Editors' Blog

Winning the PR battle in the City pay war

Posted 24/04/2007 by John Malpas

So when exactly was the starting gun fired on this year’s associate salary pay round? And which firm will emerge from the fray with the best publicity and the most associate brownie points?

It was a lot simpler a few years back. Firms would announce their new salaries in May and Gouldens would get its annual PR pay-off for paying the most.

Nowadays things are a little more complicated. Gouldens as an independent entity is no more, the assistant pay lockstep is breaking down - save for in the first few years post-qualification - and bonuses are becoming more important.

To return to the initial question, two firms – Allen & Overy (A&O) and Clifford Chance (CC) – can justifiably stake their claim to have set the pace for this year’s pay round. On one reading it was CC that kicked off proceedings when it stuck its neck out by announcing a 15% hike in newly-qualified pay from 1 May on 12 April.

While 15% is a lot in the context of the general economy, given the current concern over an RPI inflation rate currently standing at 4.8% (the ceiling, in most people eyes, of any requisite increase in charge-out rates), it came at the lower end of expectations.

The move certainly won CC friends within the City’s managing partner community, who will have been braced for an even greater rise. But the package was met with rumblings of discontent from the City’s ranks of assistants (see blog entry), many of whom believe they deserve a greater slice of the spoils.

On another reading, the starting gun for this year’s pay round was actually fired back in November 2006, when A&O also increased its pay by 15% at the same time as ripping up its flat-rate bonus in favour of a merit-based system linked to the value of an equity point (see story).

On this interpretation, CC was merely catching up with its rival when it announced its own pay rise.

So which of the two potential ‘first movers’ - both of whom are now paying similar base rate salaries - has come off best? Well, CC’s rise was met by a collective groan of disappointment from the City’s ranks of demanding associates, while A&O caused a frisson of excitement when it hiked its pay.

Looks like A&O may be getting the honours.

You can keep up to speed with the pay round in the Legal Week Wiki 2007 Pay Round special.