Lawyers are the new bankers as £1m salaries become the norm
US law firms have started to dominate London’s legal market, bringing with them the aggressive hiring practices that dominate their home market.
Competition between the US law firms and their UK peers has become increasingly intense in recent years as the former continues to invest heavily in the London market.
According to recent data provided by legal recruiter Edwards Gibson, there were 546 partner moves recorded over 2024, up seven per cent on 2023 and 14 per cent on 2022 as US companies poached talent.
In the report, Edwards Gibson stated, “The reason… is in large part due to the continued huge investment bets by US law firms”.
Neel Sachdev, the biggest legal name in deal-making, who was poached by US firm Paul, Weiss from US rival Kirkland & Ellis for $20m in 2023, has pushed Weiss into making some of the most aggressive moves in the market. The private equity lawyer has recruited heavily, attracting 200 lawyers to the London office of Paul, Weiss.
Speaking to City PM, Christopher Clark, director at Definitum Search said: “This year has seen a surge in partner recruitment, mergers and acquisitions have picked up significantly, with litigation and investigations also keeping pace.”
“Law firms have been very proactive with their lateral growth strategies including a pick up in speculative hires,” he added.
Legal Cheek, a legal publication, noted the London offices of top US firms topped its overall profit per equity partner (PEP) tables.
Some equity partners at Kirkland & Ellis have earnings of as much as £6.1m a year, followed by Paul, Weiss at £5.1m.
“Compensation has significantly increased as the war for talent heats up, if you’re not paying top of market you’ll be left behind,” stated Clark.
As reported in magic circle Clifford Chance’s annual accounts, the member (partner) with the largest entitlement of its profit took home £6m, a huge leap on £4.82m figure in 2023.
The legal market is essential for London. TheCityUK revealed earlier this month that in 2023, the legal sector contributed £37bn to the UK economy, equivalent to 1.6 per cent of the real gross value added.
Cash is king
Even at the junior end US firms are flexing the cash. Earlier this year, the newly-qualified (NQ) pay war kicked off again after US firm Quinn Emanuel upped its starting salary for London lawyers to £180,000.
Speaking to City PM as part of Eyes on the Law earlier this month, Ria Karnik, managing director at Major, Lindsey & Africa stated that the salary battle shows no signs of slowing.
“We could potentially be heading into what may turn out to be another busy year, or an even busier one,” she said, adding that if the market follows this trajectory, it will “spark another pay war, which US firms are well positioned to handle—perhaps even better than others,” she explained.
Karnik also said, “It’s become increasingly clear that lawyers are the new bankers”.
In December, lawyers across the US law firms in the City received big bonuses ranging from $10,000 (£8,000) to $15,000 (£12,000) for first-year associates, rising to as much as $90,000 (£72,000) for those in their fifth year.
English lawyers push into US market
While the US firms continue to dominate the UK legal market, some UK firms are looking to the other side of the Atlantic.
The most highly anticipated merger in the legal sector completed back in May, as UK magic circle firm Allen & Overy (A&O) and US firm Shearman & Sterling became one mega-firm.
Earlier this month, London-based law firm DAC Beachcroft announced it was launching into the US with offices planned in New York and Los Angeles.
Magic circle firm Linklaters credited its US expansion into New York and Washington DC for its latest results, which saw its revenue surpass the £2bn mark for the first time.