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Sympathy with lawyers with a starting salary of $ 200,000 directly from law school is scarce at best. And these are not the best times.
However, US corporations’ pursuit of cash for more bodies to get to the forefront of the late pandemic boom is not just a talking point for Wall Street elites, or a lightning bolt for the outrage of equality campaigns. This has implications for London’s “Magic CircleLaw firms, and for the quality of the transactions and the quality of life of people who do it.
In June, Milbank, an elite U.S. company, set a new salary cap of $ 200,000 for freshmen. Rival Davis Polk & Wardwell were immediately at the top of the list, and Milbank and other businesses applied the higher figure. Some businesses pay sign-up, referral and retention bonuses, which can amount to up to $ 250,000 for mid-career attorneys.
Bruce MacEwen from Adam Smith Esq, a boutique management consultant for law firms, compares the bonuses to ‘combating payment’. As part of the revenue generated, or divided by the many hours businesses expect new recruits to work, the payments are not irrational or particularly obscene, at least by the standards of Wall Street or City professionals.
The law school class of 2022, with another year of study ahead, is now receiving employer offers. One U.S. student who has chosen not to pursue corporate law estimates at least two-thirds of his class. “The money is pretty blinding, other friends do, and many of their professors have followed the same path,” he told me.
If they are studying at a leading school, businesses come to interview them on campus and relieve the stress of the last year with a job guarantee. The salary goes somehow to pay off student debt or to buy a first home. Student attorneys know they will have to work harder than they ever did, but plan to quit as soon as they reach their goal. If we accept, that is, they are capable and willing to unlock their golden shackles.
It’s a Faustian bargain, MacEwen says, and not just because of the hours new lawyers expect to put in. If transaction operations subside, partners will try to cut fixed costs by abandoning high-paid junior staff.
The devil’s agent is also at the table for the considerations that the companies themselves have made. “Everyone who does M&A is flat and everything happens in large quantities, with a lot of speed, as if tomorrow does not exist,” says Dana Denis-Smith, founder of Obelisk Support, which provides legal services. Some transactions that usually last three months are completed within three weeks, which increases the risk of burnout and costly mistakes. Remote control, which removes the companionship that compensates for the pressure, leading to more exhaustion and higher storage costs. It sounds more vicious circle than Magic Circle.
Veterans will pick up that it has always been a trade-off for corporate lawyers. The rewards for those who stay with the course are richer than ever. In the UK, stock partners at large companies such as Clifford Chance and Allen & Overy retired on average almost £ 2 million each in the past year thanks to mergers and initial public offering activities. No wonder they do not mind raising recruits’ salaries to compete with American companies.
But the core pool of ambitious young lawyers who simply ask “Where do I sign?”, Regardless of workload, may decline. According to Denis-Smith, the penal regime pushes women out of big business, and in some cases completely out of the profession.
What can break this cycle? Automation can take away some of the grunt work, but not all businesses are as advanced as they should be.
It can also help if corporate clients are constantly talking about work-life balance when it comes to manning the transactions they want to do. Tog is a recording by Thomson Reuters, for its clients, 61 percent of U.S. lawyers indicate that they should be available at any time. In terms of limiting out-of-hours contact, only 37 percent feel they can discuss the possibility with all or most customers.
“The focus of U.S. clients was: ‘Finish my bloody deal’ rather than the cost of settling it,” says Tony Williams, a former managing partner of Clifford Chance and now a principal at Jomati, a consultant.
MacEwen suggests paying more to senior associates, the “platoon lieutenants” who bring three or more years of experience in the transactions. As the current M&A tide declines, businesses may also consider broadening incentives to include training and development in business and finance. This would prepare employees for longer careers and strengthen their affinity with their old business when they leave.
In other words, instead of torturing the old comparison of payable hours, customer fees and payment, law firm leaders need to exercise long-term vision. Some are, but I do not have high hopes. After all, students are not the only ones who are easily blinded by the money.