That one of the chief concerns among law firm leaders in Legal Business’ annual Global London report is the retention of talent and the salaries required to do that in an ultra-competitive recruitment market is of course not ground-breaking news. Pundits have for years bandied around the term ‘the war for talent’, and with ever-more frequency in connection with demand for deal lawyers as the seemingly unstoppable private equity boom continues apace.
But when these phrases take hold they tend to stick and get churned out at every available opportunity when senior lawyers talk about the manifold challenges facing their businesses. Critical as the pipeline of talent unquestionably is, now that there is a real war on, the term seems hyperbolic.
In less foreboding times, the melodrama of the phrase would not have grated, but since Russia’s catastrophic invasion of Ukraine it seems to ring hollow. In case an alternative is immediately needed, how about: ‘the spar for stars’ or ‘the tussle for hustle’?
While Global London is more about headcount growth among those foreign firms in London – and that growth on a five-year track has been striking with fee-earner numbers up 30% to 7,853 among the top 50 and partner numbers increasing 33% to 2,237 – intrinsically linked and impossible to ignore are the salaries that are incentivising the most junior echelons of the legal industry as dictated by ubiquitous market forces.
Again, at the risk of sounding histrionic, NQ salaries for the top ten members of the Global London club are barely shy of obscene. Goodwin tops the pay in that group at £161,500 with Kirkland & Ellis not far behind at £150,000. Making up the top three, Weil NQs can expect to take home £145,000.
It is quite a lot of money. For context, contemporary Freshfields Bruckhaus Deringer recently became the highest paying Magic Circle firm, handing £125,000 a year to NQs and creating substantial bonus opportunities for London private equity lawyers to sweeten the deal further.
Freshfields has long been ahead of the curve among City peers, in 2019 becoming the first Magic Circle firm to raise NQ salaries to £100,000, however, when LB covered the news it came with the ominous headline: ‘Shades of 2007’.
Of course, a downturn has been imminent for years and has yet to come to fruition. It is not as if the hubris of investing recklessly before a bust has not happened before – but corporate memory tends to prove surprisingly short.
In our Last Word section, Gemma Roberts, Goodwin’s London co-chair, argues (and I paraphrase) that high salaries only get you so far in attracting star players; they will eventually look around at the culture of the firm and the career progression on offer.
However, the generation coming through the ranks now has not lived through a recession and that downturn must come eventually, even if Covid failed to catalyse it.
The state of play with interest rates, oil prices and energy costs feels a lot more like the precursor to a crash than the pandemic ever did. It will be a shock to the system for those lawyers that have become so used to being in such high demand. The question lingers as to whether the days of people just being grateful to have a job will return. In the meantime, it is time to get some proper perspective.