Legal market trends
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Lawyers’ salaries are on the rise – here’s why
Salaries for lawyers are rapidly increasing and are far outpacing the current record levels of inflation we are seeing in the UK. This comes at a time of intense pressure on larger law firms to grow to meet client demands, while sourcing talent in the legal sector is proving to be a challenge.
Outside of London, we are seeing newly qualified solicitors achieve salaries of £70,000 at international law firms (up from £52,000 in 2021). Whilst this may be the top end, that’s still an increase of 34%. And on average, salaries for lawyers working at the top 100 law firms have risen by 26% making the average salary £59,000 (up from £48,000 in 2021). This increase is across the board – from newly qualified lawyers all the way up to legal directors.
In London specifically, a significant number of law firms are now paying over £100,000 for an NQ, with a new record high of £179,000 from one US law firm. Like the regions, salary increases are taking place for all levels of lawyers.
The reasons behind this sudden and rapid increase in salaries are varied but fundamentally it is being driven by the following:
1. Changing working patterns post-Covid
Working from home and hybrid working models have opened up the London market to many regional lawyers who may not be able to commute to the city five days a week but whom are happy to do so once or twice per week. This flexibility, combined with London salaries, is typically attracting those lawyers working for larger regional commercial law firms.
Post-pandemic, it’s unclear whether hybrid working will remain the norm for legal firms. One leading London firm is allowing its staff to work remotely 100% of the time – as long as they agree to a 20% pay cut. For regional lawyers, this will still be an attractive salary, yet London-based staff who want to work from home are likely to feel this is unfair. Perhaps to compensate for this, if pushed to move back to in-person working, lawyers will expect to continue to receive a higher salary well into the future.
2. Reaction to the Great Resignation
Many of the larger law firms in the UK suffered from an increase in resignations brought on by the upheaval caused by the pandemic. Numerous lockdowns, furloughs, and pay cuts caused many lawyers to reflect on their careers and ask themselves if they were in the right firm and being remunerated fairly.
This led to an increase in movement as lawyers became more confident that the employment market was recovering and felt empowered to negotiate towards more favourable terms.
3. Following the leader
When one large international firm decided to increase their newly qualified rate we saw a knock-on effect across the market. Other leading firms realised that in order to remain competitive and to improve employee retention they would have to follow suit. 2nd and 3rd tier law firms then had to raise their rates to keep pace.
As law firms of all sizes fight to retain and attract talent in this increasingly competitive sector, it raises the question: where does this all end? Elite firms may be able to continue to increase remuneration, but this could widen the gap between them and the non-elites that cannot afford to do so.
In summary
It remains to be seen how or if an economic downturn will impact the salaries that lawyers are able to negotiate, but at the time of writing we are not seeing any signs of the legal recruitment marketing slowing down and the war for talent looks set to continue.
What we do know is that for those clients who are hoping to attract new talent, or even hold onto existing talent, currently the easiest way to do this at the moment is offer comparable remuneration packages.
Are you looking for great talent to take your business forwards? Or are you taking that next step in your legal career? We’re here to help. Contact your local legal recruitment team for further information:
North UK: Sam Fryer: sam.fryer@lhh.com
Midlands UK: Paul Duffy: paul.duffy@lhh.com
London & South UK: Oscar Lawrenson: oscar.lawrenson@lhh.com