SJ Berwin will spark a wages war among City firms by boosting its assistants' salaries by as much as 25 per cent.
Sources say the firm is likely to raise its rates to around £45,000 for newly-qualified assistants.
Senior partner David Harrell says the new rates have not yet been set, but that the move is being made to keep pace with significant salary increases driven by an increasingly competitive market.
Harrell says: "What we are doing is making damn sure our salaries are highly competitive and we are able to pay the best at the best.
"What we see across London is that salaries are accelerating and increases are moving significantly.
"We are going to see increases in salaries across the board. Increases of 20 to 25 per cent would be in order.
"We have done this for a number of reasons and we have decided the market has moved and to be at the top rate we ought to adjust now."
But Harrell says that the salary is part of a raft of measures SJ Berwin will introduce to attract and keep lawyers in a volatile market.
The firm is also introducing a career development programme to advise assistants on their future, even if it is outside the law.
Yvonne Smyth, a consultant at recruiters ZMB, says: "This will set it apart from all the other medium-sized firms apart from Gouldens who have always had much higher salaries for assistants.
"The rise will attract lawyers that are in huge demand - IT and telecoms, private equity and corporate finance. Berwins will be able to attract people from the larger firms and be a real alternative financially to the US firms. It is because the firm is so profitable it is able to do this."
The already expensive London market is likely to feel the knock-on from the huge salary increases that have hit New York, fuelled by the rewards available to lawyers that go in-house to internet start-ups.