London associates at Herbert Smith Freehills (HSF) have had their salaries bumped up by between £4,000 and £8,000 as competition for City talent continues.
All lawyers between first year trainee and four-year’ post-qualified experience (PQE) at HSF will receive a rise. Newly qualified lawyers at HSF will now be paid more than their peers at Linklaters, by £500 a year, and Freshfields Bruckhaus Deringer, by £1,500. They received a £4,000 increase on last year to inch closer to the £70,000 barrier Slaughter and May hit earlier this year, with salaries now pegged at £69,000.
Freshfields was the highest-paying Magic Circle firm for newly qualified lawyers in 2014, at £67,500, meaning that the top rate among UK firms have increased by £2,500 this year. Demand for talent has increased in recent years following the expansion of US firms in the City, with newly qualified lawyers at Davis Polk & Wardwell paid £100,000 a year, with high retention rates to boot.
While Magic Circle firms continue to pay higher salaries for their more experienced lawyers than HSF, the firm saved its biggest increases for those with two or three years’ PQE to reduce that gap. Lawyers with two years’ PQE received a 10% salary bump from £79,000 to £87,000 and those with three years’ PQE were handed an 8% rise to £89,000.
Those with four years’ PQE at HSF will earn over £100,000 for the first time, as salaries in this band rose 7% from £95,000 to £102,000.
Ian Cox, UK managing partner, said: ‘These salary increases reflect the exceptionally strong performance of the London office over the past year, but this is also about investing in the firm’s future. In order to continue advising clients on their most important transactional, contentious and reputational matters we need to have available the best legal talent in the market, and offering competitive overall compensation packages at all levels is a major factor in ensuring that.’
Yesterday (1 July) HSF unveiled promising financial results for 2014/15, with profits per equity partner up 8% to over £800,000 against a 2% revenue increase.
Salaries from 1 June 2015:
First year trainees – up 6% from £39,500 to £42,000.
Second year trainees – up 5% from £44,000 to £46,000
NQs – Up 6% from £65,000 to £69,000
1 year PQE – up 6% from £70,000 to £74,000
2 year PQE – up 10% from £79,000 to £87,000
3 year PQE – up 8% from £89,000 to £96,500
4 year PQE – up 7% from £95,000 to £102,000