While London shivers through a January cold snap, the city’s legal elite are basking in an earnings heatwave as salaries for City lawyers at major law firms have edged up over the last year.
Over the 2024/2025 financial year, the average profit per equity partner (PEP) at the big firms, including Linklaters, A&O Shearman, Herbert Smith Freehills, and Macfarlanes, ranged from over £1.5m to over £3m.
“Last year we saw increased pay stratification across the board with top numbers climbing,” Luke Woodward, managing director at Major, Lindsey and Africa, told City AM.
This comes as ‘magic circle’ firm Clifford Chance’s accounts published on Companies House on Monday, revealed that the highest-paid member took home over £7m.
“It has been a surprise to no one that eight-figure packages with a two at the front are increasingly being attached to star performers,” stated Woodward.
Mega-mania
The explosion in pay at City law firms is the result of competition and globalisation, which have led to a surge in transatlantic mergers.
We’ve had not only one, but three such stories: London-based Ashurst and Seattle-based Perkins Coie announced a $2.7bn merger in November, while Chicago-based Winston and Strawn and Taylor Wessing revealed their merger in early December.
Just before the festive break, London-based Hogan Lovells announced its intention to merge with Wall Street’s oldest law firm, Cadwalader, Wickersham & Taft, to create a nearly £2.7bn law firm.
As a result of the surge of US money, “firms felt the pressure to both stay competitive and do so as fairly as possible by looking at both contributions and strategic goals.”
Pay wars and partnership shifts
The salary battle is not new in the sector; over the last few years, firms have tried to keep competitive on newly qualified (NQ) salaries, the most junior role, with the top starting salary standing at £200,000.
However, while pitches are ticking upwards for ‘top talent’ partners, Woodward noted that “more junior partners are missing out on the biggest bucks as relationships are protected by the main client partner.”
He also pointed out that the structure at firms is also changing as the number of non-equity partners has increased, which “reflects a focusing of reward on the very top performers”.
Equity Partners, part owners of the firm, do not get a ‘salary’ but take their share of profits, while a non-equity partner acts as a senior employee. The title of a non-equity can be seen as a ‘golden carrot’ to retain talent, without diluting the profit pool.
The drive for talent hasn’t slowed over the last year, as legal recruiter Edwards Gibson’s data, first reported by the FT, revealed that law firms in London hired 668 partners, a 21 per cent increase on the previous year, with US law firms dominating that data.
Competition is expected to remain a key focus for big law in the City in 2026, with significant hires and rainmaker partner pay continuing to rise.
“It is worth noting that some firms prioritising investment in London are shifting away from the traditional book-of-business-based pay model, instead offering a number that also factors in the strategic value of the hire itself.”
“We’re seeing this in particularly hot practice areas like funds, structured finance, private capital and infrastructure, to name a few,” he added.