City firms raising billing targets to balance recent pay increasesTop City law firms are raising their annual billing targets in a shift which will see them moving towards a US-style billing culture.Clifford Chance is raising targets by 50 hours while Allen & Overy is setting its first formal targets, which are 150 hours higher than previous informal targets.

It is understood that other top-ten firms, including Freshfields and Linklaters, are raising targets by an average of 150 hours to make up for recent pay increases which have seen newly qualifieds' salaries shoot up by nearly 30%.

It is a new twist to the spiralling salary war which is raging in the City.

Allen & Overy set its formal target at 1,600 hours, while the Clifford Chance target has gone up to 1,700.A new survey by legal recruiters Graham Gill said that firms are generally raising their targets from 1,400 to 1,800 hours a year.

But US firms are still ahead, recording an average of more than 2,000 hours.

But the survey also said that in spite of these targets, a large number of UK corporate and finance lawyers already record an average of 2,000 to 3,000 billable hours in a busy year.In a related move, UK firms are ditching their reluctance to pay bonuses and are increasingly looking at linking bonuses to hours.

Graham Gill said that hours-linked bonuses give firms more flexibility than upwards-only salary changes.

The survey said: 'Until this year, most UK firms were reluctant to sanction bonus schemes on the basis that they were intrinsically divisive.

Although bonuses were handed out, it was done discreetly and almost below board.

Now firms seem to have been persuaded...

that they are a necessary reward for those whose specialism requires working excessive overtime.'Globalisation, US law firms and Clifford Chance's merger with Rogers & Wells have all been cited as drivers for the recent pay increases.

But the Graham Gill survey has also found that there is a dearth of newly qualified lawyers on the job market.

The survey reported: 'We saw far fewer newly qualified lawyers on the market in September 1999 and March 2000 than ever before.'Good newly qualified corporate and banking lawyers were able to have the pick of the jobs.

We anticipate that the demand for September 20000 qualifiers will far outstrip supply.'Anne Mizzi