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Magic Circle NQ lawyers charged out at £600 per hour, new data suggests

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Rates for top partners hits £1,500 — double compared to 15 years ago

The hourly rates of a newly qualified (NQ) associate at a top Magic Circle or US law firm can be as much as £600, new data suggests.

The eye-catching figures, compiled by legal costs expert Jim Diamond, also show that Magic Circle partners’ rates have doubled compared to 15 years ago, whilst, according to the Bank of England, inflation has risen 36% over the same 15-year period. Magic Circle partner rates currently sit between £1000-£1500, while US firm partners typically charge between £950-£1350, according to Diamond’s figures.

Magic Circle (left), US law firms (centre), Top London law firms (non-US and non-Magic Circle) (right) (Data source: Jim Diamond)

The research suggests the hourly rates for lawyers at Magic Circle and US law firms with between zero and two years post qualification experience (PQE) sit at £450-£600, while those at five PQE can charge up to £850.

Between 2000 and 2021, revenues produced by the UK legal sector have shot up from £8.6 billion to £41.6 billion with over two-thirds of this generated by the top 100 firms.

Magic Circle law firms

YearNQ-2 years PQE5 years PQEPartner
2003£175-£185£245-£280£375-£450
2005£180-£215£250-£300£425-£525
2007£235-£250£375-£450£625-£700
2008£250£350-£400£600-£750
2009£250£375£450
2010£300-£350£450-£550£650-£725
2013£350-£425£450-£550£700-£850
2015£350-£500£500-£575£775-£850
2022£450-£600£650-£850£1000-£1500

Diamond believes the recent series of junior lawyer salary rises explains why NQs are now charging around what partners would charge back in 2007 (not taking inflation into account).

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“The Magic Circle law firms are paying in region of £125,000 for NQ lawyers whereas the US law firms are paying £160,000 for NQ. One US law firm smashing records in the legal market place by paying just shy of £180,000. In 2015 the US law firms were paying in the region of £90,000 in comparison to Magic Circle law firms paying in the region of £70,000 for NQs,” says Diamond who is the author of The Legal Extortion Racket which is coming out later this year.

He notes: “The simple logic is with these huge increases in salaries will be passed on to the law firms respective clients. This is not meant as a criticism of NQs themselves as the 24/7 work commitment is the price they pay. I just wonder how many of them are still in the legal industry in 10 years’ time.”

US law firms

YearNQ-2 years PQE5 years PQEPartner
2007£215-£225£325-£360£450-£500
2008£225£300-£375£425-£500
2009£250£375£450
2010£250-£300£450-£550£500-£600
2013£275-£325£450-£550£550-£700
2015£375-£525£500-£595£700-£900
2022£450-£600£700-£850£950-£1350

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57 Comments

Anon

But I thought a&o and links couldn’t afford associate pay rises due to challenging economic conditions?

(116)(0)

Anon

Wow – if you do the maths based on the above that’s means a NQ doing 1800 billable hours (around the expectation at magic circle) would generate over a million pounds in revenue. And yet links and a&o say they won’t pay them a penny above 107.5k gross. As you go up the scale it only gets worse.

(70)(2)

Congrats

Congratulations, you just figured out how businesses work…

That commercial awareness will get you far when applying for insights days, fresher.

(24)(71)

Anon

So how can the likes of HSF pay their associates more with half the equity returns and less revenue fresher? I thought “that’s how business works”

(57)(2)

That's how mafia works

That’s how mafia works

(1)(0)

Anon

Not at all true. That assumes that all work is charged out at the full notional rates (without discount), that no bills are ever challenged or written off, and that all money is recovered. It’s not as simple as [Notional Rate] x [Hours].

(53)(2)

Wigmore

Only a moron would agree to pay £600 an hour for an NQ.

(35)(37)

Ground Gears

If you actually do the maths, an NQ charging 1800 hours a year (meaning the hours that actually go on the invoice, post write offs) will be generating around £1M give or take. Even with mad 30% bonuses at that billing rate, and factoring in other sunk costs like training those NQs and all the time that may have been written off while they were trainees, surely at this point the ROI for NQs must be at least circa £500,000.

On that basis why is it that we still keep getting told that Associates only really become profitable to a firm when they’ve been qualified around 2-3 years? Is it because firms make a profit on more senior associates by bunching their salaries but charging them out at even higher rates?

(19)(3)

Anonymouse

I think the distinction is that NQs are most useful at 2-3 years (rather than most profitable).

Lawyers at every level are profitable and some of the most profitable types of work are done at the junior end – e.g. big DD projects or discovery processes in high-value complex pieces of litigation. A client will generally only want to pay so much for a senior lawyer to draft/negotiate an SPA (irrespective of deal size) but will be comfortable paying far more on “process-type” work (usually done by juniors) where the nature of the project warrants it.

A 2-3 PQE lawyer, however, will often be able to slot into a team with minimal oversight or bedding-in time and quickly become a productive resource whereas more junior members will usually need more investment in time/training from other members of the team, which can be more disruptive, especially when everyone is already overworked.

(32)(1)

Reena

£600 an hour for the skills is someone that has spent at most 6 months in that sector, amending documents and photocopying bundles 🤦🏼‍♀️

(16)(10)

An Office wizard

Exactly. I am a 1PQE at a US law firm and spend significant amounts of time simply formatting documents after the partners have f*ucked them up. I’ve been fixing a word doc for more than 3 hours today after a partner made all of his/her comments in a different font and managed to ruin all of the bullet points / numbering. In other words, if this partner knew how to use word, I wouldn’t have needed to even open the doc today as nothing substantive was required from me.

(51)(5)

Anon

Do you not have a document production team that does this for you?

(25)(2)

Anon

No, they work at a US firm…

(55)(4)

Sol bruda

MC Associates wonder why they get paid comparatively a lot less, but then settle in with their document support guys, PA, delivery guy, rubbish swimming pools, pathetic gyms and onsite subsidised Dentists. I’d much rather open my own letters and get paid £40k more pre-tax.

Delicious Chargeables

Sol Bruda – Also probably means everything becomes chargeable like spending an age reformatting rubbish documents because there is nowhere else for it to go.

G

Why don’t you go do a law degree? See how hard it is

(3)(5)

Wigmore

As a member of the Bar I had to once represent a client in an unpaid invoice case where over £50k of the bill was essentially inefficiencies and errors that had eaten up time. We won. Easily. With all due respect, your firm should not be charging you out for re-formatting a document.

(13)(0)

Anon

Are these rack rates or average amounts actually billed? Some clients’ fee discounts are very significant (eg bank panel work), plus some specialist areas may charge out at different rates.

This article also makes a lot of the MC but as far as I can tell the US firms’ numbers are basically the same (and, few Warner salaries aside, they will probably have considerably lower overheads).

(12)(1)

Anon

*fee earner (!)

(4)(1)

That’s suspicious…that’s weird

Funny how US firms are actually charging out cheaper and yet they still manage to pay their lawyers near x2 more

(21)(0)

Anon

Well they’re far more profitable…

(9)(1)

Anon

The likes of Ropes, Shearman, Goodwin, Vinson Elkins, Akin Gump, Covington aren’t more profitable…and yet still can fork out more moolah

(9)(4)

Anonymous

The likes of Ropes, Shearman, Goodwin, etc are more profitable… their average profits per partner are $3-4m …

(5)(4)

Anon

Most of those firms have higher PEP than the MC, and with smaller headcount.

(2)(1)

Anon

Top U.S. firms do not charge out cheaper than MC firms in the same practice areas. They just don’t.

Referring generically to “U.S.” firms picks up a whole host of other firms, including “transatlantic” firms and firms whose small handful of NQs are subsidised by the U.S. offices.

(27)(1)

Busty buster

Baker McKenzie, DLA, NRF, HL, Jones Day, BB and White & case are dragging the US average down. I charge £870 as a 5pqe and a counsel (below partner, 12PQe) charges £1550. The figures can’t be right.

(15)(1)

Wrong

Yep figures completely wrong. £910 p/h here at 4.5 PQE (cravath scale, white shoe US). £1,600+ easily for partners.

(8)(1)

Ill-thought-out narrative

Taking this at face value charge our rates increased circa. 30-40% but NQ salaries increased circa. 70-80% between 2015 and 2022 at US firms. The numbers hardly suggest the increase in associate salaries are passed onto clients.

(11)(1)

S

Why would they not stick around in ten years?

(2)(0)

Lord Barrister of Bar

Now do this for magic circle junior barrister rates.

(9)(2)

Wigmore

I know of no newly qualified barrister billing £600 an hour. The highest newly qualified I have come across was £375p/h at a revenue set. I know of numerous 25 years call commercial barristers not charging anywhere near £600p/h.

(9)(1)

Lord Barrister of Bar

Interesting. This is consistent with my experience fwiw.

(0)(0)

dp

Lacking nuance. Most of the hours of NQs will be written off or heavily discounted. It’s not uncommon for a Partner to just say at billing time “yep we’ll just wipe those off entirely”.

(24)(0)

Anon

I’ve seen clients refuse to pay for NQ time at all (though it’s more common a demand for trainees).

(5)(0)

A loyal US firm supporter

It isn’t about hourly rates but recoverability of fees. US firms tend to have 95%+ recoverability while MC firms have between 60-80% due to fixed fee arrangement and panel/institutional relationship.

In brief, US firms still reign supreme! God save the US firms.

(35)(3)

Fortune Teller

Moving from CC makes me realise how good it is with a US firm (even a west coast firm like mine). Chaps – no more excuses, actions are louder than words. Time for the big bucks while it lasts (trust me, the market will collapse eventually!)

(13)(2)

bob

It’ll probably collapse in six months and it will be last in first out at the US firms lmao

(1)(1)

MC to US associate

From my experience:

US firms charge out their lawyers at higher rates compared to MC firms. I’m being charged out at almost 50% more than I was at my previous firm.

US firm clients are significantly less fee conscious. I’ve seen FTSE 100 companies nickel and dime MC firms and make them sweat for every £ of fees. Meanwhile, the big US corporates and PE funds do not care (within reason) about their legal spend. This is partly because the US economy recovered a lot better from the Great Recession whereas European economies and businesses have stagnated in the last decade.

I’ve personally seen my previous firm give large discounts and write-offs and (try to) justify it by saying it’s worth it to work on a premium/’statement’ deal. My current firm doesn’t do anywhere near that level of write offs and discounts and the mantra is if it’s not profitable, we won’t do it.

Unsurprisingly, my current firm pays me far more!

P.S. I am very, very, VERY lucky to receive a US firm salary. But I also feel like I should receive more. If you multiply my charge-out rate by my hours target, the firm will get close to £1.2 million. Let’s write a VERY generous third off for billing that isn’t recovered. I’m still only being paid a quarter of the revenue I generate. Professional services firms used to operate on the principle of a third to employee, a third on other costs (office rent, IT) and a third profits. We’ve moved a long way since!

(48)(2)

Roger That

It’s also because legal fees are usually a fund expense, so don’t come directly out of the pocket of the client (i.e. the sponsor) but from the fund itself.

(12)(2)

Disgruntled

The general rule is that you Bill 4 x your salary as the baseline. If you’re billing a quarter of revenue generated, they seem to have got your salary correct.

(2)(1)

Anon

It doesn’t mean that because you generated 1.2m that you should get it. The clients doesn’t come because of you but because of the partners/the firm. Also, they are willing to pay these rates for associates only because they are supervised by these partners/seniors who has so much experience in this field. Also, lot of these fees will pay the costs of the firm, IT, the training …
Without the firm/the partners, you wouldn’t be able to bill these rates and also be able to get the workload to reach 1.2m.

(10)(6)

Anon

And without associates the partners couldn’t run deals …

(4)(1)

Dhdjdj

I know the above comment has a lot of upvotes, but I disagree with most / all of it, as in, I know much of it wrong for many US firms etc.

If the numbers from LegalCheek are correct – and I can confirm they are correct for US firms – the obvious conclusion is that MC firms are having a bit of a laugh because the charge out rates are the same, but they pay much less.

The point is tempered by a few things, including lower billables. If the firm has a target of 2000 hours (or 1950, whatever the particular requirement is on a firm basis), you hit that, hit bonus and are in good standing. There are lots of associates in US firms who miss their targets (as in, a high % which varies from team to team, but it could be as high as 50% or more depending). That is not to say, they aren’t close or aren’t working hard, but they might bill 1900, and have had to put 150 hours on BD, by the partner when it should have been billable. Many just hit 2000-2100 – from an internal progression perspective, and as a rule of thumb you should avoid doing too much over if possible, because it gives you 0 back. There are a few firms like K&E which do have a progressive hours bonus over 2000, but most just kick in at 2000, and that’s it. You are then rated on BD, any pro bono, team initiatives, internal training etc. You should be attempting to delegate wherever possible to avoid going too high. Sometimes you just can’t.

But the point is, the billable difference in reality between an MC and US is a hundred or two generally, which doesn’t justify the drastically lower wedge, even when taking into account office costs, higher business services costs etc.

The reason I disagree with the comment above is because it is bollocks. The poster claims as a generality that US firms are more profitable because they don’t write off as much and have PE funds who don’t care about bills.

It’s way more complicated than that. Firstly US firms do huge write offs all the bloody time. Just because your partner is robust on bills, does not mean you can speculate blindly about other teams and firms. It’s also a dumb point to make since the write off usually depends on what the partner quoted in the first instance. So an MC firms quotes 200k and bill 300k; US firm quotes 300k and bills 300k – yes, quelle surprise if a write off has to be made for the former. It’s not even true that Latham will quote more than a magic circle either, they just don’t oftentimes. You can’t generalise. US firms constantly lowball for work as a loss leader to win clients as do MC firms; equally if everyone is slammed they might give a silly high figure and win the work anyway, because the client wasn’t particularly fee sensitive in the context of the work, luck etc. when the US firm still didn’t think they’d win the mandate anyway.

It usually comes down to leverage and utilisation. That is, partners provide generous estimates, then staff the deal leanly, the associates work long hours and time dump, up to the quote, and go over if any of the initial assumptions in scope are incorrect. So they’re bleeding a couple of hundred hours more out of each associate, and they don’t have outlier associates like some UK firms who have only billed 1300-1500. Each associate employed is well utilised.

And then they significantly less office services like marketing or IT support.

And then to circle back to the point I started with – MC firms are just having a laugh, it appears. They could pay more but they’re not, particularly A&O and Links, to keep the partners richer.

Additionally, the idea all US firms are the same really irks me. Like deeply. They are not. They pay what they pay because it is market and they get parity with the US. Some US firms are intensely profitable. Some are not. Some are loss making. Some of those are smaller firms trying to gain critical mass, some have big brand names at which prospective trainees will clamber against a thousand or two applicants, not knowing or caring the firm is loss making. They’re often supported by their US offices. So everything I’ve said above is a big generality – and why that other poster is also talking nonsense. Some associates might be billing 1500-1700 hours, and a significant chunk of BD, and that’s recognised as OK because the office is only so busy and the partners only have so much work. That would not fly at uber profitable US firms.

Equally to imply US firms are just all about PE, isn’t true either. K&E and STB, yes. Others have a range of clients, some very obviously profitable, some not. As do, MC firms, and silver. The poster also claimed above that US firms in London are doing work for American clients who are less few conscious because of the American economy. Wrong. The vast majority of all the teams in London at US firms are predominantly if not exclusively doing work for UK and European clients with counsel and ops based in those jurisdictions. Some may have clients as a derivative of a US originated client but no means commonly the case; particularly with PE, most of the fund clients are European. Just because it is a US client does not also mean that they will be less fee conscious – it depends on their UK manager and UK counsel. It’s such an individual case by case thing. Yes, as a rule in the US they are less fee conscious, but that’s not something you can transpose for the London market as a rule with US originated clients. The idea also that the American economy is wot dunnit is also rubbish – it’s a different culture and it’s been that way for decades, it’s not a short term economic reaction.

Final point – makeup of US firms and MC varies. So often US firms have a lot of salaried partners but few equity like K&E, where the equity is really really tight. And MC firms might have institutional relationships which stay with the firm rather than a partner. US firms try to lateral the clients in through partner hires. Sometimes that works and a partner will bring in 5-20 mill a year. Sometimes it doesn’t. So the bench strength across any individual US firm varies hugely – so one firm might have a very profitable white collar team but a lacklustre corporate or finance team, another might be strong for funds and not much else with some partners not even bringing in a million. Some US partners come in, barely bring any work, and leave after 3 years to do the same at a new shop. That in turn, depending on what team you’re in – a blockbuster team or a quiet team – is going to affect your hours, the clients and any write offs as well.

TL;DR Basically – very complicated, no hard and fast rules, things depend, and it isn’t about write offs, and MC firms likely could take out their wallets and afford to pay their associates a lot more.

(19)(16)

MC to US associate

I can see you wrote this comment at 4am but even that is no excuse for the terrible, directionless writing style.

Get some sleep.

(31)(3)

Anon

bro why were you writing all this rambling stuff at 4am? and if it wasn’t 4am in your time zone, why is it so rambling and hard to read??

(14)(0)

Steve

Finally an excellent and detailed response – ignore all the freshers who still haven’t learnt all the read yet.

(4)(10)

Lol

Hello Dhdjdj/Steve, did you just wake up?

You must be the only one upvoting your first post. Rambling and incoherent.

(7)(1)

Shdhdjjandjeizjdjejzbdujqkwisjeis

I was the 4am poster. It’s not excellent, and maybe it’s a rambling diatribe, but it is, at least, detailed and correct. As opposed to punchy but nonsense. I haven’t re-read it but for those with a sufficiently high pain threshold to wade through, the points made might be helpful and they aren’t bullshit.

(13)(2)

Anon

The above two replies to Dhdjdj are why I hate other lawyers.

(0)(0)

IC

So for litigation, as a client picking your team, you can pay £600 an hour for a baby faced NQ with a 2:1 from Leeds or £250 an hour for a 4 or 5 year qualified barrister with an Oxbridge first and a bunch of university prices?

(5)(3)

Baker

Try asking a barrister to help with anything actually essential for the litigation – like, you know, finding evidence to be argued.

(13)(0)

Tab

They are not allowed to find evidence. Closed shop stuff from the solicitors to prop up their profit margins.

(1)(1)

tired bill

Doesn’t factor in discounts ergo meaningless. Discounts alone may work out at 10-25%.

On top of that, you have fee caps etc.

(3)(0)

Lord Barrister of Bar

Yes, and many have spent time learning the other side of the profession’s skills too, usually via a previous career, through (well-chosen, not menial) paralegalling, or on secondment. Simple answer is to ask the firm you instruct on litigation matters to involve more than one junior counsel within the team!

(0)(0)

Anon

Wouldn’t disagree but having tried in the past to get barristers to deliver on time, it was such a nightmare that I gave up instructing them other then when I was prepared to wait.
I appreciate that chambers didn’t have the same infrastructure as solicitors firms but that became my problem, not theirs, and I got tired of being fobbed off as deadlines were missed.

(2)(0)

Lord Barrister of Bar

I do know this to be a problem and I find it baffling amongst my peers. Still not sure if it’s arrogance or a total lack of commercial insight into the sols’ and client’s needs but either way it’s shoddy and unbefitting of a client service industry.

The first rule of my practice is not to miss deadlines (I suppose perhaps second to ‘get the right answer’ and ‘don’t be an insufferable waste of skin’) and it’s working so far.

(0)(0)

Anon

Is PE / Funds going to tank hard over next 12 months?

(2)(1)

Comments are closed.

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