Blue-blooded US law firm Cravath Swaine & Moore has set the pace in the junior lawyer pay war presently raging among the City’s elite US law firms.
Cravath, which has offices in New York and London, has unveiled a new pay scale for junior lawyers and promised to dole out thousands in bonuses in order to try and retain its traditional position at the zenith of lawyer pay.
The move follows a surprise pay hike by US law firm Milbank Tweed Hadley & McCloy last week which boosted first-year lawyer pay to $190,000 (£143,000).
Cravath has matched Milbank’s pay scale for its most junior lawyers, and bested it for mid-level and more senior associates.
Fourth-and-fifth-year qualified lawyers will receive $5,000 more than their peers at Milbank, ($255,000 and $280,000), while sixth-to-eighth-year lawyers will be paid $10,000 more than the Milbank scale, with pay topping out at $340,000.
The firm has also promised bonuses on top of the salary increase, ranging from $5,000 for first-year lawyers to $25,000 to eighth-year lawyers.
Last week Simpson Thacher & Bartlett also raised salaries for its junior lawyers and announced unscheduled mid-year bonuses ranging from $5,000 to $25,000.
It is widely expected that a slew of other top US law firms will increase associate pay in order to stay competitive in the ongoing scrap for talent.
The UK headquartered magic circle firms have traditionally tied the pay of their junior US lawyers to that of the Wall Street elite and the pressure is on for them to match the generosity of their US rivals.
However junior lawyers in London at the magic circle are paid on a more modest, albeit still generous, scale.
Allen & Overy raised base-rate pay for first-year London lawyers to £81,000 last year, while Freshfields Bruckhaus Deringer pays its first-year lawyers in London between £85,000 and £97,000.