Leading US firms have rushed to match pay increases at New York giant Cravath, Swaine & Moore after the firm lifted its starting salary for the first time in almost a decade – following big rises in the City of London.

Last week Cravath lifted base pay for first-year associates in New York from $160,000 to $180,000 (£110,000 to £125,000) – its first increase since 2007 – triggering other US firms to follow suit.

Milbank also boosted first-year pay to $180,000 and simultaneously lifted pay for the same cohort in London to around £124,000.

Weil, Gotshal & Manges and Cahill Gordon & Reindel have also matched the increase.

The US pay rises follow a large jump in salaries for junior lawyers in the big City firms. Magic circle firms Freshfields and Clifford Chance have boosted pay to £85,000, including bonuses, for their newly qualified lawyers.

The increase is a £15,000 jump from last year at Clifford Chance and a £17,500 increase at Freshfields.

Meanwhile Linklaters has announced its newly qualifieds will receive at least £81,000, including a bonus, while high performers could get as much as £91,000. This compares with a basic salary of £68,500 last year.

Slaughter and May, however, announced modest increases in pay, raising wages for newly qualified lawyers from £70,000 to £71,500. Hogan Lovells has also increased pay for newly qualifieds to £71,500, while Baker & McKenzie has set the pay level at £70,000.

The pay increases have renewed concern over the increasing polarisation of the legal profession.

Bryan Scant, vice-chair of the Law Society’s Junior Lawyers Division, said: ‘There is a considerable disparity in income for those in certain firms in London in comparison to smaller firms, in particular those outside London. The recent increases in salaries further emphasise what is already well known.’