Law Firms - London (commentary)
With the market now more buoyant than it has been for a number of years, salary levels look set to soar once again. For a more detailed look at the trends and numbers, read on! If you would like to talk to a consultant in more detail about salary and benefits - please contact Joanne Street or Sharon Samra on 020 7523 3800.
City firms
With the return of confidence to the City in the last twelve months has come a huge upswing in recruitment activity of the London law firms and candidates are once again calling all the shots.
Commercial Property and Finance remained buoyant throughout the downturn but firms are now experiencing a huge boom and with the return of a very active M&A market, the number of corporate opportunities has soared. This increasing corporate activity has also fuelled the demand in other specialist practice areas such as IP/IT, employment, pensions, competition, tax and share schemes.
One indicator of the increased demand for candidates, as work levels grow, is the larger firms revisiting their traditional hunting ground of Australia and New Zealand and also venturing into new regions such as South Africa, Canada, the Far East and even India. Until recently, traffic - with the possible exception of specialist finance lawyers - has been almost entirely one way; Aussie and Kiwi lawyers returning home.
But as competition for candidates continues to intensify, we have recently seen a number of international firms running recruitment advertising campaigns for top quality Australian/NZ lawyers to come to the UK.
The huge increase in demand for talent will of course have an impact on salaries over the coming months and Allen & Overy & Freshfields have already announced that they will increase their mid-level associate salaries by up to 40% in May 2006 and will increase their newly qualified salaries to £55,000. The other Magic Circle firms are yet to announce their intentions but this will no doubt have an effect on all the City firms.
Another interesting trend which we have experienced as the City firms struggle to recruit the best talent is the payment of a 'signing on fee' or 'golden handshake' when associates join the firm - these can be as much as £15,000.
US firms
As with the UK firms, the London offices of the US firms have also seen a massive boom in corporate and finance work and are recruiting aggressively at all levels. The original concerns about the longevity of US firms in London and the "sweat shop" environment have proven to be unfounded and they continue to be a real threat to the UK firms in the continued scramble for talent.
The top tier New York firms continue to pay the highest salaries and with recent increases of $20,000 for NQs from $125-145,000 and the top West Coast firms following closely behind with rises from $125-135,000 it seems that a salary war is well underway.
There is a generally consensus however, that the total compensation paid by the US firms will not in fact change significantly, as these firms will reduce end of year bonuses, preferring instead to pay associates better basic salaries.
One thing is certain though, despite the likelihood that the Magic Circle firms will substantially increase salaries in Spring 06 in an attempt to curb the number of assistants jumping ship to their American counterparts, the US firms are determined to stay one step ahead.
An interesting trend in the US firms in the last 12 months has been their interest in recruiting in new areas such as international arbitration and property, which is evidence of their commitment to being full service in the long term.
West End / Holborn firms
In recruitment terms, the smaller firms benefited hugely in recent times due to the limited opportunities within the City firms - which has fed good quality lawyers out to the West End.
However, with the increased activity in the City and huge demand for associates at all levels in most areas, these firms will no doubt once again become a hunting ground for these City firms and will have to make sure that they carefully consider their position on salaries going forward.
Benefits and trends
As recruitment becomes hugely competitive, both bonuses and additional lifestyle and flexible benefit packages are being carefully considered by firms once again. No doubt we will be seeing bonuses of up to 30-40% being paid going forward.
Newly Qualified Solicitors
The Newly Qualified market is booming once again, although the vast majority of current vacancies tend to be in transactional areas i.e. corporate and finance. The US firms in particular are aggressively recruiting at this level.
Professional Support Lawyers
This area of the profession continues to thrive. Demand remains high as firms' information systems grow increasingly complex and the calibre of lawyer entering the PSL field gets stronger as a better long-term career path for a PSL opens up.
Normally, firms will discount an equivalent fee-earner`s salary by between 10-20% but it is not uncommon for a PSL, particularly in certain practice areas, to match or even improve their current salary.
