Kirkland & Ellis is the latest US firm to announce hefty salary rises to match top-of-the-market salaries offered by Cravath., while a source has told RollOnFriday that Akin Gump has instituted the same rises in London.
A Kirkland spokeswoman confirmed to RollOnFriday that from 1st July it would pay its lawyers as follows (City lawyers at Magic Circle firms are allowed to look, but not touch):
In 2016 Kirkland was one of the first US firms to peg its UK pay to the dollar, allowing its London associates to be awarded parity of disgusting wealth with their US colleagues. This means that, on the basis of a spot FX rate today, NQs at Kirkland's City outpost will be paid around £143,500. This exact sum will vary depending on the state of the exchange rate on the date the currencies are pegged, and the firm has a collar of an upper and lower amount should either the dollar or pound surge or plummet excessively.
Just before going to press, a source tipped off RollOnFriday that Akin Gump has now also matched Cravath's latest salary hikes, "in all offices where the US salary and compensation grid applies, which includes London!!". Associates and Counsel are set to receive the same special bonuses being paid by Cravath, added the source. Akin Gump did not immediately respond to a request for comment.
Milbank and Simpson Thacher, who are both boosting their salaries in the US, will also peg UK salaries to the dollar so that their London lawyers share in the bonanza.
Not every large US firm is following suit. At Quinn Emanuel, while London associate pay will be increased, it will not be pegged to the dollar, but set in sterling as follows:
On the basis of today's exchange rate, a Quinn Emanuel NQ would be on £143,500 if their salary was pegged to the dollar, but (to the sound of a tiny violin) they will have to settle for £125,000 instead, i.e. £18,350 less.
Cravath and fellow US firms Weil Gotshal, Sullivan & Cromwell, Skadden, and Cleary, are yet to confirm whether they will peg London pay to the dollar.
Tip Off ROF
A Kirkland spokeswoman confirmed to RollOnFriday that from 1st July it would pay its lawyers as follows (City lawyers at Magic Circle firms are allowed to look, but not touch):
| Qualification | Base Salary | Summer 2018 bonus |
| NQ | $190,000 | $5,000 |
| 1PQE | $200,000 | $7,500 |
| 2PQE | $220,000 | $10,000 |
| 3PQE | $255,000 | $15,000 |
| 4PQE | $280,000 | $20,000 |
| 5PQE | $305,000 | $25,000 |
In 2016 Kirkland was one of the first US firms to peg its UK pay to the dollar, allowing its London associates to be awarded parity of disgusting wealth with their US colleagues. This means that, on the basis of a spot FX rate today, NQs at Kirkland's City outpost will be paid around £143,500. This exact sum will vary depending on the state of the exchange rate on the date the currencies are pegged, and the firm has a collar of an upper and lower amount should either the dollar or pound surge or plummet excessively.
Just before going to press, a source tipped off RollOnFriday that Akin Gump has now also matched Cravath's latest salary hikes, "in all offices where the US salary and compensation grid applies, which includes London!!". Associates and Counsel are set to receive the same special bonuses being paid by Cravath, added the source. Akin Gump did not immediately respond to a request for comment.
Milbank and Simpson Thacher, who are both boosting their salaries in the US, will also peg UK salaries to the dollar so that their London lawyers share in the bonanza.
Not every large US firm is following suit. At Quinn Emanuel, while London associate pay will be increased, it will not be pegged to the dollar, but set in sterling as follows:
| Qualification | Base Salary | |
| NQ | £125,000 | |
| 1PQE | £133,000 | |
| 2PQE | £145,000 | |
| 3PQE | £170,000 | |
| 4PQE | £185,000 | |
| 5PQE | £200,000 |
On the basis of today's exchange rate, a Quinn Emanuel NQ would be on £143,500 if their salary was pegged to the dollar, but (to the sound of a tiny violin) they will have to settle for £125,000 instead, i.e. £18,350 less.
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"If only my salary was pegged to the dollar" the London NQ dreamed as he gazed longingly at the organ |
Cravath and fellow US firms Weil Gotshal, Sullivan & Cromwell, Skadden, and Cleary, are yet to confirm whether they will peg London pay to the dollar.
Comments
Despite what the UK firms say, this isn't because elite US firms work their lawyers significantly harder than the Magic Circle (they don't) or because elite US firms have far fewer associates to feed (they don't globally). It's because elite US firms run inherently more profitable businesses (Kirkland's PEP is £3.5m, Freshfields' is £1.5m), just like the Magic Circle are inherently more profitable than regional firms.
It's not about that, though, is it? It's to pay for the raw materials that will hopefully turn in due course into someone capable of signing off on matters of substance on their own. They are surprisingly hard to find, and everyone wants them - hence the price.
Agreed. It's a triumph of marketing by the Magic Circle that (i) their salaries are usually quoted inclusive of bonus; and (ii) they manage to propagate the myth that US associates work significantly longer than their associates.
Inclusive of summer and winter bonuses, an Akin/Kirkland 3PQE is now earning £240k (if they hit their 2,000 hours).
Everyone always focuses on the NQ rate, because that is the stage of our career when we're the most useless. But as someone else has said, you don't pay NQs that amount of money because you think they're worth that now: you're competing for the best graduates, and then the best qualifying trainees, in the expectation that they will be among the "best" throughout their career. US firms are profitable enough to do that (they don't often have low-billing peripheral departments), so why wouldn't they?
In the main, it's generally Banking/Finance, Litigation, Corporate, Restructuring lawyers we are talking about, because the US firms don't have a lot of other teams. Instead of focusing on NQs, I think the more apt comparison is someone at 4-5 PQE. At that stage, you should know what you're doing, and if you're in one of those teams you're going to be doing long hours (and thus be profitable for any city firm) wherever you are. At that stage, it makes complete sense for US firms to pay top whack and keep creaming off the best Linklaters associates (which they will continue to do so long as they can offer twice as much for the same amount of work).