29 Mar Law Firms offering Substantial NQ Salary Raise
With major dealmaking taking place last year with 62,000 mergers and £4.1 Trillion in acquisitions worldwide, law firms are desperate to ensure that they snatch up the best talent. American firms responded aggressively to the surge in M&A deals through pay rises with UK law firms under pressure to follow suit. Professional recruitment firm Robert Walters announced that NQ lawyers were benefiting from a 15% and 50% salary increases in comparison to 2021 amid cutthroat competition for workers.
Magical Circle Firms followed the trend
Clifford Chance is the latest Magic Circle law firm to raise pay for newly qualified lawyers to £125,000 a year, the increase follows their salary hike from £94,500 to £100,000 in 2021. This rise flows Freshfields Bruckhaus Deringer’s recent announcement that it would give law graduates a 25 per cent pay increase to £125,000. Magic Circle firms Linklaters and Allen & Overy, which offer £107,500 base salaries for new starters, now fall behind their Magic Circle competitors Clifford Chance, Freshfields Bruckhaus Deringer and Slaughter & May.
Regional Law Firms Join In
The bump in NQ salaries is not unique to city firms. Regional NQ salaries are also on the rise and at even higher rates. Firms like DLA Piper raised NQ salaries regionally to £65k, pressuring competitors to do the same. Simmons & Simmons raised their regional NQ salaries to 22% too. Such action has forced firms to reconsider their NQ regional salaries and increase them in order to remain competitive. Although critics are not in favour of the emerging trend and consider it unfeasible, the industry has not heeded these warnings.
Graduate Pay Rise Backlash
Law firms raising the salaries of those who are just starting out during a cost-of-living crisis has brought anger to many. The pay increases are much higher than the 9.4% inflation rate in the UK and come after workers were discouraged from requesting a pay rise. While NQ solicitors are being offered alarmingly high salaries, according to the Office for National Statistics, the average salary in the UK is £38,131 with most people’s wages not rising in line with soaring inflation.
Another criticism of the grossly large increase is the argument that the move simply isn’t sustainable. Sir Nigel Knowles, chairman DWF wrote: ‘Offering more and more money to young people is only a sticking plaster. It is not a sincere, sustainable or healthy solution for anyone.’ He pleaded with law firms to concentrate on building healthier workplaces with a work-life balance rather than implementing startlingly high starter salaries.
This trend is likely to cause tension amongst existing employees who are not being offered the same level of remuneration for their work. While new hires have been wooed by firms with bumper salary offers, this has contrasted with existing employees whose wages have largely stagnated. ‘The consequences of this will result in ‘wage compression’ – where existing employees feel their additional experience at the company (over new starters) is no longer valued or has not grown in value.
If you are a hiring manager for a law firm, or as a candidate, would like to know where you should be positioning yourself salary-wise. Please get in touch.
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