“All New York firms pay essentially the same – it’s just a matter of who goes first,” says Cleary Gottlieb Steen & Hamilton’s managing partner in London Glen Scarcliffe on the subject of associate bonuses.
That is Scarcliffe’s opinion, but the research does not quite back it up. Shearman & Sterling went first this year, upping its bonus by a whopping 25 per cent on last year’s figure. Associates at the firm’s London office can pocket merit-based bonuses as high as £40,000.
Shearman London managing partner Kenneth MacRitchie says: “We had another good year and we’re keen to recognise the effort and contribution of our associates, as well as enhancing our competitiveness in the London market, particularly on our total compensation levels for associates.”
However, a closer look at the figures suggests Shearman’s eye-catching raise reflects a desire to catch up with the competition rather than outstrip it.
Scarcliffe’s associates at Cleary, for example, received a comparatively modest bonus increase of 10 per cent this year. Not only does this figure represent a healthy £20,000 bonus for newly qualified associates, but unlike the Shearman bonus it is lockstep and increases £2,900 for each year they remain at the firm. And that is on top of a reported newly qualified salary of £70,000, £10,000 more than Shearman.
Both Milbank Tweed Hadley & McCloy and Sullivan & Cromwell are only slightly behind, with bonuses starting at £17,000, rising to £37,000 for senior associates.
Ben Stapleton, the Sullivan partner in charge of associate affairs, says: “We made a decision in late November to raise bonuses roughly in line with last year, but after that several other firms went beyond that by about $5,000 [£2,900]. We wanted to stay competitive.”
Yet the modest increase was not across the board. It was only to match firms that had increased their rates for senior associates of seven or eight years’ PQE.
Sidley Austin offered merit-related bonuses ranging from 5 per cent to 30 per cent of base salary. Given that a Sidley newly qualified associate’s salary is £65,000 (again, higher that Shearman’s), the size of the bonus ranged from a measly £3,250 for an associate earning 5 per cent to a better-than-average £19,500 for one receiving the full 30 per cent.
Skadden Arps Slate Meagher & Flom refused to comment, but is reported to be offering between £8,500 and £34,000. It confirmed that the bonus is merit-based.
Among the non-New York-based firms, Kirkpatrick Lockhart Nicholson & Graham has not upped its associate bonuses in percentage terms, but it did increase newly qualified salaries from £46,000 to £49,000. The salaries are merit-based and associates could receive up to 20 per cent for the hours they put in, plus a further 10 per cent if the office achieves its cash-collection target.
St Louis-based Bryan Cave London managing partner Charles Attlee describes his firm as “in the mid-Atlantic bracket in terms of base salaries”.
Newly qualified associates receive a £60,000 salary, which will be reviewed in June. The firm awards associates a first bonus of between £11,000 and £22,000 based on the number and quality of hours worked, with a further £2,800 for those working in excess of 1,950 hours.
DLA Piper Rudnick Gray Cary also offered a discretionary bonus. Although unwilling to reveal how much this was, partner Jeffrey Liss says that “overall bonuses awarded were 30 per cent greater than last year” and varied “according to performance and productivity”.
San Francisco-based Morrison & Foerster is reported to be paying between £17,000 and £32,000 on a merit basis.
No UK associate at a US firm is going to be strapped for cash. With newly qualified salaries topping £60,000 before bonuses are even factored in, it is worth noting that the UK’s magic circle still lags behind its US rivals.
Clifford Chance claims its “best performers can expect a total reward well in excess of their peers at major competitors in London”, but newly qualified associates receive just £51,000, with a merit-based bonus reaching a maximum 20 per cent (£10,000).
If Clifford Chance does not count the New York elite as “major competitors in London”, maybe it should. Its associates certainly will.