At least two City law firm IT directors have won pay rises of nearly 25 per cent as the skills shortage continues.

IT directors have been able to negotiate sharp pay rises thanks to a stampede of poachings by rival firms and opportunities in investment banks and the commercial sector.

Quarry Dougall managing director, technology, Paul Young said he knew of two instances where IT directors at 50 top City firms had increased their salaries by £15,000 from about £65,000 to £80,000 after threatening to go elsewhere.

A rash of IT opportunities at investment banks, including US bank JP Morgan which currently has 30 IT vacancies, has caused unease among law firms keen to hold on to staff, said Young.

He added that the salary surge has not yet trickled down through the middle and junior levels of IT departments, which do not have such a "sound understanding of the business" side as the IT director.

Longbridge Consultancy recruiter Craig Coverman said: "EMU and Year 2000 issues, together with the much documented skills shortage, are pushing up prices almost daily."

He said law firms were offering hefty pay rises and other benefits, together with longer notice periods, to try to stop people from moving.