us law firms in london associate salary guide … us law firms in london: associate salary guide...

US law firms in London Associate salary guide 2011/2012

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US law firms in London: Associate salary guide 2011/2012

US law firms in London: Associate salary guide 2011About the survey

The results of this survey relate to UK qualified associates working in US law firms in London.

Our data was collected from information provided by our contacts within the industry via an online questionnaire. The survey has been produced in Summer 2011 and takes into account pay reviews undertaken by London offices of US

firms.

Recruitment in 2010

The year 2010 saw an increase in recruitment activity reflecting the gradual upward trend seen in the economy as a whole. A staggering 83% of US firms recruited fee earners in 2010. Recruitment has been buoyant across all levels with the majority of new hires being in the 3-6 PQE bracket.

Whilst the downturn saw a flurry of activity in areas such as litigation and restructuring, these hubs of activity were replaced in 2010 with recruitment in corporate, banking, tax and project finance. A knock on effect was seen on the transactional support areas such as IP, Competition and Employment and this continued into 2011. Real estate is still awaiting a comeback amongst the select US firms that undertake this work.

Some US firms have taken advantage of the available talent pool and been able to respond to an increase in client demand whilst remaining cautiously optimistic by recruiting lawyers on short term contracts rather than on a permanent basis. Accordingly there has been an increase to 38% of US law firms recruiting contract lawyers whilst the paralegal uptake has generally plateaued.

Just over a third of US firms now take on trainees and flexible working part time recruits has also increased by a small margin. 22% of US firms now have the support function of PSLs further strengthening a historically weak firm infrastructure.

Market overview

At the end of 2010, we finally saw the signs of recovery from the economic downturn. The freeze on hiring was lifted and we began 2011 with renewed vigour.

The road to recoveryClearly some of the recruitment at the end of 2010 was necessary to replace those who lost their roles as a result of redundancies but several newly opened offices of firms such as Ropes & Gray and Greenberg Traurig Maher were in expansion mode. The demand for associates across the transactional areas was back.

Impact on salariesAs a result of 2010’s overall prosperity, many firms reacted by unfreezing their associate salaries and in some cases, increased the salary bandings in their annual reviews. Those that did not increase, moved the associates up through the bandings. Although some firms have adopted performance related pay systems, the majority of US firms have decided to stick with the traditional PQE banding approach for now.

Areas in demandThe areas most in demand are banking, corporate, tax, US securities and the new area, high yield illustrating the renewed confidence in the return of the economy. Litigation remains buoyant and there is renewed interest in competition.

Market confidenceAs we march through 2011, the market was considerably better for those who qualified in September. Whilst some of the US firms have introduced their own trainee programmes, others see lateral NQs as a chance to capitalise on new talent. The standard of academics and City training continues to improve and amaze us each year. The competition for each NQ role is fierce but there has been a marked increase in the number of NQ roles available and September 2011 was undoubtedly a better

time to qualify than at the same time in 2010.

Associates at the key level of 2-5 years PQE remain in high demand. Good quality candidates at the Magic Circle firms now have a wealth of options available to them and US firms have to compete for this talent.

Senior associates at UK firms suffering the bottleneck for partnership track now look to US firms for clearer career prospects. As a result, we have seen a change in the legal landscape and the newly opened London offices of US firms going from strength to strength. Firms such as Ropes & Gray, Kobre & Kim and Seyfarth Shaw have certainly made their mark.

At the partner level, those with a following remain in demand. We have seen some interesting team and partner moves within the US firm network itself.

Looking aheadAs we approach the end of 2011, the future looks promising. The pipeline of instructions is constant and there is a renewed appetite for growth. However, firms must be alert to new talent and seize it when they have the chance.

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Vivienne StephenAssociate Director


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Darryn HalePartner

Amongst these firms the salary ranges and average salaries paid to UK-qualified associates at US firms in London 2011 are broken down as follows:

Mid-Atlantic firms New York firms

PQE Range Average Range Average NQ £65,000 - £78,000 £72,000 £80,000 - £100,000 £90,000

1 year £70,000 - £85,000 £80,000 £90,000 - £110,000 £95,000

2 year £80,000 - £90,000 £85,000 £94,000 - £115,000 £110,000

3 year £90,000 - £103,000 £95,000 £100,000 - £130,000 £120,000

4 year £95,000 - £113,000 £105,000 £107,000 - £143,000 £130,000

5 year £100,000 - £125,000 £115,000 £120,000 - £155,000 £140,000

6 year £110,000 - £135,000 £125,000 £132,000 - £165,000 £150,000

7 year £115,000 - £145,000 £135,000 £145,000 - £175,000 £165,000

8+ year £125,000 - £155,000 £145,000 £160,000 - £200,000 £175,000 Our survey shows that at the start of 2011 most of the US firms have increased their salaries. The remaining few that did not increase, simply moved their associates up through the salary bandings. In this way, the associates return to the salary they should have been on before the freezes of 2008. As we approach the of 2011, early indications show that in particular, the New York paying firms will increase their salaries more dramatically in 2012. The NQ salaries are due to increase with select firms set to join Binghams McCutchen in offering £100,000.

Salaries

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Salaries at US firms are generally divided into 3 categories namely those paying:1. New York rates2. Mid-Atlantic rates3. Premium UK City rates

Percentage of firms paying different rates

Mid-Atlantic

New York

Premium UK


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Bonuses 92% of US firms have a structured bonus scheme to reward fee earners who perform in terms of their hours billed, contribution to business development or a combination of the two. Some bonuses also take into account the firm’s overall performance. The graphs below show the spread of the percentage of salary that is paid as a bonus and how the method of calculating bonuses differ between the US firms.

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Percentage of salary paid as bonus

0-5% 6-10% 11-15% 16%

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The majority of US firms paid bonuses at the end of 2010 to reflect the sharp increase in market activity especially to the transactional lawyers. In 2010 a pattern emerged of bonuses being used to compensate those fee earners who did not see as much of an increase in their basic salary as in the boom time but in fact who did make an outstanding contribution to the firm.

Contribution to the firm

Firm performanceHours billed Combination of all

Method of calculating bonus

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Billing targets There is a constant myth that associates work significantly longer hours at US firms than their UK counterparts. However, our survey suggests that this is not true. Associates at US firms are indeed expected to work hard when the transactions are live but they do not work any harder than at the Magic Circle or top City firms. From our survey, 82% of the US firms have billing targets whilst 18% do not have any. This reinforces the approach US firms have in terms of encouraging their associates to manage their time responsibly rather than trying to meet a required number. Of those that have billing targets, they are broken down as follows

Billing targets per annum Percentage of firms

No target 18%

1000-1599 hours 0%

1600-1899 hours 50%

1900-2199 hours 27%

2200-2499 hours 5%

Benefits Traditionally in exchange for high basic salaries, some of the US firms did not offer as many benefits as the UK firms. However, as seen in our survey, this has now changed and the US firms compete well with the UK firms by offering benefits in all the key areas.

Benefits Percentage of Firms Offering Benefits

Pension 25%

Health 26%

Life Assurance 28%

Club/ Gym 15%

Other 6%

Other benefits offered include; travel insurance, critical illness, income protection, child care vouchers, dental care and long

term disability insurance.

Holiday

Our survey shows that holiday entitlement ranges from 20 to 30 days with the average being 25 days. A number of US firms also offer the option to buy extra holiday up to a maximum of 2 days. One difference from their UK counterparts is that at the US firms, holiday entitlement tends to be constant rather than increasing with length of service.


Headcount and promotions

With the upturn of the market, we have seen an end to redundancies with only 7% of US firms having undertaken a formal redundancy programme at the end of 2010. Overall headcount across the US firms has increased and 35% of US firms have increased in the number of associates promoted to partners. Secondment & movement to London from overseas

The majority of US firms offer their UK qualified associates the chance to visit the firm’s headquarters in the States and to go on secondment to one of their overseas offices in the Middle East, Asia and the USA. Our survey shows that 93% of US firms offer candidates COLA to relocate to London from overseas. 86% of US firms increase the amount of COLA with length of service. This reflects the current market need for US qualified candidates in London. Probation

All the US firms who took part in this survey have probationary periods for new starters, the length of which closely mirrors that at the UK firms. 13% of the US firms have increased the length of the probationary period to 6 months whilst 87% of US firms have simply maintained their status.

Length of Probation Period Percentage of Firms

Less than 3 months 2%

3 months 36%

6 months 62%

Lyndon JenningsManager

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London 95 Queen Victoria StreetLondon EC4V 4HN T: +44 (0)20 7415 2828

Dubai Suite 614, Liberty House DIFC PO Box 506739 T: +9714 448 7770

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Taylor Root is a member of The SR Group

For more information on the recruitment within the US private practice market please contact a member of our team on +44 (0) 207 415 2828:

Darryn HalePartner [email protected]

Vivienne StephenAssociate Director [email protected]

Lyndon Jennings Manager (Interim recruitment)[email protected]

Lucinda Trootstwyk (nee Cohen)Senior [email protected]

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Established in the 1980s, Taylor Root is now widely recognised as being one of the world’s leading legal recruiters. Operating out of offices in the UK, Dubai, Asia and Australia, we are ideally placed to assist law firms, banks and companies with their legal recruitment on an international basis. Taylor Root has a strong track record in the recruitment of: Heads of Legal and legal advisers; law firm associates and partners; contract/locum lawyers; paralegals; company secretaries and compliance professionals.

Taylor Root is a member of The SR Group. The SR Group is a specialist recruitment consultancy dedicated to raising standards in the business environments that we serve. The sectors we cover include tax, legal, human resources, marketing, professional support and executive search, dealing with a substantial number of the world’s leading professional partnerships, multi-national corporations and international banking groups as well as small to medium sized developing organisations.

us law firms in london associate salary guide … us law firms in london: associate salary guide...

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