Editors' Blog

Addleshaws statement of intent exposes rivals’ crude calculations

Posted 8/06/2007 by Alex Novarese

Mark Jones, Addleshaw Goddard’s managing partner, is not a man prone to hyperbole or marketing guff, so it is unsurprising that he spoke to Legal Week of the firm’s recent salary review in such measured tones.

But there is no doubt the firm’s decision to substantially hike its pay rates at a national level has sent a sizeable jolt through the UK’s key regional legal centres. Certainly, it is significant that the firm has dramatically raised its pay bands for City-based lawyers to start at £64,000, becoming the first national player to effectively match top-end City rates.

But even more telling will be the move's impact on the regional markets, where resentment had been building over the growing pay-gap between London and markets such as Leeds and Manchester.

Not only were assistants becoming restless over the gap itself, the feeling that national firms were attempting to delay reviewing their regional salaries as long as possible, largely to gauge how low they could go, has further stoked tensions.

It’s entirely understandable that such calculations have caused resentment. Firms like Eversheds and Pinsent Masons pay their London-based assistants far more than their equivalents in the Midlands and the North. While City work can, in general, be viewed as higher ‘quality’ than in the sticks, the reality for most national firms is that the regional offices are still the profitable engines of the business. In comparison, City outposts are still immature and often need a fair amount of propping up, even if they clearly have the vastly superior growth prospects.

It has also been an open secret for years that national firms, if not exactly colluding, have a clubby tendency to keep a lid on salaries. As one irritated poster on legalweek.com noted after being told that the ‘market’ sets the pay rates, it is debatable whether Manchester and Birmingham, dominated by a few major players, have really been operating as a labour market at all.

One regional recruiter summed up the reaction nicely on the Legal Week Wiki salary special: “Addleshaws has broken the cosy Manchester consensus. I could almost hear the equity partners of Manchester choking on their cornflakes as they struggled to the realisation that they are going to have to get their wallets out. Expect a new mid-tier standard of £35k-£36k, a 'bubbling under' rate of £37k-£38k, with the three big boys at £40k.”

Eversheds, which has given every appearance of trying to get away with as low a pay review for its regional lawyers as possible, will come under particular pressure. It has also been noted that neither Eversheds nor Pinsents are the most generous firms when it comes to bonuses.

Addleshaws’ ambitious but fair move has left some rivals looking flat-footed and perhaps a little mean-spirited too.

alex.novarese@legalweek.com