New research from salary benchmarking site Emolument suggests that law firms in the UK’s Magic Circle are not necessarily the best-paying.
One of the key findings from the report is that some law firms, such as US-based Latham & Watkins, the largest by revenue globally, do not pay bonuses to their junior lawyers but compensate with large fixed salaries.
Latham & Watkins rewards its employees with salaries 1.5 times larger than the five leading law firms headquartered in the UK that make up the Magic Circle: Allen & Overy, Clifford Chance, Freshfields Bruckhaus Deringer, Linklaters and Slaughter and May, according to the research.
Associates at the US law firm receive a median salary of £107,000 ($150,000; €132,000), according to the research, while Magic Circle firm Allen & Overy pays associates a salary of £78,500 and Clifford Chance pays associates a £70,000 median salary.
The research found that the market for associates is highly inefficient with large pay gaps from one firm to the next. Only half of the highest-paying law firms pay bonuses, which account for a maximum of 12 percent of an associate’s total pay.
The research also compared salaries paid by the Silver Circle, a group of corporate law firms headquartered in London considered outside the Magic Circle because they have a lower turnover than those firms, but have an average profits per equity partner and average revenue per lawyer above the UK average.
Silver Circle law firm Hebert Smith Freehills, whose median bonus of £2,700, when added to its salary of £69,000, also offers an overall salary greater than Clifford Chance’s, bringing it closer to the £72,000 salary offered by Hogan Lovells.
The research also found that US law firms pay no bonuses, despite US companies usually being the most aggressive when it comes to paying bonuses, according to Emolument
Emolument used data based on 387 entries from law associates in London in 2015-2016.