Clifford Chance (CC) is considering converging the pay rates of its English- and US-qualified associates in an attempt to head off an exodus of its English-qualified lawyers.
Tensions have been building since the beginning of the year as the differences in pay between its US and English law associates have become clearer with the arrival of Rogers & Wells' London-based US-qualified associates at Clifford Chance.
CC's US associates are understood to be paid about £65,000 in their first year of training at the firm, while English law associates have to wait until they finish their articles, when they get about £33,000.
The difference reflects the shortage of top-quality US-qualified corporate and finance specialists, which has fuelled a wage war in the US.
Last year, despite rising partner profits, CC imposed a pay freeze across the firm, fixing the base rate for assistants in their first year. Although CC assistants can earn a bonus of up to 30% of their salary, this is not an option for solicitors in their first year.
A decision will be made in
time for Clifford Chance's annual pay review on May 1. One CC source said: "If we are out of line [with other firms' pay] we will rejoin that line."
The source emphasised that despite some convergence between US and UK associate pay, the firm would maintain a degree of pay differentiation to reflect the fact that "every lawyer is not interchangeable with every lawyer".
CC has one of the most transparent associate pay structures in the City with all the associates having access to pay levels in a handbook.
The problem of where to set assistants' pay is not unique to CC.
Many other firms are watching the impact of the current US
pay wars on their own recruitment and retention rates in London
and New York.
Several US firms in London, including Skadden Arps Slate Meagher & Flom are paying their English-law qualified associates New York rates.
So far, the heads of human resources at most leading English firms report that their annual
pay reviews in May or July will
not move to match the US
firms' salaries.
However, SJ Berwin & Co has broken ranks and will announce increased pay bands across the firm in two weeks and a new bonus structure for 'outstanding individuals'.
SJ Berwin's senior partner, David Harrel, said: "At the end of
this financial year we will have
to examine our salary bands. I suspect they will have to be changed.
"We will look around the market at what fee earners are paid by US competitors."