Associates Hot Under the Collar After Freshfields' Pay Freeze
The reaction of the Magic Circle firms to the downturn seems to be kicking up a stink whatever strategy they pursue. Freshfields Bruckhaus Deringer told staff yesterday (9 February) that salaries for associates will be kept at 2008 levels. The move makes it the first UK law firm to break assistant lockstep and means that its associates will not progress through to the next pay band. Newly-qualified lawyers will also remain on the same salary after one-year PQE instead …
The reaction of the Magic Circle firms to the downturn seems to be kicking up a stink whatever strategy they pursue. Freshfields Bruckhaus Deringer told staff yesterday (9 February) that salaries for associates will be kept at 2008 levels. The move makes it the first UK law firm to break assistant lockstep and means that its associates will not progress through to the next pay band. Newly-qualified lawyers will also remain on the same salary after one-year PQE instead of receiving the expected 10% increase in salary. The obvious benefit though is that it should help to avoid redundancies.
In specific terms the starting salaries for newly qualified solicitors will fall from £66,000 to £59,000. Associates with one year of experience will now stay on their NQ salary of £66,000 while the pay band for those with two years PQE will be reduced to £73,000 (from £86,000) and for three years PQE will be £86,000 (down from £92,000). However, the firm will continue to pay out performance-related bonuses. Many might well be asking what all the fuss is about…
Whilst the move emphasises the different approaches firms are implementing to maintain profit, there are always the critics. The ‘cut associates save money’ approach leaves a trail of redundancy whilst the ‘cut pay save associates’ approach means ambitious (albeit often heavily endebted) young lawyers have their carreers ’slowed’ for a time. Firms that do both are likely to absorb the worst of the bad publicity. Whatever the case, partners always seem to be in line for criticism as the primary beneficiaries of strong profits. Whilst those affected by any of the approaches might feel hard done by which would you prefer, pay cut or redundancy?
Here’s one commenter’s view from The Lawyer:
Date: 9-Feb-2009 @ 16:30
From: Anonymous
Could you please tell me how on earth in London someone is meant to buy a third home, have a yacht and run a sports car on £66,000?
It’s virtually impossible to buy a first home at the moment unless the bank of mum and dad pay the hefty deposits.
Show some consideration please – it’s tough for everyone – MC associates included. And, for the record, not all newly qualified MC associates are 25, single and rich. Many have responsibilities other than just themselves.
February 10, 2009
how can anyone complain, yea its not what you expected/signed up for etc etc but times change; taking a pay freeze is better than facing being out of work in a recession. Entitlement is the spolit generation’s disease
February 10, 2009
Maybe but yet again associates are bearing the brunt whilst partners sit pretty.
February 10, 2009
if it actually saves jobs, its early days. FBD will look pretty bad if they have to make redundancies as well!
February 10, 2009
As an early strategy for FBD at least they will look like they tried even if it doesn’t work. I think it will sit better in the market place than CC and LL.
February 10, 2009
LL most ruthless strategy. Will this stuff be forgotten??????
February 10, 2009
up wingers. Its like the really drunk a$$holes that will not leave a party when the light have come on and everyone else has gone home. Just like that fat banker on the news last night who works for a bank saved by the taxpayer and still thinks he deserves his bonus. Without the gvnt stepping in he would be facing the dole que. Be glad you still have an income.
February 10, 2009
Freshfields must have some deadwood, they should have followed CC and LL whilst they had the opportunity. I can’t believe that every associate is worth keeping on and it will look worse than the others if they follow this up with redundancies.
February 10, 2009
MC are only interested in PEP. FBD obviously think they will be able to maintain it doing this whilst being well positioned to take up slack when the upturn comes. CC and LL obviously think they can improve PEP by reducing headcount and attract the best recruits in the upturn. Either way it sucks to be an MC associate right now.