A prominent City law firm has frozen junior lawyer salaries to help fund higher bonuses for high performers at all levels of the company.
Addleshaw Goddard has switched £1 million away from higher salaries for newly qualified solicitors to a new bonus fund worth £19 million for lawyers “who have contributed significantly”, according to managing director Andrew Johnston.
The firm, which is ranked 15th in the UK’s list of law firm earnings, said it had decided to restrain newly qualified pay this year. This would mean that junior lawyers would continue to start on salaries of £100,000 – well down on the starting rates being offered by large US firms, where they often start on around £170,000.
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US law firms Davis Polk & Wardwell, Gibson Dunn and Paul Weiss are all understood to pay their junior lawyers salaries of £180,000 on the day they qualify.
Johnston said that the decision not to increase salaries for junior lawyers at Addleshaw meant that the firm could “unwind compression between newly qualified pay and that of more experienced lawyers”.
Pay for associates has stagnated as firms have tried to keep up with US salaries for junior lawyers, City sources suggested.
Johnson added: “While we recognise this is a different position to the one others are taking, we believe that we are doing what is right for our people and business, and aligning with the interests of our clients.”
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He said the cap on newly qualified pay – first reported by The Lawyer – would allow the firm to maintain its trainee numbers. Last month, the website reported that Addleshaw Goddard had the largest qualifying cohort of any City law firm to announce its figures so far this year, retaining 50 of its 58 trainees. It has also seen an 11% increase in annual revenue to £551 million.
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