It has been a year of huge change for compensation levels across the market, with Magic Circle firms elevating rates in response to moves in the US law firm world. Clifford Chance now pays its NQs £91,000 with Freshfields now being the lowest paying at this level on £85,000. The escalator in Magic Circle compensation is not entirely accurate as the published rates are not always what ends up being paid to Associates. By 3 years’ PQE, Associates are typically on at least £105,000 with the advertised rate at Magic Circle firms at this level being circa £110-115k. The ceiling on compensation for more senior candidates in the Magic Circle has also risen dramatically with Counsel rates exceeding £200,000 in the majority of cases.
US firms have undergone a salary and bonus war and consequently there is now a more significant disconnect between these and in-house rates and, where one previously saw a number of moves for lawyers not taking any base salary cut to make a move, this no longer happens and lawyers should now expect a pay-cut for moving in-house. Lawyers at Weil Gotshal, for example, are on £115,000 at newly qualified level, escalating to £140,000 at 3 years’ qualified. By 6 years’ PQE, lawyers are often on £170k plus base salary. We note in particular a dramatic increase in the number of cases where people are “bumped up” a class year in joining a US firm (so that a 2 year PQE could be treated as 4 years PQE and paid £170k base salary notwithstanding the appropriate rate on the scale being lower). US firms have long led the way in terms of overheating salary levels in a boom market and this year has been no exception, with Associate pay rocketing.
We have seen huge growth in demand for Global Markets positions this year across product lines, with a marked resurgence in derivatives lawyer activity. We have also seen cyclical activity in the early part of the year in corporate real estate, which has since dried up and strong, on-going demand for private equity lawyers. Whereas the sell side have been in the market in numbers, buy-side activity has weakened very slightly relative to 2016/17.
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