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How high headline salaries and inflexible compensation structures are harming London law firm competitiveness and costing City lawyers jobs


On Wednesday 20th March Edwards Gibson presented a breakfast briefing on the above topic.


The event was attended by HR representatives from City law firms including: Ashurst, Berwin Leighton Paisner, Clyde & Co, CMS Cameron McKenna, DLA Piper, Fladgate, Freshfields Bruckhaus Deringer, Hogan Lovells, Holman Fenwick Willan, King & Spalding, Lawrence Graham, Macfarlanes, Olswang, Orrick, Pinsent Masons, Quinn Emanuel, Reynolds Porter Chamberlain, SJ Berwin, Speechly Bircham, Taylor Wessing, TLT, and White & Case.


Summary of our briefing:


  • A poor economy since 2009 has meant far less premium work for City firms.


  • The dramatic rise of in-house legal functions over the past decade has resulted in a loss to law firms of hundreds of millions of pounds of non-premium work.


  • Increasing sophistication of in-house departments in a hi-tech and globally competitive world has enabled them to unbundle legal services and project manage tranches of work using a wider range of external legal providers. Less UK fee income has required that law firms reduce full time qualified lawyer personnel cost to maintain profitability.


  • In spite of a strong supply of lawyers at the junior and senior level, the interconnection of law firm value propositions, together with the preservation of assistant lockstep has meant headline salaries at City law firms have remained disproportionately high, making it increasingly uneconomic for them to compete with in-house, and other legal service providers, for commoditised work resulting in:


- An acceleration of non-premium work out of City-based law firms;
- Fewer roles for full time qualified lawyers in top law firms in London;
- An increase in non-permanent contract roles for lawyers. 


  • City law firms would be more competitive in relation to other legal service providers if their assistant lawyer compensation structures were amended to differentially compensate their individual lawyers by giving greater weight to practice area over experience and merit.

  • There is currently considerable scope for City firms to reduce pay for some newly qualified lawyers and recalibrate lawyer compensation more overtly with practice area. This may well be in the best interests of some newly qualified lawyers who, in the current market, are unable to secure full time roles in City firms. However, in the short term this will probably not happen for a number of reasons, most significantly the considerable risk to law firms of being the first mover.

Click here to download a copy of our slide show

If you would like to discuss this or any other aspect of the legal recruitment market contact Kristi Edwards or Scott Gibson.

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Articles by Kristi Edwards

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