Cleary Gottlieb Steen & Hamilton has raised its salaries for newly-qualified lawyers at its London arm to £85,000 in the clearest indication yet that top US firms are to this year dramatically raise their salaries in Europe.

The New York-based firm this week confirmed that it is to raise its starting salaries for UK lawyers from £74,000 to £85,000.

The salary rise means that newly-qualified UK lawyers at Cleary's London arm will receive more than £100,000 a year once bonuses are taken into account. The firm paid year-end bonuses in 2005 ranging between $30,000 (£17,000) and $65,000 (£37,100) for senior associates in the US.

The move appears to be the first concrete evidence that US law firms are raising salaries for their UK-qualified lawyers in response to the flurry of pay rises this month in their home markets.

The rises, which were kicked off by Sullivan & Cromwell, effectively saw base pay rise from $125,000 (£71,000) to $145,000 (£82,000) at leading New York firms.

The knock-on effect of rising salaries from top US firms has increased expectations that top London firms will this year substantially raise their salaries.