City firms should cut salaries significantly for newly qualified (NQ) lawyers if they are to halt a jobs exodus to the regions and in-house legal departments.
That was the key message from a breakfast seminar for HR professionals on the impact of high salaries hosted this morning by legal market recruitment consultants Edwards Gibson. Principals Kristi Edwards and Scott Gibson warned that the drift of lawyers away from London firms caused by the increasing size of in-house teams and dis-aggregated work being farmed out to the regions will continue unless the leading London-based firms took “radical” action.
In particular Gibson claimed that for certain practice areas NQ salaries were too high.
“They’re not popular among consumers of legal services and increasingly we’re seeing in-house lawyers saying ‘I’m not paying that’,” said Gibson.
Gibson said the current ‘gold standard’ for a serious City offering was around £60,000 but firms should consider reducing this to £50,000 for NQs in non-premium areas.
Edwards added that most firms in the UK had now moved to some form of merit-based pay for associates but that at the NQ level all lawyers were initially paid the same, regardless of the practice area into which they have qualified.
“One size fits all compensation does not make economic sense,” said Edwards.
An audience comprised primarily of HR and recruitment managers and directors from a mix of firms heard that in the current market, the huge supply and demand in-balance at the NQ level meant there was a “clear opportunity” for the London offices of most UK headquartered firms to significantly reduce salaries for a large proportion of lawyers.