More details are emerging on associate pay at Magic Circle firms as Freshfields Bruckhaus Deringer has joined the list of firms to announce increased salaries for US associates, as competition to recruit top lawyers intensifies.
The move by Freshfields will see the firm match the rates set by Milbank Tweed Hadley & McCloy, which set the standard for raising the starting salary for new lawyers two weeks ago, with Freshfield’s US associates now starting on $190,000 and rising to $330,000 in their eighth year.
Despite matching Milbank’s rates, pay is below that the rates announced by Magic Circle counterpart Clifford Chance (CC), which will pay also junior associates $190,000 but this will eventually rise to $350,000 for senior associates. CC also announced summer bonuses starting at $5,000 for junior lawyers rising to $25,000 associates from the 2009 class and more senior.
The issue of associate pay has seen firms begin to jostle with each other, as CC’s rates closely-matched those of Quinn Emanuel Urquhart & Sullivan, which announced a new scale of $190,000 for first year associates to rising to $340,000 for senior associates, as both firms surpass the levels announced by Milbank for mid-level and senior associates.
In addition, Quinn announced a pay hike for junior London lawyers, which sees associates start on £125,000, potentially rising to £245,000 for senior associates. Despite being below New York rates, Quinn’s London salary announcement means a sharp hike for associates in many bands, particularly in the class of 2013, who will see a pay increase of £30,000 from £155,000 to £185,000.
The latest pay rises come as City firms wrestle with fee pressure from core blue-chip clients, while expansionist US firms continue to attract Magic Circle talent and inflate the market rate for the best deal lawyers. With good growth predicted for Magic Circle firms this year, the associate pay increases could go some way towards steering young talent in the direction of the established City players as US firms continue to stretch London salaries.