Salary boosts for newly qualified lawyers could be reversed

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A fall in legal sector revenue is set to end the two-year wage war between the City’s top law firms, with lawyers’ salaries likely to plateau or be reversed, legal recruiters have said. 

Law firm revenues fell by 7% from October to November 2022, according to the Office for National Statistics, and are continuing to drop as new business slows. As law firms attempt to control their costs within a turbulent economy, salary boots for newly-qualified lawyers could go into reverse.  

Speaking to City A.M., Scott Gibson, director of legal sector recruiter Edwards Gibson, attributed a decline in work to the slowdown in M&A activity; he reflected that firms “will have to” cut their fixed costs to respond to the likely hit in revenue. He also warned that salary boosts for newly-qualified lawyers could go into reverse. 

As firms look to cut costs, expansion plans will be slowed, or abandoned, with staff salaries likely to take a hit as law firm’s main expenditure. 

The financial crash of 2008 forced a similar situation – NQ salaries dropped, and thousands of lawyers lost their jobs. Much like now, NQ lawyers had received significant salary hikes in similar law firm pay battles.  

In May, Simon Morley, director of EJ Legal, spoke to The Times: “It is difficult to see how the UK firms, in particular, will sustain junior salary increases at the same elevated rate as over the last 12 months.” His comments were made after a pay inflation for solicitors over the past two to three years had led to NQ solicitors receiving between £100,000 and £125,00 on their day of qualification. The Times described this as a bubble that “if not about to burst – could begin to rapidly leak air”. 

Morley’s sentiment is also shared by Andrew Waters, managing director of legal sector recruiter Chadwick Nott, who said the “consensus is [pay growth] cannot continue at this rate”.