The Memo: This Means War! Are the Magic Circle feeling the pressure from US 'invaders'?

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This Means War! Are the Magic Circle feeling the pressure from US 'invaders'?

Rita McGonigle - 17 June 2024

If you’ve made it this far on our website, we’d hope you’re already considering a career in law. But if not, now would be a pretty good time to start. After all, the current pay wars between city firms are causing quite a stir. Salaries for newly qualified lawyers (NQs) continue to grow, with the highest paying firm changing weekly. If we cast our minds back to last year, anything north of £100,000 was already an impressive feat. Fast forward to today, and salaries have skyrocketed up to £180,000 and they’re showing no signs of stopping. According to experts, annual pay for juniors may even hike up to £200,000 before summer draws to a close. 

Meanwhile, on the other side of the pond, firms like Cravath and Milbank historically lead the pack when it comes to associate pay, raising salaries year by year while others fight to follow suit. As such, US firms dominate the top end of highest paying firms in the UK, with Gibson Dunn and Quinn Emanuel both increasing NQ pay to £180,000 earlier in the year. Goodwin Procter is the most recent addition to the top end of the scale at £175,000. If you’re able to secure an NQ spot at one of the top 15 paying firms, you’d even be making more per year than the Prime Minister, who earns £165,000. On the ‘lower’ end of the scale, firms like Hogan Lovells have thrown their hat in the ring and entered the pay wars, raising London NQ salaries up to £135,000.

The question remains: why have US firms come in and dominated the upper end of the pay scale? And how? 

Simply put, UK firms have had to compete with political factors that their US counterparts have not. Brexit, the shortfall of the pound against the dollar, coupled with the fact that British consumers want to spend less, has allowed for US firms to cascade into the market. To try and compete, we have seen further attempts from the Magic Circle to grow into the US market. The biggest example of this is the strategic A&O Shearman merger. However, other firms like Freshfields are trying to distance themselves from their magic circle roots and focus on global expansion instead.