City pay war continues as top US law firm hikes London lawyers salaries to £170,000
New York City law firm Simpson Thacher has hiked salaries for its newly qualified (NQ) lawyers to heights of £170,000 a year in a sign the City pay war is showing no signs of slowing down.
The white shoe law firm has given NQ lawyers in its London offices a £12,000 a year pay rise, after upping their salaries by eight per cent to £170,000 on 1 November.
The Lexington Avenue law firm’s decision to hike pay for its NQ staff put it at the top end of the City pay scale, on par with its US headquartered rivals Kirkland & Ellis and Latham & Watkins, and just behind pay way frontrunner Akin Gump, analysis from Legal Cheek shows.
Simpson Thacher’s pay hikes scupper any hopes for a ceasefire in the ongoing battle for talent that has been fought out between by the City’s top law firms over the past two years.
The race to the top has seen the City’s commercial law firms seek to tempt in young talent with offers of increasingly outrageous salaries in their efforts to capitalise on a boom in demand for legal services during Covid-19.
The entry of higher paying US law firms into the UK market for legal services also pushed up salaries in the sector, as the City’s top firm’s have been forced to compete.
The plummeting value of Britain’s currency has worsened the situation in bolstering the remuneration given out to those UK lawyers paid in US dollars.
Critics of the pay war have warned it is leading to wide scale burnout, in the face of figures showing some of the City’s most elite firms are working their lawyers up to 14 hours a day.
Simpson Thacher’s pay hikes come as the legal sector as a whole has taken a “wait and see” approach to the current economic crisis, due to fears of repeating past mistakes that could result in them being short-staffed, according to Thomsons Reuters analysis.
Law firms have held off on making layoffs and are continuing hiring, as they seek to avoid the problems they faced in rehiring lawyers following mass redundancies in 2008, the analysis shows.
Simpson Thacher also upped pay for those lawyers further up the ladder, in giving those with three years’ experience after qualifying salaries of £233k a year.