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Overview of the UK private practice legal recruitment market

Posted by: Laurence Simons 22/04/13

Legal recruitment - Magic & Silver Circle firms

Magic and Silver Circle associates’ remunerations experienced a slight uplift in 2012; with a number of firms removing salary freezes and improving on 2011’s reportedly flat trading conditions. Bonus levels varied and were very much dependent on the firm. In some instances top rated associates received up to a 30% bonus, however on the other end of the spectrum some Magic Circle firms cut all bonuses for trainees, associates and support staff, citing uncertainty throughout the global economy as the reason.

A number of marked changes to remuneration systems were made, which included firms implementing merit-based pay systems and in other cases abandoning the biannual pay review system to move in line with general market practice.

Merit-based pay systems have increased in popularity over the past few years with firms moving away from the traditional lockstep. The implementation of this system is seen by many firms as an effective solution to paying associates what they are worth. This is a somewhat double-edged sword for associates, with exceptionally technical and commercially minded associates possibly earning above their PQE salary banding and those not viewed in this light in danger of earning comparatively less than they were before the merit-based system was put in place. Similarly there is more transparency with billable hours and an increased emphasis being put on adding value, both to the client and to the firm.

Legal recruitment - City & West End firms

For a number of City and West End firms in the UK, 2012 revolved around mergers. This was largely due to contracting markets causing an increase in “panelisation”, forcing smaller firms that previously benefited from the extra off-panel work, to dedicate a disproportionate amount of time endeavoring to stay on panels. Strategically expanding and pooling resources offered a feasible and effective solution to protecting market share in an ever competitive and aggressive market.

Firms are particularly interested in the elusive mid-level associate; lawyers that are able to effectively hit the ground running and possess no partnership expectations in the foreseeable future. For this reason there does seem to be a discretionary element when law firms consider remuneration, with some firms opting to pay more to attract the best talent.

West End and boutique firms’ salaries remained fairly similar to levels seen in 2011. As in previous years, these firms attract associates from the market’s top firms with the allure of greater responsibility, better work - life balance and improved prospects for partnership. In a market inundated with candidates, firms are able to practice caution when recruiting and hold out for the right person; however there is room for salary negotiation in instances where firms are trying to secure an especially attractive candidate.

Legal recruitment - NY rates

Whilst 2012 generally consisted of consolidation in remuneration rather than increases, NY pay rates at the US “White shoe” private practices continued to dominate that of the top UK payers. With an increasing number of US firms paying their NQs a salary of £100,000, this positively dwarfs the top rate salary for an NQ at a Magic Circle firm of £65,000.

Although the market and press alike tend to question such high salaries for junior lawyers, NY firms seem less concerned and despite a slow economic recovery have continued to perform relatively well, with many experiencing continued growth in London in 2012. Due to the talent that these high salaries attract, NY firms are steadily gaining ground on the Magic Circle firms.

Legal recruitment - Mid-Atlantic firms

In 2012, even more Mid-Atlantic firms moved onto a merit-based pay structure, allowing the most ambitious and talented associates to earn substantially more than they would otherwise be able to under the old PQE-band approach. This system undoubtedly helps Mid- Atlantic firms to more successfully compete with White shoe firms in attracting talent.

A number of Mid-Atlantic firms either merged with UK firms in 2012, or expressed an interest to do so. It will be interesting to see how these mergers will affect the associates’ remuneration and whether the combined firms will adopt UK or US pay structures in 2013.