Allen & Overy (A&O) has become the latest of the Magic Circle to reveal that it is holding its associate salaries at last year’s levels, meaning its associates will rank as the lowest paid of its rivals so far.
The firm will continue paying newly-qualified (NQ) lawyers £61,500; £1,500 less than Slaughter and May, £2,500 less than Linklaters and £3,500 less than Freshfields Bruckhaus Deringer.
A&O’s first-year post-qualification experience (PQE) pay will remain unchanged at £68,500, as will second and third-year PQE salaries at £74,500 and £86,000 respectively. Last year the firm announced associate pay increases of between £500 – £1,000, following a hold on pay in 2011-2012.
The decision places the firm at the bottom of the associate pay table after Linklaters this year announced it is to increase NQ pay from £61,500 to £64,000. Freshfields, on the other hand, chose to hold associate pay but still tops the table, awarding career milestones foundation (the equivalent to NQ) lawyers between £65,000 and £72,500. Genevieve Tennant, global director of HR at A&O said: ‘I think the bonus pool is very important in this discussion – our NQ’s will receive a £5,000 bonus this year and this keeps us at a competitive position. This year we have differentiated bonuses up the PQ level. We focus on total rewards and make adjustments where appropriate.’
On the other hand, trainee salaries at A&O went up last month for the first time in three years after the firm bumped up first year trainee pay by £1,000 to £39,000, while second year’s got to take home an extra £800 totalling £44,000. The salaries now match its Magic Circle peer group for trainee wages, aside from Linklaters, which award its first year trainees £500 more.
Clifford Chance remains the last Magic Circle firm to reveal its associate pay bands for 2013-2014.
Associates at City firms have seen their salaries drop by around 15% in real terms post the collapse of Lehman in 2009, which saw many firms cutting pay packets for NQ lawyers by around £6,000. Aside from Freshfields with its new career milestones arrangement, firms are still below the £66,000 pay bracket for NQs.