PostsNews

A&O Shearman follows Magic Circle rivals in upping NQ lawyer salaries to £150k

Avatar photo

By Rhys Duncan on

47

Just Slaughters left to increase


A&O Shearman has become the fourth Magic Circle law firm to boost pay for newly qualified lawyers (NQs), taking its starting salary up to £150,000.

This is an increase of £25,000, or 20%, from the outfit’s previous salary of £125,000, and comes within weeks of identical raises at Freshfields, Linklaters, and Clifford Chance.

Having officially merged just this month, the new A&O Shearman NQ salary marks an increase from both pre-merger figures, including the former Shearman & Sterling pay of £145,000.

This latest increase is effective of 1 May.

The 2024 Legal Cheek Firms Most List

Trainee salaries have also increased from £50,000 to £56,000 in year one and £55,000 to £61,000 in year two.

Denise Gibson, London managing partner, A&O Shearman said:

“With A&O Shearman we have created a unique law firm and our ambition is to be the firm of choice for the best, most diverse talent. Our compensation structure gives us flexibility to reward expertise, performance and wider contribution and is designed to be highly competitive to reflect the markets in which we operate. Trainees and NQs are a key part of the firm’s future and A&O Shearman provides unmatched opportunities for them to build successful careers. Our people are fundamental to our success and, in addition to offering a competitive remuneration and excellent benefits package, we are committed to nurturing a rewarding and supportive culture, which includes important elements such as a focus on wellbeing and engendering an environment where people can be themselves and excel.”

The Legal Cheek Firms Most List 2024 shows that Slaughter and May is the only Magic Circle firm not to increase the salaries of its junior lawyers, currently remaining at the previous standard of £125,000.

47 Comments

Observer

At least it was before Slaughters..

Reply Report comment
(59)(0)

Dispassionate Observer

Reeks of desperation to make Shearman associates take a pay cut, only to bump them up shortly after.

Reply Report comment
(91)(15)

Pay-war observer

Couldn’t agree more, not a classy move here

Reply Report comment
(31)(2)

Entitled Law Student

Hardly ‘desperation’? I don’t think any of the other MC firms, bar Freshfields, wanted to make an increase, but market dynamics forced their hand.

Reply Report comment
(4)(0)

A&O Shearman Associate

All you’re saying is that you don’t understand how TUPE works? Shearman associates didn’t take a pay cut (not legal when employees transfer over). It is any incoming Shearman NQs (aka those qualifying in September 2023) that would have been on the lower rate, but who’s to say they will have even been offered an NQ role?

Reply Report comment
(8)(0)

Anon

A lot of the US firms like Skadden, Weil and Goodwin are now 175k for NQ and 340k-350k for senior associates (plus bonuses that are six figures). It’s when you get to senior associate level that the magic circle really get left behind.

Reply Report comment
(3)(2)

Anon

Source for Skadden at 175k? Last I heard they were still paying 165k…

Reply Report comment
(1)(0)

Truth Serum

For those wondering if it will have a trickle down effect to smaller firms… the answer is no.

Trainees at firms like Pinsents, Gowling, Squires, Eversheds will be working during it their firms will also increase.

However, they will only up it by max 5k if that.

Trainees at those firms in this dire NQ market cannot make the jump to a better firm and their current firms are fully aware of this hence they are not increasing the NQ salary by much.

They know their trainees have nowhere else to go.

Reply Report comment
(44)(13)

Anon

At NQ level I agree its a difficult market and may be best to sit put for a few years and build out the CV.

The market for more experienced hires is much better, and excellent in certain practice areas / sector focuses.

Reply Report comment
(26)(1)

Future trainee at a small firm

As a future trainee at a smaller firm, it’s quite sad knowing that we won’t reach these pay levels in years to come… but I guess I should be grateful for what I already have.

Reply Report comment
(16)(2)

Stick it out for a few years until market picks up

It’s not that you won’t ever be able to make the move, it’s just unlikely in the current market.

It’s all about the job market in the legal sector, which is reflective of the economic state in the UK.

The UK economy has taken a hit and so have many industries who are making employees redundant. Unfortunately, the legal industry is not any different.

After covid there was a boost in hiring and many law firms needed more people, especially NQs. In 2020 the trainees of that time were able to train at smaller firms and move to Magic Circle and US firms. The last trainee cohort who were able to move laterally quite easily were the ones who qualified in 2022.

The current market is very dire and there are not many NQ roles going. Trainees are lucky if they are retained and need to hope for the best and be very onit with external applications if not. I have friends who are final seaters and they aren’t being kept on and they are struggling to find external roles at firms of the same level to their current one meaning they may have to take a huge pay cut and move to a much smaller firm or even go in house.

I hope this helps.

Reply Report comment
(29)(1)

Slaughtered and Played

You could have always applied to a MC there was nothing stopping…

Reply Report comment
(1)(5)

Anon

If the salary increases were solely aimed at retaining NQs qualifying in September the firms wouldn’t back-date or make the effective date as of May. The salary increases are needed at all levels to keep talent, hence they’re announced in May/June/July when firms share their latest finance performance and increase the hourly rates across board to reflect market and inflation.

Reply Report comment
(7)(0)

Dentons SA

Cheekily at Dentons, pay review is in June / early July

Then they announce any NQ raises (if any) in August.

You then realise in August that your modest salary increase has the NQ increase baked into your July salary raise because your salary doesn’t rise with the August NQ announcement.

Salary is also bunched tighter than the Devil’s…

Reply Report comment
(14)(0)

Mr Grumpy

People unliking this comment but sadly it’s true.

The lateral NQ market is dead.

There are not that many NQ roles going and therefore trainees are either staying at their current firms or downgrading to a smaller firm.

MC firms are increasing the salary because their trainees can leave and go to other MC or US firms but that is not a possibility in the current market for most trainees at the firms at the mid level like Pinsents, Eversheds, CMS etc. Those trainees are going to look to be retained or they could be without a job entirely or go to a much smaller firm and take a pay cut or go in house.

Reply Report comment
(23)(3)

Oli

Bet the Shearman lot who joined at happy. Back to their usual salaries.

A&O had to increase it especially after the merger.

Reply Report comment
(13)(2)

AOS Associate

As stated above, this just isn’t how it works. The Shearman associates transfered over to A&O (now AOS) under TUPE. This means legally the Shearman associates can’t and never did take a pay cut. It would have been the incoming Shearman NQs (aka those qualifying in September 2023) that would have been on the lower rate.

Suggest you go away and do some research on TUPE

Reply Report comment
(6)(1)

Observer

Was expecting £160k given their “newfound super prestige – the best of both worlds US/UK” twaddle they have been putting out there.

Reply Report comment
(74)(6)

Anon

Imagine if the Magic Circle didn’t have freshfields? I imagine NQ salaries would still be around 100k.

Reply Report comment
(106)(6)

What’s happening W&C?

White & Case is surely going to have to rise soon?

What’s the USP there anymore? For trainees you can do a seat abroad at pretty much any of the MC firms and will be paid the same. As an associate you are now potentially paid less given the bonuses of some of these MC firms. The hours are longer and sweatier at W&C too, and whilst mid-Atlantic the US culture in this respect for sure feeds through.

Also – anyone asked what the NQ attrition rate is there?

Reply Report comment
(51)(1)

Tim

Every trainee I’ve spoken to at that firm has terrible things to say about it.

It’s a US firm without the high US salary and prestige.

Reply Report comment
(61)(3)

NQ

Lambo dealership is calling my name

Reply Report comment
(1)(5)

Kirkland NQ

They’re always recruiting new car washers, yes.

Reply Report comment
(15)(0)

Tomo

To be clear, ALL they did was raise the NQ salaries – all levels above that are subject to further review. So they’ve got the “A&O matches!” headline without committing to proper raises through the grades – expect some heavy bunching…..

Reply Report comment
(41)(4)

sceptical

Surely not? Isn’t the usual jump between PQE’s circa 10k? meaning a 1PQE was previously on 135k? There is no world where the NQ salary is 150k and the 1PQE hasn’t been raised otherwise 1PQEs are literally being paid less than NQs

Reply Report comment
(18)(1)

Anon

Tomo is completely right. I hear they said that pay is under review for all levels above NQ and there’ll be an update mid-June. They will obviously raise across the board as currently 1, 2 and 3 pqe are now below the new NQ rate, but will be interesting to see how tight the bunching is. Given they didn’t want to raise at all this year and their hand was forced by FBD, CC, Links, my money is on some incredibly tight salary bunching

Reply Report comment
(14)(1)

Laywer4737

Any news on bakers anyone??

Reply Report comment
(6)(0)

Haul Pastings

Any1 kno the NQ whack at Myman Greenspan Fox Rosenberg Mobasser Younger & Light?

Its my dreem to work ther !

Reply Report comment
(11)(5)

Idk

Any news on firms like HSF HogLov?

Reply Report comment
(17)(0)

MC NQ

Not sure about HogLov but HSF likely to increase in the near future – they caught up before S&M/LL last time around, and the time before that. HogLov might take longer.

Reply Report comment
(8)(13)

anon

How likely are we to see an increase in US trainee salaries in response to the MC trainee salaries increasing to £55/61K?

A lot of US firms sitting on £55/60K currently. Surely they’re going to bump them to maintain the gap?

Reply Report comment
(7)(8)

Mac McMac

Better hope for some news at Macfarlanes. Criminally underpaid compared to some of our peers, particularly at senior level, while PEP continues to be incredibly strong. Lots of unhappy murmurings…

Reply Report comment
(36)(0)

Dor

When will US firms increase trainee salaries? You can hardly claim to be an elite US firm if you pay trainees less than somewhere like Linklaters

Reply Report comment
(9)(22)

where is my mommy

I’m intrigued as to what US firms around that pay package are going to do. We’ve all discussed W&C and Shearman, but what do you do if you’re Dechert, Jones Day, Covington or Cooley in London (all around the £145k – £150k mark I believe)? Some of these firms have PEP that’s not much more than the MC but have historically paid 20-30% more than MC. However, I just don’t see them going wild and joining the most profitable firms like K&E and Latham at £180k.

Do they just stay put, or do they find a middling ground at £165k?

Reply Report comment
(3)(0)

Cx

Which firm non US/MC will rise again you reckon ?

My crystal ball says AG and the Shed especially as PM rose to 97k

Reply Report comment
(0)(0)

Fingers crossed

Do you think this will trickle down to the insurance players? RPC, Clyde & Co, DWF, DACB, Keoghs? Surely an NQ at the MC can’t be earning more or same as a 10 year PQE are these firms?

Reply Report comment
(3)(3)

Associate at proper big firm

A 10 year pqe at those firms will be ecstatic to earn the same as an MC NQ – even some Partners wouldn’t be on that, and that’s including London.

Reply Report comment
(5)(1)

Larry

This. Salaried partners in London would be on about £130-140k. SA £105-130k.

Reply Report comment
(3)(0)

Shout out to

Freshfields. The rest of the magic circle has been copying their comp package for ages but this latest move with the pay bumps being swept up the associate lockstep has made a genuine difference. The morale boost at my firm (MC) has been enormous. We should have done this years ago. These firms can afford it and a lot more. Everyone does 1800+ hours with many doing over 2000+ and a few smashing 2500+ in special years. Those that don’t are managed out. You’re not really allowed a quiet year. That means associates are billing millions and taking home a small fraction. Yes, there are bloated business service teams that need to be paid for plus some loss making international offices, but I think things will be slimmed down over the next few years such that it’s all a lot leaner and ever more mean. Looking forward to K&E punching through the £200k mark soon.

Reply Report comment
(8)(1)

Jim

I always wondered how much of it is meant to be “reading between the lines” around all of the mixed messaging in these big firms. When on the one hand you’re getting told to take care of your mental health blah blah and on the other if you don’t bill 2200+ hours then you’re sacked etc. Would it be sensible to suggest that all juniors simply be up front with their supervisors, not beat about the bush and just be like “is this what you want from me??”

Reply Report comment
(4)(1)

Associate at proper big firm

That’s actually more than a DWF Equity Partner in London.

Mind you, an NQ at magic circle will being more money in…

Bantz!

Reply Report comment
(1)(1)

Anon

A lot of the US firms like Skadden, Weil and Goodwin are now 175k for NQ and 340k-350k for senior associates (plus bonuses that are six figures). It’s when you get to senior associate level that the magic circle really get left behind.

Reply Report comment
(5)(0)

Yhh boiii

Goodwin have recently raised their NQ salaries

Reply Report comment
(0)(0)

Wow

Bonuses that are six figure? Really?? That’s crazy

Reply Report comment
(0)(0)

UAE recruiter

It is important to note that the pay rise in London hasn’t been the case for offices outside of London. I spoke with a Managing Associate at Linklaters (UAE) who hasn’t received a pay rise and is now being paid the same as an NQ in London. They told me there has been no communication from the partners about pay and that this is causing major discontent in the office with lots of hostility growing as associates feel like they’re being ignored and undervalued.
Lots of US firms are hiring in the UAE at the moment and will no doubt be happy to take the talent from the MC firm’s. Just an insight.

Reply Report comment
(2)(0)

Gareth Southgate

The elephant in the room you conveniently don’t mention is tax, which is one of the key reasons pay isn’t raised in the Middle East.

Most of the UAE has extremely low income tax rates (or none at all), which means that although MC UAE lawyers are paid less on paper than their MC London equivalent, they can keep essentially their entire paycheque. Anyone in a London is hit by a 45% income tax rate on 100K+.

If you’re earning 150K at the magic circle in London, post income tax/NI you’re left with a little under 92K.

If you’re earning 100K at (for example) Linklaters Dubai…you can keep it all. If you raised Dubai salaries to match London ones, Dubai lawyers would actually take home far more than their London equivalents!

Reply Report comment
(4)(1)

UAE recruiter

Appreciate the response and agree. However, 90% of UAE offices are staffed by expats who have moved from their home countries to work in the UAE. Of course tax means they are paid more, but a significant personal cost has often come from moving. Plus lots of the US firms still pay the same in the UAE as they do in London which means the market is very unbalanced. Would you move to another country for an extra £1,000 a month? The answer from most people would be no, which is why the MC will lose talent if they don’t up pay.

Reply Report comment
(1)(0)

Join the conversation

Related Stories

news

Clifford Chance joins City pay war with improved £150k NQ lawyer salary

Follows Freshfields and Linklaters

May 29 2024 10:16am
114
news

City pay war: Linklaters matches Freshfields with £150k NQ lawyer salary

Rises for trainees and apprentices too

May 17 2024 2:00pm
106
news

Freshfields sets down Magic Circle salary marker as it ups NQ lawyer pay 20% to £150k

Is there another pay war on the horizon?

May 3 2024 11:44am
110