Freshfields has given its trainees and associates massive pay rises which put NQs on £85,000.
The Magic Circle's trainee salaries are rising by £2,000. First years will be paid £43,000 and second years £48,000.
Above qualification level, the firm uses a performance-based salary banding system called Career Milestones. The lowest band, Career Milestones Foundation, covers NQs and 1PQEs. It used to be £67,500 to £77,500. The new band is £85,000 to £97,500.
NQs will be paid £85k, and while they were previously eligible for a discretionary bonus, the firm has said that their new salary exceeds the previous salary and bonus combined.
2PQEs and 3PQEs fall within "CM1" which used to pay between £87,500 and £100,000. They will now be paid between £105,000 to £115,000. That's without discretionary bonuses. With bonuses, 2-3PQEs can earn between £126,000 and £136,000. Taking the median figures (without bonuses) the Magic Circle salary table now looks like this:
|Allen & Overy
|| Not yet
|| Not yet
|Freshfields (old pay)
||85,000 (70,000)||94,375 (75,000)|| 107,500
|Slaughter and May
*Unlike other firms, Linklaters releases figures which include the bonus along with the salary, so its figures appear higher. The figures used in this table are for a median salary plus a median bonus.
The move will leave Slaughters lawyers grim-faced. As reported in today's news, they expected their firm to match Allen & Overy's bumper salaries. Instead the firm refused, creating a two-tier Magic Circle for pay. The only question was which way Freshfields and Clifford Chance would jump. Now Freshfields has jumped. In fact at most levels it has leapfrogged right over A&O. Its NQ pay is higher than A&O's by £6,500, and only at 3PQE will it pay less (and even then, perhaps not if the lawyer is awarded a bonus). Meanwhile, Its straight salaries now dwarf Linklaters' figures, which include bonuses.
Staff were told this morning and delighted insiders leaked the news to RoF within minutes (leak your stuff to RoF within minutes too, please).
Julian Long, London Managing Partner, said "Our ability to attract and retain the most talented individuals is critical to our continued success". He added, "Obviously we should not underestimate the need to be competitive with regards to pay in our market; we believe that making changes across the board for our trainees and associates maintains our strong position as one of the most attractive firms in the market".
Lawyers at Clifford Chance will be feverish with anticipation. Which tier will they be joining?
In the meantime, Freshfields lawyers who are toasting management in the sun today should probably raise a glass to A&O.