NQ salary war: What are young lawyers being paid in the City?
In the last two weeks, two notable City law firms have raised the salaries of their young, newly qualified (NQ) lawyers – a sure sign that the pay war in the legal sector is far from over.
In the same week that fellow magic circle firm Allen & Overy (A&O) and US firm Shearman & Sterling formally merged as A&O Shearman, Freshfields increased its NQ salaries to £150,000.
However, last Friday, US litigation boutique Quinn Emanuel Urquhart & Sullivan revealed it had hiked its NQ annual salary to £180,000 for its London young lawyers and now has one of the highest starting salaries in the City.
Quinn joined fellow US firm Gibson Dunn which also pays its London NQ £180,000 a year.
Other US law firms report in US dollars, such as Akin, which was last quoted as paying out $215,000 – around £179,000 in 2022.
US firm Milkbank hiked its NQ pay to $225,000 last year, which was quoted at the time to be £183,000.
It is noted that US law firms have entered the City over the years and have overtaken English rivals.
The firms are not only paying their young lawyers well, but even the partners are earning more. It was reported last year that partners in the London offices of the top 15 US law firms took home 25 per cent more than their counterparts in the UK’s top 15 firms in 2022.
While Freshfield may not be the highest payer, as the US firms are winning on that front, it is still higher than the rest of its magic circle.
It was just last November when all the Magic Circle law firms were on equal ground by paying out £125,000.
Even after it merged, A&O Shearman has not yet budged on the £125,000 figures its legacy firm A&O paid.
Predicting what will happen next, Christopher Clark, director at Definitum Search told City PM: “With Freshfields raising NQ salaries to £150k it’s brought pay gap with top US firms back down to roughly 30 per cent. But with Quinn Emanuel matching the likes of Kirklands at £180k for NQs, I’m sure it will be just weeks before the top US firms raise again, most like to £190k/£195k.”