The so-called bidding wars for associates have raged since at least 2015 when US firms made a concerted push into the UK market to pursue private equity work. Aggressive hiring formed a massive part of that push and continues too now. brought in 18 UK partners in 2023, and Paul, Weiss, Rifkind, Wharton & Garrison made 14 lateral hires during the same time, including recruiting top partners from Linklaters and Clifford Chance. In fact, , more than 370 associates left Magic Circle firms in 2023 and US firms have been among the top beneficiaries.
UK firms, as shown in our recent report, Disloyal lawyers: has the partner track lost its lustre?, have been fighting back. They aim to increase associate recruitment and retention by focusing on improved work-life balance, offering attractive packages that reduce hourly demands, provide faster tracks to promotion, and afford greater autonomy in each role.
In this article, we deep dive into our report to look at how US and UK firms compete for associates, exploring the allure of higher salaries and the increasing appeal of a greater work-life balance.
In the simplest terms, UK firms are struggling to match US salaries. Our report suggested that compensation packages have stayed roughly the same in the last 12 months for UK firms. Only 11% of senior leaders claimed their firms had increased salaries above the rate of inflation, while 21% said they've only increased to match inflation.
Medium-sized and large law firms were more likely to raise salaries, at 38% and 31% respectively, but even these numbers show a minimal appetite – or an inability – to compete with US firms on salary. None of the Magic Circle firms match the that elite US law firms adhere to for compensating associates. In fact, according to a , the top UK firms pay roughly 35-40% less than US peers.
According to Scott Gibson, , UK firms have generally struggled to match US firms profits due to new competition and post-Brexit currency changes. In the simplest possible terms, UK firms are unable to meet the rises offered by US firms.
Attempts by UK firms to increase pay have been met by further increases from US firms. Newly qualified associate pay in London has increased by 25-30% since 2020, , a London-based legal recruiter for . But US rivals have matched or exceeded such rises, retaining the pay differentials and remaining attractive to associates.
UK firms offer , which can prove less attractive to associates, with pay linked to seniority. Under lockstop models, skill level and performance play no role. This can be challenging in terms of recruitment and particularly retention. If you're a top-performing lawyer, generating huge profits, you may resent subsiding older partners. Top-performing lawyers might be more attracted to the US model of meritocratic compensation.
Magic Circle firms are aware of the pay disparities. One method of tackling the issue, , is by offering the opportunity to earn 100% of base salary as a bonus, if associates hit a part a particularly high hours threshold. This unusual situation does address the lower salary issue and effectively navigates issues around lockstep compensation.
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Our report demonstrates salary is only one of element of recruitment and retention. Salary is crucial, as highlighted, but work-life balance has become increasingly important. Since the pandemic, as we've shown elsewhere, workers across the economy have re-evaluated their priorities.
According to the , two-thirds (67%) of employees are re-evaluating how they spend their time and 72% believe employers need to rethink what work means. Lawyers are no exception. According to our report, over two-thirds (71%) of associates would place work-life balance in their top three most important priorities.
This provides a huge opportunity for recruitment and retention, one that bodes well for UK firms. Working hours are another key difference between UK and US firms. Compared to US and global firms, UK lawyers work comparatively little. measured start and finish times for lawyers across a range of firms and practice areas, and found that junior lawyers at UK firms work just over 10 hours a day, compared to 14 hours is US and global firms.
US firms often have more competitive work cultures which can create stress and unhealthy expectations. Consider billing targets, elite US firms . UK firms expect lower: even Magic Circle set targets around 1700-1900 hours. UK firms cite reduced hours to counter to allure of US pay packets. Associates might gain higher compensation, but they have to work harder for that pay.
As mentioned above, UK firms simply cannot compete with US packages largely because of economies of scale and because of comparatively low profits, so they need to take more creative and innovative approaches to recruitment and retention. Considering work-life balance has become such a priority, UK firms should do more to double down on existing success in the area and make themselves even more attractive to top talent.
Discover the full findings in our free report, Disloyal lawyers: has the partner track lost its lustre? Download today!
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