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):

 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.
 
 "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.  
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Comments

Anonymous 22 June 18 07:48

It's unbelievable. Don't forget to add $15-100k in year-end bonuses to the numbers above.

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.

Anonymous 22 June 18 12:45

Paying someone £125,000 a year, when they will have to have everything of substance they prepare signed off by someone, is barking.

Anonymous 22 June 18 14:52

@Anon 11:45

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.

Anonymous 22 June 18 17:29

@ 06:48

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).

Anonymous 22 June 18 18:35

@ anon 11:45

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).

Anonymous 22 June 18 19:04

RoF can you do a calculation to harmonise net earnings between American firms and magic circle firms? I presume this would take into account the fact that American firms do not provide pension contributions, health insurance etc.

Roll On Friday 23 June 18 02:22

No pension/health insurance? What are you on about? US firms provide the same packages as all other firms.

Roll On Friday 23 June 18 12:06

what are you banging on about anon @ 18:04 of course you get pension contributions and health insurance etc. - the benefits are the same as any decent UK firm

Anonymous 25 June 18 12:26

An NQ on £125k! Seriously, this profession has an issue . You wonder why clients feel ripped off.

Anonymous 26 June 18 02:57

I think it's frankly ridiculous that ROF allow MC firms to get away with the myth that associate pay goes up every year and allow them to include bonuses in the total pay figures. At Freshfields, a sizeable number of the associates in my team didn't get bonuses this year. Also, the introduction of 'merit based pay' at Freshfields has meant that you are routinely held back at certain 'merit gateways' and told that only "exceptional performers" will go up a gateway each year and therefore see their pay go up every year. At US firms - which are still largely lockstep and pay by PQE - this just doesn't happen.