Editors' Blog

Latham don’t give a damn about the dollar (for now)

Posted 25/05/2007 by Alex Novarese

What a generous bunch they are at the City arm of Latham & Watkins. As reported in the current issue of Legal Week (see story), LA’s finest legal export has come up with salaries in London that appear to make it the highest-paying law firm in Europe. Hell, with the exception of hyper-profitable Wall Street iconoclast Wachtell Lipton – which regards the concept of New York rates as something other people do – Latham’s London assistants are getting paid more than pretty much any assistants anywhere.

The reason is that not only is Latham paying top Wall Street rates - which start at $160,000 (£81,240) - but in London it has chosen to maintain a dollar/sterling conversion rate that has become not so much outdated as antiquated.

The result is an artificial uplift in its UK salaries that effectively hike its London rates by around 20%, taking newly-qualified salaries to £96,000. Given that there is absolutely no sign that the dollar is to recover from its current slump, this seems uncommonly generous, even for a firm that has been a star performer globally over the last five years.

Certainly, Cleary Gottlieb, which prides itself on topping the market in those foreign jurisdictions in which it operates, seem slightly put out – especially since Cleary’s $1.74/£1 rate is itself taking a considerable conversion hit.

Of course, with law firms you always have to read the fine-print and it seems apparent that Latham’s aggressively meritocratic bonus system is a factor. Though uncapped and in many cases generous, Latham prides itself on not just dishing out samey bonuses across the board.

Latham’s exchange rate largesse is also not uncommon in the City, even if most other US rivals aren’t quite so generous. Add in the fact that many US firms are still paying substantial cost-of-living allowances for their US-qualified lawyers and London is in danger of overtaking New York as the world’s highest-earning legal market.

Still, you can be sure that head offices in New York won’t allow their City branches to keep chalking up steeply-rising staff costs without some serious results.

alex.novarese@legalweek.com; georgina.stanley@legalweek.com