Trainees, NQs and PQEs to receive salary boost.
Setting the bar for trainee, newly-qualified (NQ) and associate pay last month were early Magic Circle movers Slaughter and May, Allen & Overy (A&O) and Linklaters, as Ashurst, Hogan Lovells and Shearman & Sterling were among other firms to announce changes.
Linklaters’ decision to increase pay pushes it ahead of the Magic Circle pack, with first-year trainees’ pay up by £500 to £40,000, and NQ salaries by £1,000 to £65,000. One-year post-qualified experience (PQE) associates also took home an extra £1,000 to £70,500, while two and three-years PQE saw more substantial increases, up by £3,750 and £4,500 to £82,000 and £93,500 respectively. These increases are significantly higher than last year, when pay rose by £2,250 and £1,000 respectively for two and three-year PQE associates.
The increase means the firm is edging back to 2008, pre-crisis pay levels, when the firm paid NQ lawyers £66,600, before cutting salary bands for junior lawyers in 2009 and lowering NQ pay to £61,500.
Linklaters’ decision to push up salaries across the board contrasts with A&O’s decision to largely stick to last year’s pay levels, after an additional pay rise last November. On the face of it, the firm lags behind its peer group, with NQ lawyers receiving £64,000, while a one-year PQE lawyer will take home £69,500, and second and third years will receive £78,500 and £89,000 respectively. In 2008, A&O became the first Magic Circle firm to freeze NQ pay at £65,000, and first, second and third-year PQE wages at £71,500, £84,000 and £92,500.
However, A&O managing partner Wim Dejonghe told Legal Business: ‘Starting salaries is not the whole reward. Our bonuses link to the profitability of the firm. Associates don’t only look at salaries; they look at bonuses, the working environment, the opportunity to work with partners and the culture. At this level in their careers, these things are more important.’
A&O’s entry-level pay bands are topped by Slaughters, the first major City player to announce changes to its junior fee-earners’ pay levels.
First-year trainee pay has risen to £39,500 (up by £500), and to £45,000 (up £1,000) in year two. NQs will receive £65,000 (£1,000 more than A&O), one-year PQE lawyers will earn £70,000, and two-year PQEs will receive £79,000 (both £500 more than A&O).
‘Starting salaries is not the whole reward. Our bonuses link to the profitability of the firm.’
Wim Dejonghe, A&O
Slaughters executive partner Richard Clark said: ‘The relevant benchmark is the market and our aim is to pay salaries which compare favourably with current market rates.’
Elsewhere, Ashurst upped trainee and NQ salaries following a two-year freeze on pay – the firm’s first post-merger salary changes since its combination with legacy firm Blake Dawson in November 2013. First-year and second-year trainees will take home £1,000 more, up from £38,000 and £43,000 respectively from 2012 levels. NQ lawyers will receive slightly more at £63,000 up from £61,000. The firm has, however, kept its spot rates for lawyers of one, two and three years’ PQE static, having raised them in 2013.
Ashurst global HR director Sasha Hardman said salary is not the only thing that attracts associates, but the whole employment package. ‘We believe our total packages are competitive with Magic Circle firms as we also offer attractive bonus packages,’ she said.
Hogan Lovells also revealed last month that it will increase NQ pay by £2,000 to £65,000, while boosting first and second year trainee pay to £39,500 and £45,000 respectively.
Shearman, meanwhile, increased pay across its three-tier merit-based system by up to 6.4% across the board.