US law firms in London Associate salary guide 2011/2012

US law firms in London Associate salary guide 2011/2012

US law firms in London: Associate salary guide 2011 About the survey Market overview 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. 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 recovery Clearly 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 salaries As 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 demand The 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. 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 confidence As 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 ahead As 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. Vivienne Stephen Associate Director

Salaries Salaries at US firms are generally divided into 3 categories namely those paying: 1. New York rates 2. Mid-Atlantic rates 3. Premium UK City rates Percentage of firms paying different rates Mid-Atlantic New York 1 2 3 Premium UK 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. Darryn Hale Partner

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. Percentage of salary paid as bonus 50% 45% 40% % of respondents 35% 30% 25% 20% 15% 10% 1 2 3 4 5% 0% 0-5% 1 6-10% 2 11-15% 3 16% 4 Method of calculating bonus 70% 60% % of respondents 50% 40% 30% 20% 1 2 3 4 10% 0% 1 2 3 4 Hours billed Firm performance Contribution to the firm Combination of all 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.

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.

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

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 Hale Partner darrynhale@ Lyndon Jennings Manager (Interim recruitment) lyndonjennings@ Vivienne Stephen Associate Director viviennestephen@ Lucinda Trootstwyk (nee Cohen) Senior Consultant lucindatroostwyk@ 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. London 95 Queen Victoria Street London EC4V 4HN T: +44 (0)20 7415 2828 Singapore 30 Cecil Street #21-03/04 Prudential Tower Singapore 049712 T: +65 6420 0500 Dubai Suite 614, Liberty House DIFC PO Box 506739 T: +9714 448 7770 Melbourne Level 2, Rialto North Tower 525 Collins Street Melbourne, VIC 3000 T: +61 (0)3 8610 8400 Hong Kong 1918 Hutchinson House 10 Harcourt Road, Central, Hong Kong T: +852 2973 6333 Sydney Level 12, 25 Bligh Street Sydney NSW 2000 T: +61 (0)2 9236 9000 Taylor Root is a member of The SR Group