Several top firms in Germany have pledged to put a stop to the surging salary increases for local associates, as the legal sector confronts the continued slowdown in Germany's legal market.

Legal recruiters and German office managing partners have told Legal Week that there will be little or no salary increases for newly-qualified associates in the upcoming 2003 pay round, although lawyers will move up annual salary bands as usual.

German legal experts are also predicting an increase in the time associates take to make partner, with lawyers being asked to prove they have a business case, rather than simply claiming seniority – the traditional route to the top.

TMP Worldwide's Frankfurt-based legal recruiter, Gary Mackney, said: "Germany's economy is static and I do not see an upward move in associate salaries next year."

Another German recruiter added: "There are more German lawyers than jobs and I expect associates to only rise up by band."

An extra factor that may dampen the expectations of young German lawyers is US firm Shearman & Sterling's decision last year to make some of its German lawyers redundant.

Many German partners have said they were "shocked" and "could not believe" the lay-offs were true, as they went against the culture of a market unused to redundancies among lawyers.

Predictions of a salary freeze come after three years during which heavy expansion into Germany by Anglo-Saxon firms has pushed up salaries for junior lawyers.

Newly-qualified salaries at leading firms this year stand at between E75,000 (£47,600) and E81,000 (£51,400) in Frankfurt, a rate that matches salary scales in the much larger and more profitable London legal market.

In 2000, top German firms such as Hengeler Mueller were paying around dm140,000 (£45,500) to junior lawyers.

Given the fact that billing rates in Germany are typically about a third of the rates enjoyed by City-based lawyers, local pay rates look set to remain a major headache for those UK-based firms with large German practices for the forseeable future.

However, demand for German lawyers from foreign firms shows no sign of abating this year, with US firms such as Latham & Watkins and McDermott Will & Emery continuing to expand their German law practices aggressively.