The Continuing Salary War and Its Effect on British Law Firms

In a recent article, we explored how US law firms’ mass entrance into the London legal market has forced salaries to skyrocket among British firms as they strive to keep up. This so-called ‘salary war’ between London firms shows no indication of slowing.

With the increase in M&A deals between law firms, firms are becoming more and more desperate to attract the best talent. American law firms responded rapidly to the increase in mergers by raising their pay rates which created pressure within the market, forcing many UK firms to follow the example.

Impact on London NQs

Statistical analysis of the change in Newly Qualified Solicitor rates shows that in London NQ Lawyers are currently benefiting from a 15% and 50% increase when compared to 2021 salaries. The NQ salary of Akin Gump is even reaching a gargantuan £179,000. These increases have proved tantalising to many NQ Solicitors given the rise in the cost of living and seemingly untempered inflation.

Impact on Commuter Towns

The salary war not only has consequences for law firms in London who have seen an exodus of talent into these lucrative roles. It is also having an increasing effect on the legal market of commuter towns surrounding London. Many NQ Solicitors who live in the surrounding areas such as Milton Keynes, Reading, Cambridge, Guildford and Peterborough are beginning to choose to commute to London firms over working for local firms due to what they see as a lack of just renumeration.

This choice is nothing but reasonable. With the highest NQ rate in these areas ranging from £50,000 to £68,000 which is measly compared to what the larger London firms are offering. What used to benefit the regional firms is that it is a truth universally acknowledged that no one likes to commute, being the bane of employed life. Thus, many Lawyers chose to remain in their regional sphere.

However, since the pandemic work, has been revolutionised. For the first time in history working from home has become part of the new status quo. Now all one has to do is commute to London two times a week, work from home the rest of the time and then receive a significant increase in their salary.

The Future of the Regional Firm Vs. London Firm Rivalry

Regional firms are seeming to remain complacent to this threat. It may seem a Sisyphean task to compete with the seeming Midas Touch that the large London firms possess.

These regional firms – if they do not want to lose their best talent – must fight fire with fire and increase their NQ salaries to match the median percentage increases in London. But not only that, they must show how they are different and, in some ways, better than London firms by showing their commitment to a better work life balance, career progression and stability. Something London firms are notorious for lacking.