Is London becoming New York when it comes to pay?
(Allow me some artistic liberty here please…)
Unless you’ve been living under a rock recently, you will have all seen that (trigger warning Slaughters associates) three out of four Magic Circle firms have put their NQ salaries up to £150,000 – and all eyes are on A&O Shearman (and S&M…) to see if they’ll match. My view remains that A&OS will match, and the jury remains out if S&M will.
There has also been a lot of commentary of whether the famous ‘pay bunching’ at MC firms remains true or whether these firms have upped salaries across the board. Well, my sources at these firms tell me that associate pay has increased pari passu across the PQE ladder.
The great thing about these increases is that, for many people at MC firms, it is likely to reduce the previously overly weighted importance that money has when it comes to choosing if they want to move to a US firm, as the difference is no longer c.60%+. It’s now (for MC to Cravath) c. 17%. I’m not saying an additional 17% isn’t a lot of money – and this is just base numbers, the US firms’ bonuses are still considerably more – but it will, in my view, bring other important factors into the light such as culture, progression, diversity, and firm infrastructure.
My query at the top (is London becoming NYC?) stems from the top firms in NYC (and nearly all major cities in the US for that matter) pay their associates EXACTLY the same amount – including bonuses – therefore making associates consider all the other factors when it comes to a move. And in my view, London is getting closer and closer to this point.
There are currently c.28 firms in London who pay within c.20% of London’s highest payers. Yes, the majority are US firms and there are only a handful of English firms paying these numbers, but I’m going to be very interested to see what other English firms do following the MC pay increases. Firms like HSF, NRF, Mayer Brown, and Hogan Lovells, who were previously only £5k off what the MC were paying. Will they increase too to stay within touching distance? Or will they ‘accept’ their new position when it comes to pay and risk losing more associates to a wider array of firms?
Caveats:
– Bonuses will continue to play a big factor, as the bonuses you can expect to receive at US firms are HUGE, and in some cases are not hours based. Whereas, the top top bonuses available at English firms require a lot of hours billed, significant additional non-billable hours ‘billed’, and near perfect review scores.
– Associate pay bunching remains at a lot of English firms, meaning that as you move up the PQE ladder, the gap between what a Senior at an English firm and a US firm becomes seriously significant.
– Apologies for the focus on MC firms in this piece, it’s only because no other UK firms have made a move, yet…
