Shearman & Sterling has agreed a 20% pay hike for UK lawyers at its highly-rated London arm in a move that will see newly-qualified lawyers receive £72,000 before bonuses.

The new pay rates, which will kick in from 1 May, apply to all UK lawyers up to six-year qualification in a move that raises the firm's base pay from £60,000 to £72,000.

The firm operates a five-tier performance-related salary system from one year post-qualification, but a Shearman spokesman said the increase was intended to be equivalent to a 20% uplift across the board.

The aggressive salary package, from what is regarded as one of the most successful City practices yet built by a US firm, will be watched closely at a time when most UK firms are expected to announce substantial raises to their assistant pay rates.

The move will also head off criticism that the New York firm's compensation had begun to lag US rivals who have invested heavily in the UK over the last three years.

Shearman also announced rises in its trainee salaries and maintenance grants. First-year trainees will receive £36,500 – an increase of £1,500 – rising to £39,500 in their second year. Maintenance grants will go up to £7,000.

Earlier this year Cleary Gottlieb Steen & Hamilton kicked off dramatic increases in London associate pay by raising its salary for newly-qualified lawyers in London from £74,000 to £85,000. The 15% increase meant newly-qualified UK lawyers will receive more than £100,000 a year once bonuses are taken into account.