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One lot of City workers certain not to forgo their bonuses voluntarily are law firm associates.
Slaughter and May announced that it was cutting trainee bonuses and freezing associate bonuses last October, while accountancy firm KPMG is reported to have scrapped its £1,000 bonus for most trainees.
Even US law firms are cutting back in London, with research by legal recruitment consultancy Edwards Gibson showing that firms paying ’New York rates’ froze their January bonuses this year for the fourth consecutive year.
These firms typically pay bonuses ranging from £4,700 for lawyers with one year post-qualification experience (PQE) to £23,100 for seven-year PQEs.
Salaries at select US firms are up by 10 per cent, with some paying surprise spring bonuses last year that roughly doubled lawyers’ bonus earnings in response to market buoyancy. Whether they do this again this year will reflect how they see conditions now.
UK firms have slashed bonuses as a proportion of salaries, according to Edwards Gibson.
“Those tied to their salary bandings have tried to top up salaries with discretionary bonuses, but these have been at levels way below previous years’ as firms are feeling the pinch across the board,” said Claire Cavanagh at EJ Legal.
Several US firms have delayed base salary announcements, but are expected to freeze these too. Kirkland & Ellis and Quinn Emanuel Urquhart & Sullivan, which usually pay ’mid-Atlantic’ rates, hit the ’New York’ band by upping London pay for newly qualified lawyers (NQs) to £97,000.
New York rates typically pay NQs £94,000 as base salaries, rising to at least £157,000 for six-year PQEs and more experienced associates. Mid-Atlantic rates range from £75,000 for NQs to more than £125,000 for six-year PQEs and more senior non-partners. But market changes mean salaries are less set in stone.
“Pay bands for associates are becoming increasingly stretched and it’s more difficult than ever to predict pay ranges, particularly for mid-level and senior associates,” said Gideon Krotosky at legal recruiter Deacon Associates.