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Macfarlanes restores NQ lawyer salaries to £85,000 following COVID cut

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Pay trimmed by £5k last summer

Macfarlanes has become the latest City player to reinstate the salaries of its newly qualified (NQ) lawyers, after opting to cut pay in response the coronavirus pandemic.

The silver circle player confirmed junior lawyer base rates have retuned to £85,000. In August, Legal Cheek reported that salaries had been trimmed by £5,000 (6%) pending a review in the autumn.

A firm spokesperson revealed salaries were upped from £80,000 to £82,500 in November, with the boost backdated to September. It then upped them again last month, with salaries returning to a pre-pandemic £85,000. This second uplift was backdated to October.

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The news comes less than a week after fellow City player Bryan Cave Leighton Paisner restored NQ pay packets to £80,000 following a summer cut of 2.5%. Other firms to take similar steps include Hogan Lovells and magic circle firm Clifford Chance.

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32 Comments

Stingy firm police

Still have no idea why they cut. They revealed the strongest PEP figures ever (£1.9mil stronger than any MC) and a revenue boost. Definitely used the pandemic as a excuse to cut back and line the pockets of the partners.

They can also afford much better trainee pay.

Note Macfarlanes has been paying its nqs £80,000 roughly around 2016. This was at a time when MC were paying less than this and Macs was known as a better payer. Considering the fact that they are now even more profitable and taking in line inflation, they can certainly afford at least 95k. Hmmmm I smell a stingy firm.

(56)(2)

FlourPour

It may seem stingy in the context but having been a City NQ and having worked with them anything close to or above 60k is generous..

(3)(32)

Tolstoy's bicycle

You’re absolutely right: they are stingy and this is an issue at most UK-based City firms. Billings were through the roof and some teams have had their supposedly ‘best’ year yet, and despite this City firms acted as a cartel and cut salaries as since “our competitors are doing so, we should too. More profit for us partners”.

It may have looked prudent to some, but in my view it just highlighted the inevitable differences between the US powerhouses throwing more money on its associates via special bonuses on top of their huge pay packets (recognising the hard graft), and UK firms which are penny-pinching and gradually slipping into irrelevance. The future is American my boys.

(44)(2)

...

The reason is probably that they don’t have steady enough client i.e. awaiting a possible downfall… MC firms have a steady client base which will be with them for 10+ years thus once they gather enough such clients will increase the NQ rate, whilst Macs probably had their most profitable year but probably due to a temporary upsurge and since they do not have secure client contracts for the future years they will not increase the rates

(3)(12)

Loadsamoney

The cuts to the bands at higher PQEs haven’t been reversed and there’s no chance of any form of “Covid bonus” unless you’re a partner

(9)(3)

disgruntled resident of Cursitor St.

cheapskate firm

Managing Partner was paid over £4m last year

you’d think they could afford to match what FF was paying 6 years ago given that their profits are at a similar level

(19)(6)

Anonymous

Why should the firm match FF salaries? It’s competitors are firms like Slaughters, Travers, HSF and HL. Salaries are around the same if not more than these firms.

(6)(16)

A&O is King

Delusion lol.

(10)(5)

NQ

Once bonuses are taken into account, NQs get at least around 100k every year and more depending on firm wide performance.

Also worth bearing in mind trainees at Macs also receive the firm wide bonus.

Pay then is pretty much the same as most MC players hence why not many leave for MC, those that do tend to jump ship to US firms.

(18)(5)

Anon

Typical clueless law students on LC. Those at the firm are content with the pay for a reason (strong bonuses being overlooked).

(17)(2)

Jim and Pam

That’s a good point actually, always forget Macfarlanes distribute two bonuses. However to attract the best talent I think I would be wise for them to increase base pay.

(12)(1)

Anon

Agreed. Travers is 85k base, HL also 85k, HSF around 90 (up to 105 with bonus) and Ashurst 84k.

To stand out they should increase base pay. Otherwise, they’ll be looked at just another SC firm.

(7)(1)

CMS Trainee

Second-rate Travers Smith.

(1)(18)

Eberneeza

Macs>Travers

(18)(2)

Anon

Loooool Macs is many things but it’s not a second rate Travers. Travers is literally worse than Macs on everything but Disputes

(19)(3)

Juni

Few points I’ve noticed as a junior lawyer:

1. Macs, Slaughters, and most of the other MC and SC firms pay about the same nowadays, and some inflate overall figures with fake bonus numbers which they incorporate. Doesn’t appear to be Macs as they quote genuine base.

2. Bonuses they quote are the top of the range bonuses, and which are subject to performance and hours. You’re really looking at 5-10%, not 15%, so 4k to 9k; 40% of which is taxed; so big deal if you’re getting 2.4k extra for hitting targets.

3. Plus you may not be bonus eligible – the firm may operate a performance year of January – December. So if you qualify in September 2020, you may not be bonus eligible until January 2022, and the award of your bonus may not happen for several months after that. Point being – you might need to work 1.5 years or more to get a bonus, and you might well leave before then.

4. There’s a lot of talk about US firms in relation to money, but there’s woeful retention at these places – either because they boot people out all the time or people burn out, and I’ve worked in one, seen it first hand. There’s also a degree to which they can apply to the magic circle too. If you work in a US firm vs Macs for 6 years, you’re save probably about 300k on average at the former in that time, maybe more, and maybe about 60-90k more than you would have at Macs. Big f’ing whoop. This is because the figures are high, and so the tax bill is also high. The real money is made at partnership – you’ll make just as much basically at a UK firm as you would at a US firm esp at equity level, potentially even more.

5. So further to 4, qualifying at say, Latham, and then churning away for 3 years on qualfication, then burning out, buggering off either in-house to a fund to earn c. 100k (and that’s a genuine reflection of what in-house actually pays, you’re not making 140k+ even at a good fund at 3), or to a “lesser” UK firm to pick up also around 90-110k isn’t the most profitable outcome. Better to chill at a Macs (to the extent they chill, I don’t know), and then come to Latham at 3PQE, rather than having spent 5 years churning there, and stay until 5 or 6. The money differential between a 3 and an NQ is big, and a 6PQE is getting 270-280 with bonus. The bonuses do become chunky but only when you get senior. 3k after tax as an NQ, versus 40 odd k for a 6PQE bonus at US firm after tax is big on top of a very hefty base.

(25)(2)

2PQE

Some good points. Only think I’d add is that the bonus is actually 10-12% which is always paid and an additional 7% if the firm hits performance targets (which it almost every year does).

I’ll save the maths for the experts here.

(9)(0)

Quick Maths

“If you work in a US firm vs Macs for 6 years, you’re save probably about 300k on average at the former in that time, maybe more, and maybe about 60-90k more than you would have at Macs. Big f’ing whoop.”

You’re doing something wrong if that’s the case. You would be saving much more than 60-90k over the 6 years if you were at a US firm over Macs (as a proxy for a UK firm).

Let’s take base salary only from NQ level (which actually understates how much more the US firms pay because bonuses on the NY scale are known figures paid out if you are in “good standing” i.e. basically if you haven’t been fired whereas UK firms tend to have vague criteria and bonus ranges depending on whether you did BD or KM stuff in addition to billable hours):
NY scale: 135k or thereabouts
Macs: 85k
So a difference of 50k before tax and around 24k after tax at the NQ level (ignoring student loan because that’s irrelevant – earning more just means you pay it off quicker).

An extra 24k x 6 years is 144k and that assumes that the pay difference between the US firm and Macs stays the same as you move up in PQE – it doesn’t. The pay gap only grows – e.g. at 5PQE, the NY scale is around 200k base. I can’t speak for Macs, but at my MC firm, a 5PQE associate is on 132k. So that’s a 68k difference at year 6 before tax and around 37k after tax.

So, you’re probably looking at 150 – 200k more savings from working at the US firm on base pay only for the 6 years; add another 20 – 50k for bonuses. I’d say that is a pretty big f’ing whoop.

Your other points are valid though.

(6)(3)

US

Even still is that extra money worth it over that length of time? Will it change your position financially in a material way?

(0)(0)

Anon

In what world is up to a quarter of a million over 6 years or 40k per year net on average not material?

That’s easily a house deposit for your first home or an investment property, or private school fees or enables your spouse to not work and take care of kids etc.

The two alternatives both involve working at law firms – sure, the US is probably going to be worse hours on average but not by much in most transaction groups. If you qualify at 24/25, you’d be netting this difference just around the time you turn 30 so it’s not like you’ve sacrificed your whole life either.

(3)(3)

Anon

You’ve misunderstood here as what was being said is 3 years PQE or 5 years in total – so around £75k.

The general point still applies though. Why run out of steam after spending 5 years there when you can come in at 3PQE and earn the real money for a good few years and possibly make partner.

(4)(0)

Quick Maths

No I haven’t – I copied the original post before my comment and I’ll set it out again – it literally says:

If you work in a US firm vs Macs for 6 years, you’re save probably about 300k on average at the former in that time, maybe more, and maybe about 60-90k more than you would have at Macs. Big f’ing whoop.”

Nothing about 3 years or 5 years – you’re conflating point 5 with point 4 from the original post.

(0)(3)

Latham NQ

Why do you think someone at Macs can just walk into Latham? Everybody would be trying to do that at 3PQ – they pay the big bucks.

Better to start out at Latham if you can – as its easier to not get fired there than get a job there at 3PQE.

(9)(6)

Anonymous

Not easy but probably best placed compared to most other non-US firms. Similar team sizes to US firms and top notch corporate and PE equity practices albeit not on the scale of Latham.

(10)(1)

Latham NQ

Yeah so I think point remains that OP’s idea that its better to start at Mac’s and then transfer to Latham is misguided. I can’t think of anybody who would turn down a Latham TC for a Macs TC if they had the choice, can you (I may be biased, but my point is still valid)

(4)(3)

Anon

Indeed, if Latham/US firm is the end goal, why not just go there from the beginning?

You’re leaving a lot of money on the table purely on the bet that you won’t be burnt out as a 3PQE at Macs/UK firm but rather somehow be full of energy to jump across to Latham and stay until partnership… yeah right.

Anon

I feel like this is a bit of a rallying cry for people not good enough to get a TC somewhere like Latham. Every sane student would choose a TC at Latham over a TC at Macs and there’s a reason for that.

(2)(3)

2nd year exatah

Thoughts on Dentons for TC?

(4)(0)

Anonymous

As good as anywhere for a tactical chunder

(5)(0)

XXXX

No. Run. The retention rates are actually awful (that’s why they’re not published) and the whack is subpar. Everyone who trains there wishes they trained somewhere else.

(2)(0)

Anonymous

Is £55k good for an NQ in the city, working average 12 hour days?

(0)(0)

Kirkland NQ

Yeah it’s about market for a first year trainee

(3)(0)

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