Over recent weeks, the legal press has been filled with content regarding the war on salaries between law firms. A national survey carried out by MHA (accounting group) has revealed that 85% of UK based law firms plan to increase staff numbers in 2022. 93% of firms are not planning to make reductions.
This focus on retaining and growing staff numbers has resulted in firms becoming embroiled in a bidding war for new talent. Average salaries across all levels have now risen by circa 5% at a minimum. A diminishing pool of legal candidates has contributed to this competitive market and increased wages. Many believe law firms will need to conduct two pay reviews a year to keep up with expectations. What this information highlights is that law firms have now come out the other side of the pandemic, where they were hit by big recruitment freezes and hiring pressures, and are set to significantly ramp up their recruitment efforts over 2022 and 2023.
Goodwin, a US headquartered law firm declared that new associates will be paid £161,500 per annum, rising to £169,000 in the second year. They are second behind Gibson Dunn who pay £161,700. This recent announcement further solidifies the trend that city law firms are competing for talent and are offering lucrative pay packets to secure such talent.
To give you an idea, the Top 5 law firms for NQ salaries are as follows:
1. Gibson Dunn – £161,700
2. Goodwin Procter- £161,700
3. Davis Polk & Wardwell- £161,000
4. Fried Frank- £160,000
5. Vinson Elkins- £159,500
So, with all the money on offer in the private sector, why would an NQ (or a lawyer at any level) consider the in-house legal market?
Whilst the money on offer in the private sector is at times eye-watering, there is still a large number of employees from the private sector looking to transition in- house. Most private sector employees are moving in- house for greater job security, flexibility, work-life balance, better promotion opportunities, and better hybrid working conditions.
When speaking to private sector lawyers, a lot of them have expressed that the hands-on nature of the in-house market is also a key factor for why they want to make the move across. The ability to start and finish a project, rather than just advising on one aspect of it, as well as working alongside the business to achieve commercial aims, plays a key factor in decision making.
There has been a high demand from employers for lawyer who are within the 2-6 year post qualification range as businesses feel that they are hiring fully-trained lawyers who have had sufficient experience, perhaps even a secondment in-house, and are able to hit the ground running and can easily understand the business and its aims. Furthermore, the pay increases post 2 years PQE are not so eye-watering and are minimal in comparison to the NQ starting salaries.
The in-house market offers good quality work, access to clients directly, a flexible working structure and clear progression paths. Whilst the salaries may not be as eye-watering as the private sector, the benefits of joining an in-house organisation can far outweigh just the salary on offer.
To discuss more about salaries in the current market place, call our Private Practice team on 020 7092 8000.