City law firm Addleshaw Goddard has pulled out of the junior salary war by freezing pay and relocating those funds to its bonus pot.
As reported by trade publication The Lawyer, Addleshaw Goddard has reallocated £1m that would have been spent on higher salaries for newly qualified (NQ) lawyers, into its bonus pot, now worth £19m.
In the City, NQs at Addleshaw Goddard, who have completed their training and qualification, receive a £100,000 salary.
Addleshaw Goddard’s managing partner, Andrew Johnston, noted that, after careful consideration, the firm will not increase its NQ salaries this year, but instead will allocate the funds to its bonus pot.
He was quoted as saying this move “means lawyers who have contributed significantly are meaningfully rewarded.”
Earlier this month, the firm announced that its financial performance for the period up to April 30 showed an 11 percent increase in revenue, from £495.6m to £550.9m. While its profit per equity partner (PEP) was £1m.
Pay war
This move comes after years of a pay war trickling across the City as several firms continued to raise the bar on NQ salaries. Last year it reached £180,000, which was set to US firms Gibson Dunn and Quinn Emanuel Urquhart & Sullivan.
The so-called pay war dominated the legal market, as US firms were offering higher salaries to junior staff, while top English firms, including those in the Magic Circle, struggled to keep up, with some offering salaries of £150,000.
The US firms have been investing heavily in the London legal market, offering higher salaries to attract talent from UK firms.
Last year, partners switched firms at a record pace due to a surge in American investment that intensified competition for talent. According to data reported in December, there were 546 partner moves recorded in 2023.