Terrible news for lawyers: it is not possible to increase your salary by moving to an investment bank
These are not good times for lawyers. It's pretty bad, especially if you're an associate at a UK law firm.
Firms like Allen and Overy and Linklaters have frozen salaries, for two years running. The value of associate pay bands at Linklaters is being held static. 1st year trainees will earn 37.4k. Newly qualified solicitors will earn 61.5k.
In the circumstances, it might seem appropriate to leave such law firms and arrive at investment banks. After all, investment banks seem to be setting aside large amounts of money to cover litigation expenses. They need lawyers to interpret regulatory edicts and they need lawyers to work on M&A deals.
There have been some high profile lawyerly banking moves. Nomura recently invented the role of head of legal and general counsel for its global wholesale division, filled (as with so many things nowadays) by someone from UBS.
However, legal recruiters say there's really not that much demand for lawyers in investment banks. Nor are banks dispensing liberal amounts of cash to attract them.
"Legal teams in investment banks have been shrinking over the past two years and most
hiring has had a regulatory slant," says Siobhan Lewington at Fox Rodney Search.
"The bulge bracket banks haven't been hugely busy hiring," agrees Toby Folwston, director of legal at Robert Walters. "We've seen a lot stronger activity in wealth management and fund management, although there has been an increase in demand for commercial lawyers to work on M&A transactions."
A senior regulatory lawyer at one British law firm confirms that banks have made no attempt to poach him. "I feel quite sad about this," he confesses quietly.
Inferior salaries
Not only are investment banks not falling over themselves to hire lawyers, but even though they've increased salaries, they're still not paying as much as private practice.
A salary survey from Barclay Simpson suggests a newly qualified lawyer in an investment bank can earn 45-65k, while their counterpart in magic circle law firms earns 60-61.5k and US law firms pay up to 94k.
"Banks have increased salaries, but they still seem to pay less than law firms," says Tracy Brown at Barclay Simpson.
In theory, this doesn't matter because banks pay bigger bonuses. In reality, banks are allocating bonuses more cautiously than they used to. If you're a frozen junior at a magic circle law firm, you may therefore want to stay that way.
