Summary: Slaughter and May will raise salaries for junior lawyers starting in January.
It’ll be a good holiday for Slaughter and May associates. On Wednesday, the Magic Circle law firm announced that it would raise salaries for junior lawyers and pay five-figure bonuses, according to Legal Business.
The London-based law firm said that associates who achieved good or exceptional performance reviews will receive a bonus ranging between 9-16% of their salaries. This mostly matches what was paid out last year.
The firm also announced that starting in January it will increase junior lawyer salaries to match “current market rates.” That means first-year trainees will see their salaries move up from £43,000 to £44,000, second-year trainees will rise from £48,000 to £49,000, and newly-qualified lawyers will see a raise from £78,000 to £80,000.
Mid-level associates, however, will not have their salary ranges changed.
Slaughter’s announcement was deemed a move to attract and retain talent. In London, other firms have also worked to stop the drain of associates, who attempt to leave for the United States where pay is well over £100,000 ($134,256) for entry-level lawyers.
In November, Legal Week released a study about profit per equity partner (PEP), and they found that American law firms’ PEP has grown more than its UK counterparts. Oliver Brettle from White & Case’s London office said that he was surprised that the gap was so large.
“I would have expected that the U.S.-based firms would be ahead, but not this significantly,”Brettle told Law.com. “My expectation is that the U.S. firms’ growth is linked to the very strong performance of the U.S. economy and the strong performance of U.S.-headquartered corporates and financial institutions, enabling US firms to follow them as they expand and invest globally.”
Legal Week stated that the top 10 American law firms grew at a rate of 50% more than their U.K. rivals over the past five years. The top 10 U.K. firms’ PEP increased an average of 15.7% during the past five years while the top 10 U.S. firms’ PEP increased by 24.7%.
Across the pond, industry leader Cravath, Swaine & Moore announced that it would give $15,000 to first-year associates and up to $100,000 for more senior associates. These first-year associates make $180,000 a year, so the $15,000 bonus was a little over 8% of their salary. After Cravath made its announcement, several other big law firms such as Milbank Tweed Hadley & McCloy LLP and Paul Weiss Rifkind Wharton & Garrison LLP stated that they were matching that amount.
Cravath Bonus Structure
Class of 2017 — $15,000 (pro-rated)
Class of 2016 — $15,000
Class of 2015 — $25,000
Class of 2014 — $50,000
Class of 2013 — $65,000
Class of 2012 — $80,000
Class of 2011 — $90,000
Class of 2010 — $100,000
Class of 2009 — $100,000
- Cravath Sets the Scale for This Year’s Bonuses
- UK Law Firms Struggle to Compete with American Firms
- Susman Godfrey Beats Cravath Year-End Bonus Scale