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A law firm salary war could be brewing, but unfortunately for American associates it is across the pond in London. Linklaters recently raised eyebrows in the British legal community by boosting salaries for newly qualified lawyers, the equivalent of American first-year associates, to �51,000, or about $88,000. It is a very English sort of war, really more a display of gentlemanly one-upmanship than the can-you-top-this race to market equilibrium that took place among U.S. firms at the height of the technology boom. Before Linklaters threw down the gauntlet, the prevailing salary for newly qualified lawyers at top London firms was �50,000. Simon Firth, the partner in charge of recruitment at Linklaters in London said the �1,000 raise was an expression of confidence that market conditions were improving. He said he expected the other members of London’s so-called Magic Circle of leading corporate firms would match Linklaters. “What it does is send a signal that we’re trying to recruit and train the best people,” he said. “We want to position ourselves at the top of the market. To do that, you’ve got to put your money where your mouth is.” It is perhaps not an obvious moment for British firms to be pushing salaries upward, though, however slightly. Apart from Linklaters, the other members of the Magic Circle are Allen & Overy, Clifford Chance, Freshfields Bruckhaus Deringer and Slaughter & May. Though their market position is roughly similar to leading New York firms like Sullivan & Cromwell and Cravath, Swaine & Moore, the British firms lack litigation practices on the scale of their American counterparts and have suffered more from the worldwide drop in major corporate transactions over the past three years. Many have announced lower profits and revenues, and, in response to the weak market, Clifford Chance actually reduced newly qualified lawyers’ salaries to �48,000 last year before restoring them to �50,000 last week. Firth said Linklaters probably could have gotten away with not increasing salaries but was conscious that competition among Magic Circle firms for top law graduates was always fierce. Of course, most New York associates, whose salaries begin at $125,000 for first-years, would be unimpressed with the salary scale at British firms, all the more so since lawyers become “newly qualified” not after earning their law degrees but after spending two years in firms’ trainee programs. Trainees at Magic Circle firms mostly start at �29,000, or around $50,000, though Linklaters trainees now start at �29,100. The trainee system at British firms, where fledgling lawyers are rotated through various practices over their two years, is one reason competition from the London offices of American law firms has had a negligible impact on the salary levels of young British lawyers. Though they have met with considerable success in poaching partners from top London shops, most American firms in London, with the exception of those that have merged with British firms, lack the scale or inclination to train large classes of British law graduates, said Giles Ruben, a London-based consultant with law firm consultancy Hildebrandt International. “It has not been a significant thing,” he said. “They’ve taken very few trainees.” Moreover, he said, the British trainee programs, which usually have more than 100 participants, had social attractions for young British lawyers that made joining the smaller London offices of U.S. firms a “non-mainstream” choice. Unless they are qualified to practice U.S. law, junior British lawyers joining American law firms in London are generally not paid the same as their American counterparts. Firth said there were essentially two different pay scales for lawyers in London now, with the U.S.-qualified lawyers paid more across the board, even at British firms. Indeed, Linklaters pays its American-trained lawyers in London the same salaries as their New York counterparts. “But they are expected to work New York hours,” he said, “at least in theory.”

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