees and hundreds of offices and gives you a great insight into “Big Law”. It also has great pro bono and employability programmes to get involved in and I found it to be a very friendly firm. I think you could happily qualify here and stay for a decade or so if that’s what you want but personally if you want to jump out of your comfort zone, thrown in the deep end and learn hard and fast with the adrenaline of a faster pace and more pressure and if you thrive on that and the top dollah that comes with it then I’d jump ship without a second thought. I think therefore that DLA has a lot of associates who like to play it “safe” and have a comfortable legal career. On that basis they get (relatively speaking to the city legal market) an average wage and a strong work life balance.

Trainee

Hang on, a comment that is actually informed and wasn’t written by a first year LLB student? What are you doing in the Legal Cheek comment section? You don’t belong here.

(15)(2)

Withheld

“A decent amount”.. ?! You guys really need to get real. You are paid huge sums of money. Yes, that’s the market, but let’s not pretend it’s because you are the most deserving in society. This current period makes it very clear what the important jobs on society are and, whilst important, lawyers are not top of that list. You’ve no idea how lucky you are. Stop whinging.

(4)(15)

Check yourself

We’re essential workers. The government said so. If anything, we aren’t paid enough. We deserve bankers salaries.

(4)(1)

Anon

Lmao dream on mate, you high ?

Anon

People still under the illusion the work and hours are the same at US and MC firms? Speak to people at those firms rather than reading opinions from students on legalcheek. The training at MC is miles and miles ahead of the US firms, with better quality work and better support. Despite what you see on here, the hours are also longer at US given the higher billable hours targets combined with less admin support. On-site amenities very important to lawyers working long hours in the office too – you’re mad if you can’t see that.

(9)(6)

Ant

I’d rather be one of a small pool of trainees at a US firm than one of scores at a MC firm. It matters.

(0)(0)

anon

Didn’t realise partners get paid quarterly. Do they not get a monthly wage on top?

(0)(5)

Jamie

It’s not that straightforward as there’s a difference between salaries partners, equity partners, managing partners etc

(14)(0)

Lynn D. LeBanks

There is only one sort of partner, equity. The reason are staff plain and simple.

(7)(8)

Chad

Meanwhile insurance law firms are rolling in dough

(3)(0)

HR

RPC are very insurance heavy and announced no furloughing or job cuts. There are even talks about decent pay rises and bonuses in the summer.

(2)(2)

anon

RPC, what’s that?

(6)(1)

Paneer

Learn. If you don’t know the name of the top 100 firms in the country you are sh*t at your job.

(2)(7)

lol

Indeed, at my firm you don’t get a bonus unless you can recite the top 100 firms in the country (ordered by revenue)

Paneer

Good. Load of crud if you can’t do that.

Anon

Brown Rudnick have furloughed fee earners in London capped at gov sum. How can an elite US shop have a balance sheet such that that is already required in this climate?

(17)(1)

Lmaobantah

Where can a buy this brown Rudnick? I’ve always liked quality leather goods.

(24)(1)

Anonymous

Because Anon, in terms of market sensitivity law firms are very very fragile compared to companies. A small downturn can wipe profit, and hence income, and even a small drop in income can cause partners who feel they are missing out to move.

(1)(3)

Anon

Actually, law firms are more robust than a lot of companies when it comes to the impact of a global pandemic.

(2)(0)

Joker

An obscure pit like Brown Rudnick and elite? LMAOOOOOOOOOOOOOOOOOOOOOOOOOOOOO

(6)(3)

HR lady

It’s a top US firm paying top whack. NQ salary currently on £107k. Phat money, quality shop.

(1)(2)

Jake

Because like a lot of law firms it’s thinly capitalised and the nature of an LLP means that it’s not worth partners leaving money in their firms (as they’re taxed on it irrespective of whether or not it hits their bank account).

(0)(0)

Anonymous

Hogan Lovells cancelled summer vac and now offering direct TCs. We received confirmation this week

(18)(14)

Henry

This is the Hogan Lovells Birmingham office I’m assuming

(18)(2)

Anonymous

I don’t know about Birmingham. This was in reference to London.

Don’t believe me? Email the firm yourself

(6)(13)

Hoegan lovehell

If this was true, Legal Cheek and other news outlets would have been the first to report it

(6)(5)

TC holder

Or vac schemers who actually received the news directly would be first to report?

Why is this news upsetting people so much loool

Fake news

Fake news

(10)(8)

Chaz

Is it me or does it say something about NRF’s financials prior to this crisis which has caused them to pull the trigger so quickly and take stronger steps than merely freezing salaries? I mean has any other law firm in the City taken similar steps to MRF, I don’t think so

(11)(7)

Chad

What will the Kirkland private equity team be doing over the next couple of months?

(4)(2)

Brad

Fuck off Chad.

(14)(2)

Anon

As it has always done, get rid of people ASAP but pretend nothing is going on and all is business as usual. Everyone is “so happy and doing well”, “great supportive culture”! Sadly, it has already started…

As I’m sure you know, Kirkland also saw a massive drop in deal value compared to 2019.

(7)(2)

Real Lawyer

So much AIDS in this comment section, don’t know where to start. For the benefit of the 90% of readers and commenters here (Who I assume are students), I’d like to outline the following. I am a a lawyer now and I was a lawyer in 2008, if that qualifies me at all.

(1) NRF is making the smart play, and thinking like a business. They did the same in 2008, and made relatively fewer layoffs and came off the back-end better off than other similar law firms. It says nothing about the quality of there firm, and if anything it’s a good thing.

(1)(b) 2008 was a s**tshow compared to this. We won’t see the same levels of freezing/layoffs as we did then. A lot still to play for.

(2) Hogan Lovells have not, as of now, cancelled their summer scheme.

(3) As regards firm pay. Revenue is a useless method of trying to determine whether a law firm ‘should’ pay more. The most profitable law firm in the world has only one office. Contrast with, say, DLA. Their revenue is enormous, rivalling some big investment banks. Nonetheless, their PROFITABILITY is a very different thing. It irks me when people say things like “CMS doesn’t pay enough when Ashurst pay is what it is”. That is because one firm is much more profitable than the other.

(2)(b) There is no real difference between the SC and MC firms. It is a nonsense to suggest that the trainee experience is meaningfully unique between them. The only difference is the relative level of snobbery amongst your cohort and/or supervisors. They mostly compete for the same work, with varying levels of breadth.

(2)(c) Slaughter and May is a great firm. It still dominates M&A tables in many instances, if that’s what you’re into. That said, and as noted above, train there or at Ashurst you’re unlikely to notice the difference. I know because I’ve been at both.

(3) Lawyers are lucky to earn what they do. Also, the very structured and well trodden path along which one can project their current and future earnings across gives a great deal of safety compared to other industries, like finance. Legal skills are still incredible specialised and marketable. This is less so for banking.

(3)(b) Money isn’t happiness. The extra £6000 you might make at a slightly better firm will contribute 0 marginal benefit to your life. Working an hour or two less per day will so so infinitely. Realise this, not at the beginning of your careers (where I’d always advise to aim high) but soon after. If you don’t, you’ll end up posting salty comments on boards like these and not spending time with your wife and kids.

(38)(5)

Real lawyer 2

A mid level associate at a top US law firm is earning almost double to their equivalent at a MC firm and perhaps even triple compared to their counterpart at a DLA type firm. That is a very big difference of several thousand per month. That same top US law firm also very likely has top draw work and top draw clients which means you can earn fantastic money whilst doing fantastic work. The money in itself doesn’t buy you happiness but the position it puts you in (i.e. getting on housing ladder, living in central London, holidays, having a family etc) is certainly something which is admirable to aim for. It’s simply a lie that these salaries come at the cost of having any spare time. You can comfortably bill 2000 hours a year and still do everything else you would want to do including seeing your family.

Lawyers are not lucky to do what they do. They train for 6 years whilst incurring massive debt and then get beasted at the bottom of the food chain until they are mid level when the bargain finally starts to pay off.

It’s simply not cool if partners who have been taking home multiple millions for years haven’t left enough money in the firm to be able to support the staff who work so hard for them for a few months before having to turn to the government for a bail out.

(12)(6)

George

I agree with why you are saying for the most part but to say that there is no difference in the working culture and work/life balance is a load of rubbish

(6)(0)

Ant

Billing 2000 is very, very different to working 2000. To actually bill 2000 you need to work a lot more. That’s where it gets painful.

(1)(0)

Sishi Runak

Ok boomer

(2)(1)

Steve

How can you have worked at both Slaughters and Ashurst when Slaughters very rarely takes lateral hires? Smells like bs

(7)(4)

Poirot

Train at Slaughters, go to Ashurst? Crikey, I am probably ready to solved the Da Vinci Code with this one.

(5)(4)

Scallop

Who trains at slaughters to qualify at Ashursts? Surely they have more dignity than that

(4)(1)

Phineas

Where do you work now if you don’t mind me asking? Have you made partner at the firm or happy being an associate?

(0)(0)

Ferb

What you said about there not being any real difference between the silver circle and magic circle firms sort of reiterates what was said above by a couple people in the comments. Essentially that they’re both offering near enough identical level of work, the same hours of work and for different salaries (notwithstanding the profitability of the firms).

I agree with what you’re saying, I think aspiring solicitors now have dollar signs in their eyes seeing these firms with high NQ pay packages and so they aim for the law firms offering higher Or the highest pay but in the end what is the point of that money when you don’t have enough time to enjoy it besides from the 25 days holiday you can take each year.

(4)(1)

Kyle

It will be interesting to see how long the current generation of aspiring solicitors, trainees and NQs can put up with these firms until they jump ship

(2)(0)

Tia

Hogan Lovells did cancel their scheme. I was told on Tuesday.

I suspect you are probably a student just like the rest of us…

(1)(1)

Mo’ Money Mo’ Problems

If you look at Silver Circle firms around the 85k salary mark – once you deduct the tax, student loan plan, rent, cost of living, travel, amongst other expenses…. you’d be lucky to be left with 35k and maybe slightly more if you keep spending to a minimum.

It’s interesting because I have friends that work in city firms in London and also friends that work in regional firms in Manchester and Birmingham and the ones who work in the regional firms (bear in mind they are on much less pay) have larger savings and have put down deposits for a house whereas the ones in London are struggling to save 2k a month (or just about managing to) despite being on a significantly higher salary.

If you were on US salary at say around 120k you would be taking home 65k after tax and student loan and if your yearly London expenses were 15k including rent and everything else it would leave you with 50k in your pocket which is a better alternative to the 35k you will be left with working at a silver circle firm but like the real lawyer said above – it comes down to a matter of you slaving away a few more hours a day for this extra money. Plus the expectations at US firms are a lot more intense.

There is no denying this extra money can change your lifestyle as you can afford the ‘nicer things’ or if you just save it for the long run you will be able to buy a bigger house or nicer car… but realistically, you will have to stay at the firm long enough to reap these benefits which will mean sacrificing many years of your life to finally enjoy savings in the end as you got sucked in by the firm until you retire. If you have the patience to work your way up to partner, once you are made partner you have somewhat more control over your hours and work life balance but that won’t be until you’re 40.

(14)(0)

Anon

Hopefully, the MCs will “unfreeze” their pay once deal volumes start to return close to normal. My fear is that they use this pandemic as an “excuse” to depress wages in the long term.

(3)(0)

Anon

All of these comments about not having a life at a US firm and that there is no point getting paid a lot if you don’t have the time to spend it are just myths peddled to aspiring lawyers by the MC firms who are scared their associates are going to jump ship.

To bust some myths:

1. as the poster above said: you can bill 2,000 hours a year and still not work weekends and take your full holiday allowance.

2. many of the partners in the US law firms made partner much earlier, in their late thirties at 9/10 pqe whereas at the MC it’s often much later.

3. It’s not just a 5/10k net difference after tax. If you’re a mid/senior level US associate on say 190k basic you could save about 4K a month plus your 30k net bonus that has you saving circa 80k a year x 3 years you have 240k in cold hard cash in the bank. It’s a game changer.

4. The culture is faster paced as is said above and you learn faster but it’s by no means unhappy or horrible. It’s probably much more efficient than life at the MC. You are doing juicy work not shuffling papers in massive teams.

(6)(7)

Realist

All this talk of ‘quality work’ – I think we should all be honest that working in the corporate meat grinder is boring as hell and in many cases the only difference between ‘terrible work’ and ‘quality work’ is a few extra zeros at the end of the value of the deal. It’s all the same boring content.

(17)(0)

True Talk

Finally someone speaks some truth.

It’s bizarre that “quality work” is automatically equated with billion dollar deals and well known clients.

(6)(1)

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