Allen & Overy (A&O) has announced a salary increase for its associates, bringing the firm in line with its key City peers.
For a newly-qualified (NQ) lawyer, pay will rise to £64,000 from £61,500, for one year post-qualified experience (PQE), salary rises to £69,500, two year PQEs goes from £74,500 to £78,500 and three year PQEs will earn £89,000, against £86,000 currently. The news was first reported on the legal site RollOnFriday.
A&O was the only Magic Circle firm not to increase its salaries earlier in the year. With the latest rises, starting pay at London’s top five firms now ranges from £63,000 to £65,000, with Freshfields Bruckhaus Deringer currently offering the highest starting salary.
The rises come despite relative gloom in the UK corporate markets and criticism from some clients at being asked to pay high charge-out rates for junior lawyers. The Legal Business 100 this year found that revenues were up 8% to £19bn though this was mainly due to mergers and growth outside the UK. The Magic Circle largely saw flat revenues during 2012/13.
However, in real terms salaries for City lawyers have fallen considerably since 2008, when many top law firms were paying around £66,000 for newly-qualified lawyers, and some UK law firms have also phased out strict lockstep compensation for associates in favour of more flexible merit driven models. There have also been signs of returning confidence among commercial law firms since the spring.