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Freshfields Bruckhaus Deringer has sharply raised pay for newly qualified lawyers to £150,000 in the latest sign of a battle for legal talent in the City of London.
The “magic circle” law firm, which turned over £1.8bn in its most recent financial year, said on Friday it had increased base pay for new solicitors by 20 per cent from May 1. The move means salaries for its most junior lawyers have risen 50 per cent in the past five years.
The increase is the latest salvo in a pay war among elite UK law firms and their deep-pocketed US rivals, which has led to an escalation in salaries for both junior and senior lawyers.
It comes as US-headquartered firms have beefed up their presence in London over the past decade, including by poaching partners from UK rivals with multimillion-dollar pay packages.
The trend has pushed up salaries for newly qualified solicitors at top US law firms in London including Latham & Watkins to about $225,000. Davis Polk pays its most junior lawyers £170,000.
Recruiters said Freshfields’ move could spark pay rises at the firm’s “magic circle” peers. Linklaters, Clifford Chance, A&O Shearman and Slaughter and May currently pay newly qualified lawyers in London £125,000, with Linklaters and A&O Shearman last raising salaries for junior lawyers in 2023.
“Freshfields has thrown down the gauntlet on junior pay once again in a sign that the pay wars in the City may be ramping up,” said Chris Clark, a director at London-based recruiter Definitum Search. “US firms will no doubt raise the bar again, looking to keep at least a 40 per cent difference” with their UK rivals.
Clifford Chance will next review its salary packages in the summer, while Slaughter and May will not do so until November, according to the firms. Linklaters declined to comment. A&O confirmed its current compensation but did not respond to questions about whether it was reviewing pay.
Clark also predicted that increases for more qualified associates could follow in response to the pay gap narrowing.
Freshfields’ increase comes despite a slowdown in work for City law firms as dealmaking has declined, with magic circle profits flatlining last year. Elite firms including Freshfields have also been seeking to gain a bigger foothold in the US market. The firm’s first-year associates in its US offices receive a salary of $225,000, according to a person with knowledge of the situation.
The move comes after rival Allen & Overy this week completed its merger with New York’s Shearman & Sterling, with the enlarged firm rebranding as A&O Shearman.
Freshfields has also increased London salaries for first-year trainees from £50,000 to £56,000 and for second-year trainees from £55,000 to £61,000.