A leading UK law firm has increased its base salary for newly qualified lawyers by 24 per cent since December last year and will now pay its graduates £120,000 a year once qualified.
The Anglo-Australian law firm, Herbert Smith Freehills, is one of the City of London’s top ten earning firms – and this is reflected in the significant pay increase for the latest recruits.
In December 2021, the firm made the decision to increase junior lawyers’ salaries by around ten percent to £105,000.
But the new £15,000 pay rise reported by The Times overshadows the earlier rise – despite the Bank of England and financial experts urging all businesses to be cautious about pay rises over fears it could push inflation even further. .
“It’s critical that we continue to attract the very best talent,” said Alison Brown, the firm’s executive partner, adding that the practice wanted to “recognize high-performing attorneys at all levels.”
Herbert Smith Freehills is in the top ten highest-earning law firms in the City of London (pictured)
The Bank of England has raised its interest rate from 0.1 percent to 1.25 percent since December 2021
In May, Bank of England Governor Andrew Bailey asked employers to exercise restraint with wage increases after inflation soared to the UK’s 40-year high of just over nine percent.
Inflation is expected to rise further to at least 11 percent before reaching its peak as working people struggle with the rising cost of living.
The bank’s interest rate has risen from 0.1 percent to 1.25 percent since December 2021.
The median average wage in the UK is currently £25,971, according to the latest available figures.
Herbert Smith Freehills is far from bucking the trend in its generous salary increases in the city, but one of Britain’s top firms has put in place a wage freeze despite a price war in the so-called Magic Circle that started in the UK, driven by rising US salaries.
The Magic Circle is a term used to describe the top five London law firms, all of which specialize in corporate law rather than criminal law.
In comparison, criminal lawyers entering the profession can get as little as £12,000 a year, although they can claim some expenses in addition to this amount.
Bank of England governor Andrew Bailey has urged companies to exercise restraint in wage increases over fears they could push inflation up.
The city is home to the so-called Magic Circle – the top five UK banks in the City of London
The term was first coined by legal journalists in the late 1990s, and over the past 15 years its member banks have included: Allen & Overy, Clifford Chance, Freshfields, Linklaters, and Slaughter and May.
Allen & Overy has frozen junior lawyers’ wages at £107,500 this year, following a significant increase last year.
A company spokeswoman told The Times it was “a wise decision based on a number of factors, including the more challenging business environment.”
She added that the company would keep an eye on wage levels.
The highest paying English law firms in town for young lawyers are Clifford Chance and Freshfields Brukhaus Deringer, an Anglo-German firm, offering starting salaries of £125,000.
The two remaining magic circle firms – Slaughter and May and Linklaters – pay starting salaries of £115,000 and £107,500 respectively.
But these pale in comparison to the amounts offered to new British lawyers by US-based firms, which routinely offer much higher salaries than the majority of their UK counterparts.
Akin Gump, a Texas-based firm, is leading the way by providing more than £160,000 to UK lawyers from the day they become eligible.
The 24 percent pay rise at Herbert Smith Freehills comes as the majority of the UK struggles to cope with rising prices and bills, from groceries to utility bills and fuel.
Petrol and diesel prices continue to rise and reach new record highs. On Thursday, the average selling price of petrol stood at 191.4 pence, while the cost of diesel rose to 199.1 pence.
The average UK car now costs over £100 to fill completely with fuel.
Many working families have also reported taking increasingly desperate measures to save money, including skipping meals or drastically cutting back on food spending.
A survey by the Trussel Trust, an organization that manages food banks in the United Kingdom, found in April this year that one in ten parents was ‘very likely’ to visit a food bank to help feed their children.
At the same time, a third of parents said they skipped a meal to feed their children.
The Trust operates more than half of Britain’s food banks and delivered 2.1 million emergency food packages to families and individuals between April 2021 and March 2022.
Waves of strikes have already hit Britons hard and will continue after key workers such as railway workers, junior criminal defense lawyers and BT staff all threatened action this summer.
Junior doctors, postmen and teaching staff are also considering going on strike.
Most of these professions argue that their real incomes have fallen in recent years due to wage freezes or increases that are not in line with inflation.