The NQ Salary War

Earlier this year, the London legal sector witnessed another intense salary battle.

The NQ “salary war” began in May 2024 when Magic Circle firm, Freshfields Bruckhaus Deringer increased their pay for NQ Lawyers in London from £125k to £150k. Linklaters and Clifford Chance were soon to follow in their footsteps, also hiking their NQ salary by 20% to £150k.

In the same month, Magic Circle firm, Allen & Overy and US firm, Shearman & Sterling officially merged to create A&O Shearman. Prior to the merger, NQ Lawyers at A&O were receiving £125k and at Shearman & Sterling, £145k. The merger saw the newly formed firm matching their competitors’ increase to £150k.

The last remaining Magic Circle firm, Slaughter & May have so far refused to compete in the NQ salary battle (much to its employee’s disappointment), however do have plans to review their salaries in November.

It appears Magic Circle firms are now within touching distance of US firms when it comes to financial package, but at what cost?

Pressure from US Law Firms

A contributing factor to the NQ salary war is the influx of US law firms taking over the London legal market.

Firms such as Quinn Emanuel have recently hiked their NQ salary to an eye watering £180k. Similarly, Akin Gump have increased their NQ salary to £179k, Kirkland & Ellis to £173k and Paul Hastings to £173k.

US firms are often buoyed by their strong financial performance and larger profit margins (when compared to UK firms), allowing them to offer their junior Lawyers hefty salaries. US firms compete with eachother to match the infamous ‘Cravath Scale’, set by Cravath, Swaine & Moore, a US firm considered to be the key trendsetter for associate salaries.

Cravath Scale: Source Big law Salary Scale + Bonuses (1968 – 2024) – Big law Investor

Multiple US law firms have experienced significant hiring expansion in London this year. Paul Weiss adopted an aggressive recruitment strategy, having successfully poached 12 partners from top tier London firms, with a focus on private equity and antitrust.

Further, Paul Hastings have expanded their London presence, specifically in its finance practice with partner hires from Weil Gotshal & Manges. Skadden has periodically recruited talent from the top UK firms for a number of years and Kirkland & Ellis recently poached two debt finance partners from A&O Shearman.

It is hard for UK firms to directly compete with US firms, as the US law firm model is different to UK. Factors such as higher hourly rates, a long-hours culture, and US corporate clients being accustomed to paying high legal fees mean that UK firms will have to strike the tricky balance of keeping both their clients and their employees happy.

However, the steady stream of high value M&A deals and commercial litigation provides top London firms with the financial strength to engage in the bidding war we’ve just witnessed – and this includes the Silver Circle.

Macfarlanes recently raised their NQ salary from £115k to £140k (22% increase), whilst Herbert Smith Freehills and Hogan Lovells have both raised their salary from £120k to £135k (12% increase).

Consequences of the NQ Salary War

One major concern of the NQ salary war is salary bunching, whereby the difference in remuneration as PQE rises is negligible. Meaning, an NQ on £95k could find themselves on £100k 2-3 years post qualification.

As a result of NQ salary rises, the salary gap between NQ Lawyers and mid-senior level Associates becomes narrower. The attractive NQ salary might get top talent through the door, but if the difference in salary three years on is deemed unfair, experienced Associates may feel their expertise is undervalued and turn to the US market for a more attractive financial package.

Secondly, the increase in salary will inevitably come with an increase in pressure and expectation.

Law firms will feel pressure to ensure return on investment. For NQs, this pressure could be overwhelming and lead to burnout and stress.

High salaries can create a law firm culture where emphasis is on billable hours over well-being, potentially exacerbating the present work-life balance that the legal industry struggles with.

Final thoughts

The NQ salary war is an indication that the London legal market remains competitive, however, the long-term sustainability of the salary increases remains to be seen.

For now, the demand for top legal talent and the willingness of firms to continue to raise the financial bar suggest that the NQ salary war might have no limit.

Get in touch with a member of our team to discuss market salaries and your next career move.