London law firms have been posting bumper results this year and passing the £ 1 million mark for average pay for firms’ partners. Firms, such as, Pinsent Masons, Osborne Clarke and Simmons & Simmons, among others, have reported strong numbers for the last financial year, a sign of a solid period for the UK legal sector.
Simmons boosted revenue by 6 per cent to £465 million in the year to 30 April, with profit up 8 per cent to £185 million, and profit per equity partner up 2 per cent to just over £1 million, the firm said last week.
Pinsent Masons posted a nearly 6 per cent revenue increase to £531.1 million, with profit per equity partner rising to 16 per cent to £739,000, it said earlier this month.
Osborne Clarke boosted its revenue 19 per cent to £407 million, with UK partner pay rising 11 per cent to £796,000 the firm said last month. Magic Circle law firms Allen & Overy, Linklaters, Freshfields Bruckhaus and Clifford Chance are expected to announce their results over the coming weeks.
Tougher times
Despite the strong run of early results, there are signs that London law firms are worried the good times may be drawing to a close, and are preparing for tougher times to come. Simmons’ managing partner Jeremy Hoyland said in a statement: “The firm is well-positioned to meet the challenges and uncertainties that lie ahead of us.”
International law firm Baker McKenzie announced last week, that it has boosted salaries for newly qualified lawyers in London to £110,000, from £105,000 effective 1 July, the firm said in a statement earlier this month.
Baker McKenzie’s pay increase comes after Linklaters and Allen & Overy said last month that they were holding newly qualified lawyer salaries steady at £107,500 after two years of raging pay inflation in the sector.
Allen & Overy cited a potential market slowdown for its reluctance to increase salaries, with a spokesperson pointing to a “more challenging business environment.
In May, Clifford Chance boosted salaries for newly qualified lawyers to £125,000 per year, while earlier this month Herbert Smith Freehills said that it was increasing pay for its newly qualified lawyers to £120,000.
The firm’s chair and senior partner Rebecca Maslen-Stannage said that the pay increase made sense even in the face of a potential economic slump.
“In tougher markets, if you are willing to hold your nerve and back yourself, that’s actually where there’s the best opportunity for market repositioning,” she said. Pay at US law firms has soared even higher with newly qualified lawyers in the London office of Akin Gump now on £179,000, Roll on Friday reported.
The firm’s newly qualified are paid $164,000 which equates to nearly £180,000 because of the exchange rate that the firm has adopted to calculate their pay amid a slide in the value of sterling against the US dollar.
Bonus
Baker McKenzie said it was holding its pay rates for trainee lawyers steady at £50,000 for first years and £55,000 for second years. Solicitors undertake a two-year training contract at a law firm before qualifying to the profession. The firm’s lawyers will also be eligible to receive a discretionary bonus on top of their base salary, the firm said.
“We believe in rewarding in a fair, consistent and competitive manner. The attraction, retention and development of our people is key to the success of our firm and is at the heart of our strategy,” the firm’s London managing partner Ed Poulton said in a statement.
(The writer is our foreign correspondent based in the UK)
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