Allen & Overy (A&O) has frozen its associate salaries for 2008 – becoming the first magic circle firm to hold back from handing pay-rises to its junior lawyers.
Newly-qualified lawyers (NQs) at the City giant will again bank £65,000, the same as last year, while associates with one year post-qualification experience (PQE) will continue to pocket £71,500.
Lawyers with two and three years’ PQE will again earn £84,000 and £92,500 respectively.
First-seat trainees do gain a pay-rise, however, with salaries going up by 2.2% from £36,200 to a new mark of £37,000.
The news comes after arch rival Clifford Chance (CC) yesterday announced rises of around 4% for its junior lawyers. NQs at CC will earn £66,600 this year – the same rate as that at Linklaters and marginally above the £66,000 on offer at Freshfields Bruckhaus Deringer.
CC lawyers with one year PQE will earn £68,700, bagging £82,200 a year later and at three years’ PQE will earn £89,500, up from £86,000.
However, A&O moves into line with top 10 City firm Herbert Smith, which last month (30 April) confirmed that it would also be freezing its salaries at last year’s levels. NQs at Herbert Smith will again take home £64,000.
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The PQE rates that are advertised are misleading. A&O only increases salaries in May of each year, so those that qualify in September will not actually get the published 1 year PQE rate until May 2 years later - eg at 1 year and 8 months PQE. Those that qualify in March however will receive the 1 year PQE rate 1 year and 2 months after they qualify.
What actually happens is that A&O do adjust their salaries in May of each year, but for September qualifiers, they pay rates that sit roughly half way between the bandings - which would be fine if salaries were adjusted in March (6 months later). Since they aren't however, all employees ultimately lose out. For example, a Sept 2005 qualifier would currently be 2 year and 8 months qualified, and will be paid as a 2 1/2 year qualifed from now until September (ie 4 months). That's great, except this remains until next May, even though post September they trun 3 year pqe. Hence for 4 months they are slightly over paid, while for 8 months they are underpaid. Great little trick A&O.
Sitting here in a top US firm earnings loads more than you.
This is not just an A&O trick. Exactly the same thing happens at most firms in the City.
And in fairness, most newly qualified lawyers at A&O spend their first six weeks on a beach somewhere and the next two weeks in training so arguments that this time should be considered "experience" for the purposes of determining their level of post-qualification experience are a little unrealistic.
Some of the comments above are exactly right, it's a not-so-subtle accounting trick. Apparently one year PQE salary is £71,500, only you don't get it when you're one year PQE, not even close. September 2007 Qualifiers are on £67,000 from May 2008(i.e. basically the same as the other MC firms are now paying NQ's) and will stay on that until they've been qualified for a year and eight months. Add in the 2k deferred bonus and the other big firms are much more attractive for junior lawyers.
Hey. Anyone here knows what the bonus scheme for trainees is at A&O? Is there a trainee bonus at all? If yes, is it a firm-wide thing or is it performance-related?
A&O is cheap and a terrible place to work at. So what else to expect?
A friend at A&O was always bigging up the place. It must have been great because I didn't see him for three years. Next thing I heard he'd left to go in-house.
I think that raising salaries unnecessarily during an economic slowdown would be terrible mismanagement, and A&O have sensibly avoided this. If the economic slowdown continues, we will all watch as the London offices of US firms shed employees off the back of their (too) aggressive pay rises which may prove to be unsustainable. To the ex-A&O (and potentially soon-to-be ex-US firm) associate, enjoy the cash cow while it lasts for it may not last much longer.
To A&O Associate who refers to receiving A&O's published rate two years later "e.g. at one year and eight months post-qualification" PLEASE learn the difference between e.g. and i.e. It really is quite simple...
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