The search for the brightest thinkers has caused many London firms to reevaluate their salaries for entry-level and mid-level legal talent. This change has seen some US firms offering newly qualified salaries starting at £153,300, with some also including bonuses and better flexibility when working.
This shift has come from influence in the US, who naturally pay Associates higher salaries when they first join a firm. With US firms having roots in the UK, this salary banding exercise has been replicated, which has created even more competition amongst firms in London to attract and retain the best talent.
In an article by Sky News, it was highlighted that there are two main areas for competition, “one if for lawyers in their mid-40s with a couple of decades of experience under their belt. But, the most fiercely-fought competition right now appears to be in newly-qualified lawyers, where, during the last decade, salaries have exploded”.
This sudden demand was partly influenced after multiple hiring freezes during Covid-19; however, many firms now have the budget and the bandwidth to hire entry-level talent as the London market returns to normal.
This was also discussed in an article published in Global Legal Post, stating that “US law firms are waging an associate salary war as they look to match one another in order to attract and retain talent amid surging volumes of work.
Davis Polk & Wardwell set fresh terms for the pay race last Friday, when it upped associate salaries to between $202,500 and $365,000 per year depending on seniority level.
The hike came just a day after Milbank had fired the starting gun by raising first-year associate salaries by $10,000 to $200,000, with its most senior associates receiving $355,000.”
The salary pressures imposed by US-based firms, although positive in many ways for newly qualified lawyers, may also lead junior talent to make decisions purely based on salary, instead of culture, career progression, and other factors that are personal to them. There is a notable generational shift amongst the new wave of legal talent.
Many value the idea of work-life balance, whether this is through flexible working or having the opportunity to socialise more with friends over longer hours in the office. Although some junior candidates are still heavily motivated by the financial gain that many US-based firms can offer, there is a vast majority who would value a lower salary in exchange for a better balance.
This was supported in a piece published by Legal Cheek, which stated that “The reasons given as to why one should not give into such salary temptation and jump ship to a top-tier US law firm are varied and, for many associates, have long held sway.”
However, although there are clear opinions for and against the salary increases, there has been a notable shift in the recruitment of women, supported in an article published by Sky News;
“Another consequence of the war for talent is that, for the first time, women are being elevated to the top tier of what were seen traditionally as clubby, male-dominated environments. For example, Freshfields elected Sydney-born Georgia Dawson to be its senior partner in September last year, the first time a woman had been elected to the role.”
So, what should UK law firms do?
Attracting top talent will always be a priority for firms; however, it can be challenging to strategise the best approach to ensure that the right people are being onboarded. Company culture, mission, and values are equally as important when attracting talent, so although increasing salaries will allow you to attract financially motivated candidates, you must also highlight the other benefits to joining your firm so you attract the right type of individual.
Additionally, Associates wanting a more balanced lifestyle, are less likely to be motivated by purely financial gain. So, in summary, it is completely dependent on the type of firm you run and the type of talent that you want to retain.