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Slaughter and May cuts NQ lawyer pay to £87,000

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COVID-19: Move comes just weeks after magic circle player suspended partner distributions

Slaughter and May has cut the salaries of its newly qualified (NQ) lawyers in a bid to negate the financial impact of the COVID-19 pandemic.

Associates due to qualify at the magic circle player this September will now earn a still relatively healthy £87,000. Pre-cut, Legal Cheek‘s Firms Most List showed NQ base rates sat at roughly £92,000, with performance bonuses bumping earnings to in excess of £100,000.

The cuts come just weeks after the firm deferred annual salary reviews and temporarily suspended all discretionary distributions to partners.

The 2020 Legal Cheek Firms Most List

Slaughters isn’t alone in cutting junior lawyer pay in response to the pandemic.

Last week, Legal Cheek revealed trainee pay at Taylor Wessing had been cut by 8% as part of a new flexible working programme. The firm also cut partner drawings by 20% and delayed salary reviews until the autumn.

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76 Comments

Dan

Nice rip off of RollonFriday

S&A

God give them strength…

Archbishop of Canterbury

Amen!

SB

This isn’t a surprise. Slaughters are using the Coronavirus and the economic uncertainty as a scapegoat to drop the salaries back down because they didn’t want to raise it to ‘100k’ to begin with. Nor did any of the other Magic Circle firms

Anononono

Freshfields must be kicking themselves for opening that can of worms. As well as their move to Bishopsgate which is delayed, no doubt at great additional cost, their year is definitely not going as planned.

Anon.

Absolutely spot on.

When the Lathams and Kirklands began throwing around £100k plus salaries, the UK firms knew they had to follow. They hated it.

ECLL

Bets on the next MC firm to follow and use this as an excuse to cut NQ pay?

Graduate

Can I ask, as someone without much knowledge on this, why are American firms able to pay so much more? Is it simply the case that these offices belong to a much larger, wider company which brings in a lot more business?

Sorry if the answer is quite obvious, but I can’t think of it

US

It’s a combination of a few things:

1. The US/North American market is much larger and more profitable than anywhere else in the world so the US firms have a home ground advantage – i.e. US firms in NY can charge clients more than UK firms can in London because clients are willing to pay higher rates. The US is also the deepest capital market in the world, so you have more clients and more deals by value and volume.

2. If we are comparing London offices – the UK firms are full-service whereas the US (especially the top NY firms) generally still focus on corporate/finance and the profitable areas within those. Some of the US firms are now close to full-service in their own right in London but not to the same extent as the UK firms. As a result, you have higher headcount (and therefore expenses and overheads) at a UK firm and profitable departments carrying less profitable departments. E.g. the MC take between 80 – 100 trainees every year – they probably could cut that by 10-20.

3. Lockstep (UK) vs Eat what you kill (US) – this is a somewhat simplistic divide but it generally holds true. For the most part, everyone at the same level gets paid the same amount at a UK firm. US firm salaries (especially at the higher PQE) and bonuses are more dependent on performance and how much you billed / how much business you brought in. There are arguments for and against both approaches which I won’t go into but one way of looking at the UK system is that there are lots of underperformers who would have got forced out under the US system. This is partly why the team structures are leaner at the US firms.

Anon

The eat what you kill model is certainly not true for all US firms hence certain high profile departures between US firms in the US and UK, with partners wanting to move from one to the other. There are also some very well-known US firms that have lock-step partnerships. The reality is actually, contrary to what your note suggests, that US firms pay associates on a lock-step (Cravath or sterling conversion) and it is the UK firms that must look for ways to stagger pay – by using bands, ranks of “solicitor” and “associate”, etc.

Graduate Assistant

They charge clients higher billable rates and work their associates and partners like slaves chained to a desk. They also have higher billable targets so more money coming in.

Problem is when you have too many people with high salaries and there’s a slow-down in business, they are also the first to fire people…

Technically, British firms could all raise their rates to match US rates but it’s just not the culture, other considerations that apply in the US don’t apply here either…litigation culture, higher fees for college etc…

Anonymous

Very interesting. That’s not a million miles away from what I could earn as an NQ at the big four. Also, is this the turning point where the white shoe shops assert full dominance over the graduate market..

Tolchok

Lmao what. Big 4 throw at you £70k tops, if even that.

Slaughters no Pay

So basically you can earn more at a good silver circle firm like Hogan Lovells, Baker McKenzie, Macfarlanes, Travers Smith than you can at a Magic Circle firm… interesting

Jay

And for better hours in a firm with a more friendly culture. Slaughters is toxic as hell

Former SM

Having worked there, I actually thought the culture was friendly and that they generally employ nice people. Quite a high pay to prick ratio compared to some places I expect.

Blues and blondes

Surely you mean quite a low “toff rah rah hah” to pay ratio.

meh

I think it depends who you speak to. When I did a graduate workshop there some people were really normal and friendly, but I also vividly remember having to sit next to a very awkward partner. It was like talking to a brick wall that happened to know a lot about capital markets. I don’t think I would have liked to work under him.

Anon

Ah yes, capital markets lawyers are known for their strong interpersonal skills.

Tom

You’re probably one of the Oxbridge simps who hardcore brown-nose the superiors. Of course you found them friendly, they’re your own kind

WOT

Some sources don’t even class Slaughters as Magic Circle anymore.

anon

That’s simply because of the lack of international offices. They are still, by a very significantly wide margin, the most profitable and prestigious British law firm. Their profit per lawyer is on par with the most elite of elite US firm, near the likes of Cravath, Skadden and Kirkland. Any real solicitor knows that a few years at Slaughters on your CV gives you incredible exit opportunities to anywhere you want.

Cash is King

Ah, this old chestnut – keep drinking the Kool-Aid.

How does “prestige” work? Can I convert it into avios and buy something with it? Who cares about profit if you’re not an equity partner – are you really mentioning profitability as a selling point of Slaughters in an article reporting cuts to its NQ pay?

You could replace Slaughters with any one of 20 firms on your CV and have the same, if not better, exit opportunities – especially if it’s not corporate

Diane Abbott

Not bad compared to the measures some other firms have taken. The market is too uncertain for people to be jumping ship regardless.

Eddie

To confirm – does a slaughter and may MQ still earn more than a CMS partner ?

Onlooker

Really poor behaviour from Slaughters – just shows the contempt they have for their juniors.

Given the cash the partners make, the reduction in NQ salaries would barely move the needle.

FormerSM

In fairness, pretty much all partner pay has been suspended.

Anon

Yes, but they will get trued up in future distributions and NQs will not.

Tobias

Should’ve gone to dechert

Ty

Or a proper US firm

Dickfart

Rofl lmao

Anon

Lots of dirt being thrown Slaughters way in the comments.

But, although not confirmed publicly, lots of other City firms, some of which are on par with S&M, are implementing much more extreme measures. NRF, for example, are forcing all NQs to take a three month sabbatical on qualification (and may indeed cut pay also). Additionally, Lovells have told trainees that retention rates are going to be painfully low.

Ultimately, if Slaughters keep retention rates high, this move will be a blessing. The legal market is going to be battered by the economic consequences of Covid.

Curious Cat

How do you know Lovells retention rates are going to be low?

Ppl have short memories

Better than 20% cut to pay and hours, right?

Reason

When partner/associate pay has been (justifiably and reasonably) frozen, isn’t it a bit obscene to give fourth seat trainees an overnight 100% pay rise? Think it’s entirely fair that they share a (very small!) part of the pain COVID-19 is inflicting by getting ‘only’ a 90% pay rise.

SM bashing might be fun, but unsure why this merits it – far more aggressive (yet still often justifiable to avoid redundancies) have been taking place at other firms, as other comments have referenced. As to why it’s not being reported in favour of this minor measure, anyone’s guess.

Petty

So they have a PEP of almost £3m and assuming around 30 trainees qualify as normal stand to save £150k for the year by making this cut. That doesn’t even cover the hotel bill for their usual partner conference

Reason

To me, it’s a matter of fairness. Partners aren’t taking drawings at the moment, and associates are frozen. Why shouldn’t NQs share some of the burden?

Many comments here are clearly from people who don’t work in a firm, and haven’t factored in internal dynamics. Dumping further on support, associates or partners doesn’t make a cohesive organisation – sharing out to all levels does. If I were at an associate at a firm where they froze or cut associate pay, but then gave raises of 100% to someone potentially six months behind me, I wouldn’t be best pleased. Measures like this are eminently sensible.

And yes, partners get paid a shedload. But they’re also taking a far greater hit relatively, as they should. If you have a problem with a quantum, you’re in the wrong industry.

Anon

Not sure where the 100% number comes from – after tax the raise trainees will be getting is around 18k annual. The firm itself will be billing them out much higher at associate rates.

It’s also incorrect that partners are taking the biggest hit… they’re simply deferring distributions for a later date, the juniors are actually losing pay. If a firm is well leveraged it should be rolling in r&i, cap mkts and litigation work right now to offset the quieter departments.

As someone has pointed out earlier it all comes down to the fact they never wanted to increase salaries and just followed FBD. It’s petty to pull away a few grand from juniors when it will make barely any difference to the bottom line.

Anonymous

“It’s also incorrect that partners are taking the biggest hit… they’re simply deferring distributions for a later date, the juniors are actually losing pay.” Except, one distribution is their pay, two even a modest drop in remuneration of partners can send a firm into a spiral much easier than most business models. There are plenty of staff, and now there will be an oversupply that reduces costs going forward of new recruits at any level for the foreseeable future. And that cap markets and litigation work? Not there at the moment, outside of property litigation and even that is grinding down to a slow speed now everyone has realised no-one is paying and there is nothing anyone can do about it.

Anon

Cap markets has been crazy – last month alone was the busiest in Europe for capital raising so if your department has been quiet something is very wrong. And litigation are swamped in FM claims as companies try to wriggle out of project and supply contracts.

No one is denying that there will be an impact to business but when you do the maths cutting associate pay by 5k is not the solution especially when you only increased it less than a year ago.

anon

Does anyone know how the big US firms are responding in terms of training contracts/salaries/retention? I’m a GDL student and I’m worried that it will be even more difficult to land a TC given the current climate.

Reply to anon

I agree with Grow up here.

I can also confirm that US firms are laying off – they are not publicising it nor admitting it because they are stealth dismissals.

If you have a choice, choose Magic Circle/Silver Circle for your training and long term career prospects. Do not go for US. If you don’t have a choice, at least choose your US firm very carefully and don’t go for the one that’s offering the « highest salary » because many of those who have are either already out or on their way out – as simple as that). Many people I know who are working at a notorious US firm because they didn’t have a choice.

Anon

How about you tell us how you know more than everyone else? Not retaining trainees is not laying off. If you’re talking about actual redundancies name the firms or shut up.

I’m at a US firm and no stealth lay offs have occurred like some of the twats on here keep banging on about.

Lol

Name them you coward

Bob

Nicole?

Slaughter and low pay

Oh how the mighty have fallen…
shows that if you want a decent income after this pandemic it’s US pay or the highway I’m afraid

Grow up

US firms are laying people off in their droves. They just don’t publicise this information. They’re also not intending to retain many, if any, of their fourth seat trainees.

Slaughters after 2008 did the same as they’re doing now. Reduce salaries but keep people on. It’s a completely fair compromise.

Slaughter and low pay

@Grow up-Yet another legal cheek fool that is clearly not very bright…

My point concerned INCOME/salary levels AFTER the height of the pandemic. I did not mention anything to do with current layoffs.

I’m not denying that layoffs might have occurred at US firm BUT US firms are still extremely incredibly unlikely to dramatically reduce pay as this is a key distinguishing feature for them in the UK graduate market. They may, however, need to reduce the number of people they take on.

Regardless, if you do manage to get a TC/ become an NQ from now on at a US firm-it WILL STILL provide you with more income than any of the UK firms after this, especially Slaughter and lowpay.

Curious Cat

@slaughter and low pay

How is it better to work at a US firm which lays associates off in times of struggle compared to UK firms which instead will lower salary.

I would rather have lower pay than no pay at all. You’ll understand the value of this after you graduate young one

Response to Curious dog^

Of course no one would prefer to work for a company that treats you like shit that goes without saying.

But bar ‘The Land’, which other US firms have actually LAID people off???

I know V&E and Weil have very recently in fact offered out training contracts…

Slaughters have taken a worse hit because of their heavy impetus on public M&A coupled with suffering from generally lower revenue than many other magic circle firms. Even if they have got all hands on deck to focus on litigation or employment right now they can’t compete as well with many of the other US firms in particular that have stellar restructuring practices.

Also, I genuinely know other trainees at S&M. It is not the happy place they market it as to graduates.

There is often a sense of too much seriousness and a ubiquitous fear of breaking the ‘professional’ facade at any point. Culture is governed by the ethos that all staff having to embody its ‘prestigious reputation’…

I will add that Joining a silver circle is a much better bet these days- decent pay, more responsibility and an least an attempt to give you your life back outside of the office.

Nah

I’d take job security over a higher salary any day. US firms making stealth lay offs whereas MC are doing everything they can to retain staff… Plus the training at US is crap in comparison.

Lol

Oh no! How will those US firms survive without you?!

Bogus

Name the firms with stealth lay offs or it didn’t happen.

Anon

Rubbish comment. US firms try to headhunt out of the MC because the training is exceptional. The US firms wouldn’t survive otherwise.

US 1PQE

None of the ‘major’ US firms have had any issue with fourth seaters and qualification, name the firms bc this is BS.

Only one of the top US firms on the street are doing any form of cut at the mo and it begins with K…

US 5 PQE

Agreed, it is “The Land” beginning with K that is doing the cuts…

Truth

Kirkland aren’t doing that though?

Anon

To be fair, some US firms have been very fair with their trainees – Weil’s kept all their 4th seaters.

OK Boomer

Weird flex but okay

Ffs

This is not fair. Do these self righteous priggs not think that NQs have finacial obligations such as payments for lambos, escorts and 100% peruvian. We deserve that after strugling assiduously for a TC at a MC firm and enduring 3 years of listining to bulshit that has no use in actual practice.

Anonymous

I am leaving this firm i want more money to get drunk with.

LamboLover69

Kirkland it is then to secure the lambo

LamboNoLambo

Lot’s of people defaulting on their Lambo payments then!!

LamboNoLambo

Lots of people defaulting on their Lambo payments then!!

NRF 4th seater

YOU’RE ALL GOING TO BURN! WE’RE ALL GOING TO DIE!

Yawn

Haha such nonsense.

Every single NQ would prefer to qualify into K&E, Skadden, Latham over any other MC firm every day of the week (unless they don’t want to work hard). Simple fact is, its harder to get into one of the US elite firms.

That is fact, but it is just the MC trainees who come on here in droves to criticise US firms whenever they can, just because they feel a sharp sense of inferiority when they realise their US NQ mates double their own salaries for doing pretty similar work.

US Firm NQ

It is laughable that I get paid £150k for what I do

MC Associate

Hope the third year of your law degree is going well mate. Sure you’ll fit right in at the US shops when you get there.

Anon

Only NQs who don’t understand the difference in culture at MC and US. Anyone actually in the legal world knows the US firms are horrible places to work, but you keep writing all this from your uni halls. Do some searches on LinkedIn and see the number of MC associates who move to US firms and then decide to move back again.

DrBoomer

As a relatively recent mover (MC to US), my two cents (no floating exchange rate) is:

– At junior end, stick to the MC firms for the quality of training. My experience of training at US firms is it’s sink or swim – you don’t want to be in too deep when you realise that style doesn’t work for you.

– Once you have (or think you have) an idea of what you’re doing, switch to US: the same job for double the cheddar.

I wonder whether the horror stories about US firms are peddled to stop more associates from jumping ship.

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