WARNING - DO NOT READ THIS IF YOU ARE A NQ AT A US LAW FIRM (spoiler alert: you take home £25 per hour)
An article in The Times over the weekend titled, “US law firms declare war with £140,000 starting salaries”, tells the reader about huge salaries junior #lawyers can earn. Sounds amazing?
It’s a lot of money but the article misses the problem around exploitation and the knock-on effects of dressing up exploitation as a good salary. Let’s look at what happens:
Firstly, £140K for these NQs equates to £42 per hour. Maths time:
These lawyers are working 15 hrs a day (I have not added in the weekends that they all work because it becomes utterly depressing) and I’m giving them a lavish 28 days’ holidays, leaving 224 working days a year:
£140K/224 days = £625 per day/15 hrs = £42 gross= £25 after tax/NI.
Bad times. However, good times for the law firm, cos they are billing them out at £500 per hour, 8hrs per day. After the firm has paid out the £42 to the worker, it keeps £458 per hour. Maths time:
£458 x 8 = £3,664 per day x 224 = £820,736 pa net to BigLaw.
1:5 fee ratio Lawyer:BigLaw
NQs get experience, exposed to super-size deals but at a cost: health, stress, burn out, selling their 20s to the senior equity in a hope of becoming one of them in the future! It reminds me of the highly paid, tempting jobs that I saw 25 years ago when I was a NQ: asbestos removers, or security at diamond mines: huge risks, exploiting the unwary, foolish or desperate dressed up as a big salary for the bigger benefit of someone else.
Another problem: UK firms have to follow. Magic Circle have now upped their NQs to £100K, and the next level have upped NQs to £75K and so on.
It extrapolates because the smaller players want to be like the bigger players. They sweat their assets (formerly called employees) for the benefit of the senior equity. That's the model.
BigLaw clients are the large Institutions paying huge bills with other people’s money. The clients of smaller traditional firms however are SMEs trying to grow their businesses and helping to rebuild the economy yet will pay heavily for BigLaw increases.
So, the NQs are exploited, clients stung, the smaller law firms have to follow to "compete", the smaller firms' clients get stung by bigger bills and so the traditional old fashioned model continue.
Meanwhile, excellent lawyers are collectively tarnished as greedy, un-commercial, overcharging etc. All for the sins of a very few at the top equity of the "1:5" feudal system.
Thankfully a solution: modern #lawfirms pay their lawyers a much higher percentage. Keystone pays lawyers 75% of the fees and Aria Grace Law pays lawyers a whopping 90% of the fees. This means that SME clients get great lawyers, who can afford to charge less because they get proportionately more of the fee: a Partner for the same cost as a US NQ! Win/Win.
So, how much longer before the traditional law firm feudal system breaks? Well, that is up to #clients.
General Update by Lindsay Healy, Founder Partner at Aria Grace Law