Pay cuts for newly qualified lawyers may be harbingers of a new era in the City. Clifford Chance, Allen & Overy, Slaughter and May and Hogan Lovells have all announced salary reductions for solicitors qualifying this autumn, while Linklaters and other City firms remain in pay discussions.
At Allen & Overy, NQs will receive a minimum of £90,000 – £10,000 less than last year – and Clifford Chance has cut pay to £94,500 including bonuses. Slaughter and May’s baseline salary has dropped by £5,000 to £87,000, while NQs at Hogan Lovells’ London office will receive £85,000 as opposed to £90,000.
The pandemic has dampened last summer’s pay battle, when all the magic firms increased their salary and bonus packages to a minimum of £100,000 in response to competition from US-based firms.
Tony Williams, principal of legal consultancy Jomati and former managing partner at Clifford Chance, warned of a rocky year ahead for junior lawyers. ‘The pandemic has made the market much more uncertain. Retention rates of trainees qualifying in September will vary significantly between firms but in general firms are likely to be more selective as to those that they keep on,’ he said.
‘Until the medium-term impact of the pandemic is known firms will be very restrained rehiring and may even adopt hiring freezes. Some redundancies cannot be ruled out. US firms are also likely to be more cautious as to hiring, hence reducing some of the alternatives available to NQ lawyers.’
Whether NQ pay bounces back next year will depend on US firms’ appetite for NQ lawyers and demand from the in-house community, Williams added.
In spite of pay cuts, however, many City firms want to avoid mistakes that were made during the 2008 financial crisis when recruitment was halted and junior lawyers were let go.
Charles Martin, former senior partner of Macfarlanes, said firms ‘need to be calm and not do damage in the short term that [they] regret in the long term’. During a webinar hosted by the International Bar Association, Martin said Macfarlanes had ‘opted for a message of continuity and calm’.
*The Law Society is keeping the coronavirus situation under review and monitoring the advice it receives from the Foreign & Commonwealth Office and Public Health England.