UK mini-budget tax cuts causes pound to tank
Lucky newly-qualified (NQ) lawyers working at some US-headquartered firms’ London offices are seeing salary hikes to around £200,000 as the pound hits a record low dollar valuation.
The devaluation of the British pound against the US dollar will affect those working for firms who base their pay on the dollar amount. These firms take two approaches to currency conversions for salaried employees: either they follow the live rate or decide a spot rate that fixes the exchange rate for a certain period of time.
The Cravath Scale, which is used as a benchmark for lawyers’ pay at US firms, puts NQ pay at $215,000, equivalent to over £198,000 at the time of writing — a hefty uplift of £21,000 on the £177,000 conversion figure from last month.
US Cravath payscale at current conversion rate (£0.92:$1)
| Class year | Cravath scale | Converted to GBP |
| 2014 | $415,000 | £382,500 |
| 2015 | $400,000 | £368,500 |
| 2016 | $370,000 | £341,000 |
| 2017 | $345,000 | £318,000 |
| 2018 | $295,000 | £272,000 |
| 2019 | $250,000 | £230,500 |
| 2020 | $225,000 | £207,500 |
| 2021 | $215,000 | £198,000 |
Figures have been rounded
This is the latest money bonanza for lawyers to come from the Chancellor Kwasi Kwarteng’s mini-budget that will reverse the planned rises in National Insurance and cut the top rate of tax for those earning over £150,000 from 45% to 40% from April 2023.
The tax cuts will have the greatest impact on City partners. Slaughter and May equity partners are expected to save around £178k on their tax bills, whilst Macfarlanes and Magic Circle equity partners enjoy tax breaks to the tune of over £100,000.
Firms with equity partner tax savings of >£100,000 from April 2023
| Ranking | Firm | PEP | Tax saving |
| 1 | Slaughter and May | £2.96 million (estimated) | £178,000 |
| 2 | Macfarlanes | £2.48 million | £148,000 |
| 3 | Freshfields Bruckhaus Deringer | £2.07 million | £122,500 |
| 4 | Clifford Chance | £2.04 million | £120,500 |
| 5 | Allen & Overy | £1.95 million | £115,000 |
| 6 | Linklaters | £1.87 million | £110,000 |
| 7 | Hogan Lovells | £1.8 million | £106,000 |
Figures have been rounded
