Big US firms match each other again, in the latest pay war
Goodwin Procter has raised its salary for newly qualified lawyers in London to £161,500, as a number of other US firms have joined the pay war and hiked salary in the City.
The London branches of US firms generally take one of two approaches in paying their London lawyers in line with US colleagues. Some firms peg to the dollar, based on the currency exchange on or around pay day. However, this can result in either incredibly good or under market pay on a month by month basis, if the conversion rate fluctuates wildly. In order to provide a degree of certainty, some US firms that peg to the dollar have introduced a fixed floor and ceiling - so that rates can never go above or below a certain level.
The other approach taken is to have a set exchange rate, so that London offices fix a conversion figure at the outset in line their US counterparts, which then remains the same each month.
Goodwin uses a set rate, and the firm will now pay its NQs a base salary of £161,500 (up from £148,500), effective retrospectively from 1 January 2022. Other juniors will be rewarded as follows: £169,000 (1 PQE), £188,000 (2 PQE) and £214,000 (3PQE).
Last week, Milbank was the first out of the blocks to hike associate salary, which prompted Goodwin and other firms to promptly follow suit. Milbank sent a memo to its US, London, Asia and Sao Paulo associates detailing the new pay scale (although it is not clear whether the London office will peg salary to the dollar or use a spot rate):
McDermott Will & Emery and Fried Frank have also copied Milbank's pay rises, along with Goodwin.
A spokeswoman for McDermott Will & Emery confirmed to RollOnFriday that the firm is "matching the Milbank scale" for US and London associates. She said that the firm's "UK pay is not linked to the dollar," (i.e. it will stay at the same level each month), but she declined to provide the converted salary in the UK.
“We have recently increased our associate salaries in London, taking into account salary inflation and other factors that are happening in the London market right now," said McDermott's London Managing partner Hamid Yunis. "We are of the view that the pay level we have set is very competitive in the context of firms operating at the top end of the London market.”
A Fried, Frank, Harris, Shriver & Jacobson spokeswoman confirmed that the firm has also matched Milbank, and will use a "set exchange rate" in the UK, which is understood to convert to £160k for NQs when converted to sterling.
There are of course a raft of firms with large US components, where the US offices are untethered to the UK offices for pay. For example, Baker McKenzie has matched the Milbank pay scale for associates in the US, which will put their NQs on a salary of $215k - around £160k based on today's conversion rate. But spare a thought for Baker McKenzie's NQs in London who, in comparison, will have to survive on just £105k (following December's pay rise).
Playing pay wars in a different field, Fieldfisher has increased NQ salary from £77k to £85k in London, and from £45k to £50k in Birmingham and Manchester.
And Clyde & Co has raised NQ salary from £70k to £80k.
"At Clyde & Co we are focused on investing in our people in all respects so that they can enjoy long, fulfilling and varied careers with us while providing clients with the market leading levels of service and legal advice they expect from a firm of our standing," said Rob Hill, chair of Clyde & Co's UK board.
If your firm is raising salary, do get in touch with RollOnFriday to provide details.