UK law firms look for novel way to trump US pay war supremacy
UK national law firms have been in a long-running battle with US law firms, resulting in an expensive pay war, but Trump’s attack on the US legal market may open the door of opportunity.
US law firms, including Latham & Watkins, Reed Smith and Kirkland & Ellis, have dominated London. In response, rival firms have been increasingly investing in the City by bulking teams and increasing salaries.
Recruiter Edwards Gibson stated that since August 2023, US firms have pumped millions of dollars of additional partner compensation into the market and upended the pay structures of UK firms.
And it’s a strategy that seems to be working: Latham, a $7bn law firm, recently reported London revenue of $850m, a figure that outperforms a large chunk of the UK legal market.
Now it is also well known that US law firms pay incredibly well down to the junior end.
The sight of newly qualified (NQ) salary increases has lit up the headlines over the last few years, with English firms trying (and failing) to play catch-up.
Gibson Dunn, Paul Weiss and Quinn Emanuel all hold the top title, with NQs pocketing a handsome £180,000.
Another big benefit is transparent (and big) bonuses. US firms follow the Cravath scale, a lockstep system of associate compensation based on years of post-qualification experience.
But the hefty pay packets don’t come cheap. Lawyers at US firms are expected to bill over 2,000 hours per year, while magic circle firms range between 1,700 and 1,900.
UK outfits have said they can’t compete on money, so have instead used culture to encourage top recruits to join, and stay, with the firm.
The culture card gained a little extra power recently – especially now that Donald Trump has been a big, shiny red target in the US legal market.
This all started in March when the White House started issuing executive orders against law firms, including Paul Weiss, Jenner & Block, and Perkins Coie.
Several reasons were cited, but they are linked to the firm’s relationship with the Democratic Party or individuals who had a part in Trump’s prosecution. Another issue was the DEI programmes the firms had in place.
As a result of the orders, the firms’ government security clearances were revoked, and any government contracts held were put under review.
The legal sector in the US is divided. Several firms, including Paul Weiss and the newly merged A&O Shearman, have sided with Trump by offering millions of dollars worth of ‘pro-bono’ work.
According to Axios research, nine of America’s most prestigious law firms agreed to provide almost $1bn worth of legal work to Trump.
And the President is starting to cash in on that deal. He was reported to have directed the Justice Department to mobilise these firms to defend police officers accused of misconduct.
The deals with the Trump administration have caused fallout at the firms that dotted the i’s and crossed the t’s with the notorious leader. Dutch media reported that lawyers at the Amsterdam office of A&O Shearman are unhappy about the deal.
A senior lawyer at a US firm told Morning Wire: “I can imagine that for firms that make a deal, their internal comms piece and their internal relationships are far more strained than the firms that are litigation”.
However, not all firms made a deal. Jenner & Block and WilmerHale both responded by filing lawsuits against the orders. Jenner & Block was just in court on Monday arguing for a motion for summary judgement after successfully securing a temporary restraining order against the elective order earlier this month.
And if these political wranglings continue to stifle the US and spark discontent amongst staff, this could be an opportune moment for British firms to reassert themselves after years of being squeezed out by American giants.
In a time when most surveys conclude that junior lawyers prioritise a healthy work culture, the ‘culture card’ may be the winning edge national firms have been looking for.
Eyes on the Law is a weekly column by Maria Ward-Brennan focused on the legal sector.