How's this for a reaction to last week's pay hike at Clifford Chance: "At 10 or 15 per cent it's simply uneconomic and bad business."
Bad business? Possibly. Necessary business? Certainly. The rationale behind the comment, which comes from a partner at a top 10 firm, is that although Clifford Chance may be willing to push up its associate salaries by 15 per cent, the firm's charge-out rates aren't about to be inflated by the same percentage. Neither will its costs be coming down by the same proportion anytime soon.
"So the only way they can square the circle is by increasing chargeable hours," added the partner. "If someone can show me some maths that shows me I'm wrong about this, I'd be thrilled."
Sniping aside, Clifford Chance's move is necessary simply because the firm needs to reflect the buoyancy in the market by rewarding its associates accordingly. Ever since last October, when Allen & Overy (A&O) bumped up its associates' salaries by 15 per cent, it was only a matter of time before others followed suit. This is a candidate's market and the name of the game is retention.
Now the market is bracing itself for a reaction to Clifford Chance's move. As we report today (16 April), most of the leading City firms are currently reviewing their associate pay. The probability is that the top firms will beef up their pay structures.
And the reality is that Clifford Chance, despite the eye-catching 15 per cent figure, is merely playing a delayed game of catch-up