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A&O opts against NQ lawyer pay rises citing ‘challenging’ economic conditions

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64

Rates remain at £107.5k

Allen & Overy’s London office

Allen & Overy has told its junior lawyers they won’t be getting a pay rise due to “challenging” economic conditions.

In an email seen by Legal Cheek (embedded below), the magic circle player said that “after careful consideration of the market and with economic conditions becoming more challenging”, it had “decided not to increase associate spot salaries further at this time”.

The outfit, which usually reviews pay every summer, last upped newly qualified rates to £107,500 in November 2021.

A spokesperson for the firm said:

“After careful consideration and consultation we have decided not to increase the London NQ salary at this time. It was last increased in November 2021, to £107,500. This is a prudent decision based on a number of factors, including the more challenging business environment. We will keep the situation under review.”

The Legal Cheek Firms Most List 2022 shows the firm’s magic circle rivals Clifford Chance and Freshfields pay NQs £125,000 while those over at Slaughter and May receive £115,000. Linklaters, like A&O, provides an NQ rate of £107,500.

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64 Comments

Freshford Cliffhaus

The gulf widens between CC/FF and A&O/S&M.

(87)(3)

Anon

S&M are paying more than a&o and LL and they give way better annual leave! They’re firmly in the middle now.

(77)(3)

Graham

Real terms pay cut – cheers.

(72)(5)

Average Pay War Enthusiast

This is really odd. I’m surprised that A&O chose not to match CC/FF but I’m even more surprised that they refuse to match at least S&M. I wonder whether what, if any, impact there will be on trainee retention rates and lateral hires between the MC firms. Perhaps no change between the MC firms, but more laterals to the US firms. Curious to see how Links will respond to this.

I also found it odd that their reasoning to not increase salaries is because of ‘challenging economic conditions’, when in reality that should be the reason to hike pay in the first place.

The gap in pay within the ‘magic circle’ may even lead to the ‘magic circle’ no longer being a term in the next few years. Who knows.

(73)(1)

Anonymousse

This website needs to stop thinking that the world revolves around graduates ffs. The term “Magic Circle” has absolutely bugger-all to do with how much they pay a bunch of 23 year old redliners and photocopiers. It’s related to market perceptions of these firms by *clients*.

(24)(25)

Linklaters Q3

LL has sent an email to all staff essentially saying the same, citing competitive bonuses as the reason behind not increasing for now

(64)(2)

Oof

Links was also one of the first to cut NQ pay at the start of covid – by 10% if I remember correctly…

(36)(2)

Anon

Bonuses not even competitive you have to do 2400+ hours just to bring you close to cravath BASE.

(35)(1)

True

Worst part is the new links managing partner said back in November the firm would lead the way in pay now refuses to even match slaughters…

(18)(1)

Shocked and surprised

Absolutely shocking! If you read that email it says they are expecting utilisation to go up but salaries have gone down 10% in real terms due to inflation. Charge out rates have gone up 10% so clients are footing even more. What challenging economic conditions are they referring to then?! I assume the partners won’t still be getting millions in distributions this year seeing as things so challenging! Cue the wave of resignations…

(97)(2)

Anon

Why can their direct competitors (CC, FBD even slaughters) raise pay but they can’t? That has always been the way the market operates. Nothing but cheap from a&o… recruiters get on their greedy case!

(58)(0)

A&O third seater

Shocking. Sub 60% retention rates here we come. Is it too late now for me to start looking at US firms, given there’s only ~8 months left in my TC?

(31)(3)

Swolesome Chad

No my brother in Christ, that’s the perfect time, indeed you’re at the point where they’ll just start contacting you on LinkedIn. Get outta thereee asap

(36)(0)

Cold toes

Pay war is over.

See you all next lateral bull market.

(55)(5)

Anon

HSF and firms with a similar NQ pay breath a sigh of relief that they no longer have to increase pay across the board

(30)(1)

Greedy AO partners

Shocked that AO chose not to raise salaries
AO has revealed itself as the weakest magic circle firm
Profits increased this year but no pay increases trickling down
Trainees – vote with your feet and leave

(62)(3)

Frustrated NQ

“challenging economic conditions” for the partners losing PEP to pay employees more?

Must be so difficult for them

(39)(1)

Smith

You wouldn’t understand. PEP is the most important thing to maintain for a firm. Relative to other business structures, law firms are very susceptible to negative effects from a reduction in equity pay outs. Even a small change can trigger departures which feed a cycle. Staff can be replaced. It is an expense and no-one wants to incur it, but if it is between losing some disgruntled staff or propping up PEP, propping up PEP is always more important not only for the partners but also for the continuity of the business to preserve the jobs of the employed staff too.

(5)(30)

Anon

You don’t up PEP materially by saving a few grand on associate salaries. You up it by generating more revenue. Clearly they have their strategy all wrong

(29)(2)

Current NQ

Smith, bet your a partner. The partners should be focusing on the revenue part of the equation, not costs. Saving a few quid ain’t gonna help.

The firm relies too much on low-cost, sweaty panel work. We should poach partners and associates from US firms in London and start paying staff properly. A solid PEP will follow when staff are loyal and dedicated to the business.

(3)(0)

Anonymous

WTF? Greedy partners flying to Barcelona for a ‘conference’ at the beach, utilisation rates have been past 100% for months, 10% inflation, and we have a pay freeze?

How bad does it look to renege on an agreed NQ position and start job hunting again now?

(74)(1)

DisgruntledLL

LL have pretty much said the same, though somehow justified it using the bonus structure even though it nowhere near matches overall comp at CC/FBD.

And they did not give people enough time to jump firms only telling trainees in the week contracts needed to be signed.

(29)(1)

Anon

And those contracts, they didn’t have notice provisions in them?

(7)(4)

Ex-LL

LL have form for doing this – complete lack of transparency to the trainee/qualifying cohort and then acting offended when people complain and/or resign.

Don’t worry about having signed the contract. I was at LL when COVID first hit in 2020 and they cut pay. Straight on the phone to recruiters and then quit the week after the seat change – get yourself paid properly and don’t look back.

(38)(2)

Anonymous

Hahah get in the bin A

(12)(0)

Man the exits…

A major self inflicted wound – this failure to act will likely manifest itself in a rush for the exits and a mass exodus to US firms.

Why stay at A&O, where comp is not raised in line with market expectations, when you can make £50,000 more elsewhere?

+ we’ll say nothing of five figure signing + year end bonuses…

(44)(1)

Annoyed A&O Employee

It’s funny because the partners constantly cite the US firms as our competitors… and we do always have US firms on the other side of our deals yet we will never even come close to matching them

(33)(2)

MC Exile

Even worse is the fact that they happily pay associates in US offices top whack despite said associates hardly being the cream of the crop. The less said about the enormous amounts being paid to third-rate US partners (through the introduction of “eagle points”) the better.

(3)(1)

You guys are too much

Imagine complaining about a £107.5k NQ salary when all you’re doing is running redlines and corporate authorities hahahaha

(36)(62)

Whoosh

That’s the point, CC and Freshfields NQs are getting paid 125k to do that while more senior associates are being paid the same to run with transaction docs

(52)(0)

Anonymous

This the big leagues boy.. 107 is short change. City law is 👑

(2)(7)

Anonymous

I’m sure you’d complain about it if Jim over the road was running the same redlines and making more than you doing it..

(20)(0)

Freshfields NQ

*AMUSED HONKING*

(30)(0)

Anonymousse

Calm your tits, you’re still being paid about twenty grand than NQs at most US firms while working for some absolute psychos in your partnership (working across from FF is one of the most emotionally draining experiences I’ve ever had as a lawyer).

(16)(4)

In the City

Fine, they want to freeze pay, then hopefully the associates freeze work.

I think the target is 1750? Should be 7.8 chargeable hours a day. Get 78 of those 6 minute units on the clock then log off. Let the partners worry about any unreasonable deadlines they haven’t properly staffed the matters for.

Sorted.

(38)(4)

Non-London Scumbag

Will partner drawings be frozen too during this difficult period?

Freezing salaries and raising busyness threshold for bonuses… Taking the you know what.

Abandon ship associates. If the partners are as brilliant as they think they are they can do all the work themselves.

(30)(1)

LOL

S&M > A&O, LL

(32)(0)

Anonymous

Bruh after this US, SC, International firms all > A

(4)(1)

Anonymous

I trust you’d get a TC there if you applied? I thought so bc people earning this so called peanuts aren’t in these comments making signs

(1)(1)

Angry & Over It

Guess I will start taking those recruiter calls (to my desk phone) now… just yesterday we were told banking had one of their best financial years to date *eyeroll*

(32)(1)

Anon

A few thoughts:

Here I thought the magic circle all moved together as a monopolistic cabal!! So like others very very surprised.

Spare a thought for the trainees (if you can/want to care to) who just blindly thought/assumed a&o would match FF when they were the first movers. Must be a fair bit of anger at a&o (rightly or wrongly despite already high salaries for the role we do)

Recruiters will be having a field day rubbing their hands. They’ve got a busy day ahead of themselves tomorrow cold calling every single a&o trainee (as a minimum) and then working their way up.

Already seen one recruiter put out a post on LinkedIn asking all a&o lawyers to reach out to him/her if this lastest news was the last straw and they fancy a move !!

(24)(0)

LOL #2

Travers, HSF, Ashurst, et al are going to have a field day with this if they decide to up their NQ salaries this year!

(25)(0)

2PQE Corporate

And 30% max bonus …

Folks are already jumping ship, two seniors on my floor just handed in their notice today right after the announcement.

This is shocking. Nobody in my team did any work today, aside from browsing Linkedin and emailing recruiters.

Disgraceful from the partnership after the 17% y-o-y rise in PEP.

(36)(2)

The Informer

Bonus ranges from 30%-%50% for mid-level associates and upwards.

Max 30% is basically for anyone 2PQE and lower.

(3)(1)

Tommy

I’m mid level and was given the “medium” bonus, and it was 10%

(5)(0)

Tommy

Given that bonuses are paid in 3 weeks’ time I strongly doubt this happened

(3)(1)

US associate

Exodus to US is now inevitable… especially with costs of living growing by the days

(17)(1)

Now what

I hope some members of the partnership read these messages. This was a wildly uncoordinated and stupid f you to the associates. They will now face an exodus and there will be no way to fill the void – other than to take on people they may not have necessarily considered before as everyone else is going to the US firms. Wild miscalculation.

(36)(1)

But what about bonuses?

Does anyone know if individual bonuses were upped in light of this (as compared to last year for example)? What are the expected/average bonuses for an NQ and up to say 5PQE? Sadly there isn’t much transparency on that from Magic Circle law firms.

(1)(0)

Disgruntled A&O Associate

We were supposed to be told about bonuses today but they emailed us last minute saying the conversations will be pushed to next week. Not much transparency even within the Magic Circle I’m afraid.

(26)(1)

The Bubble Has Burst

awwwwww those poor NQ’s imagine having to survive on a measly! However will they survive?

(6)(10)

Associate

Overtaken by HSF paying £120k now!!

(14)(0)

anon2

Why don’t they just become commercial barristers…? Choose your own hours, better pay.

(7)(11)

A&O 2PQE

Handed in my notice this morning, and got my interview at a US firm lined up for next Thursday already. In a bit x

(16)(0)

MC Exile

Well done. I left the “Magic Circle” for a US firm recently. Best decision I’ve ever made.

(11)(0)

US partner

I’ve received at least 8 CV from existing A&O/Links associates over the last three days and our PE/litigation/restructuring are recruiting. As an ex-A&O associate I can assure you US firms are just the same as A&O (but with 50% more pay).

(18)(0)

Curiosity killed the cat

What’s a 4-5 PQE on at A&O?

(0)(0)

Anything but Overy

4 PQE – £140k
5 PQE – £150-155k

Bonus – 90% of the people get between 10-15%
Perks – None
Cons – Toxic partners

(6)(1)

Insider

A&O has overspent on its expansion in the United States (in the £50m+) and our third-rate Boston and LA partners aren’t performing at all. Our cash reserve which could have been spent on associate pay has been sucked up by these Americans. Sadly, the Partners aren’t taking responsibility and their hands are full of blood.

Pay is low but hours are consistently long. I work more than my pals in US firms or investment banks. A&O could have paid London associates US rates and trust me, we could have attracted the best talents and send the US firms home. A&O has no chance now.

Recruiters are calling us so the firm will soon be gutted. Honky dory.

(28)(0)

Risky Business

Which teams are the busiest at A&O at the moment? Considered a move there but maybe not worth it.

(0)(0)

Front door bulls

Bro, sup. Finance is always busy and extra busy for the leveraged finance associates. Funds is also up there.

I don’t think you’d be short of work at A&O but the reality is your hard work isn’t appreciated and won’t be recognised fully by way of a just and equitable remuneration package. Our selfish, arrogant and cocksure partners would rather eat up all the profits and “bugger” us (literally). Will let you judge the culture when a majority of the workforce is at least contemplating to leave if not already negotiating offers with other UK/US firms.

(9)(0)

Risky Business

Damn. This is worrying.

But what’s the sentiment within A&O at the moment?! Like what are the partners saying? Are they saying anything at all to address the elephant in the room?

If they are getting loads of resignation notices…are they not at all worried?

(0)(0)

Ex MC

As an ex-A&O-er I completely agree. They hired a load of useless US partners who clearly aren’t paying their way. I am sure there are some really good ones in this new crop but they are the exception.

Increasingly hard to see what the attraction of A&O is for good associates.

(15)(0)

A&O alumni now US associate

A&O has been manipulating the minds of assiduous yet naive associates by telling them that the world outside is cruel and cutthroat. I have believed it for years, until i couldn’t stand the toxic environment and decided to move to a US firm for much better pay (>£100k before tax).

My two cents. When a firm doesn’t treasure its loyal employees it’s time to move on. There are better places out there. I’d be nervy if I were an A&O partner – how would the firm look when the good people are all left for your competitors?

(8)(0)

Comments are closed.

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