Linklaters is to increase its associate salaries by around 16%, overtaking magic circle rivals Allen & Overy (A&O) and Clifford Chance (CC) as a pay war looks increasingly likely.

Linklaters – the market leader in UK assistant pay over recent years – has boosted its one-year-qualified salary by 14% to £69,000, two-year-qualified pay by 15% to £81,000 and three-year-qualified pay by 16% to £89,000.

Newly-qualified salaries at the firm are expected to rise by about 16%, taking them up to just under £64,000. The rises mean the firm's salary bands will move ahead of CC, which announced its new salaries last week (12 April). CC's newly-qualified lawyers will now earn £63,500, one-year-qualified lawyers will earn £66,000 and two-year qualified lawyers will earn £79,000. Three-year qualifieds will earn the same as at Linklaters.

The move also puts Linklaters' salaries slightly ahead of A&O, which upped its salaries by 15% last October.

A&O is currently reviewing its salary and bonus package, with a rise expected to be announced next week. The firm already offers broadly similar rates to Linklaters' new figures with newly-qualified associates earning £63,300.

Remaining magic circle firms Slaughter and May and Freshfields Bruckhaus Deringer are also known to be undertaking salary reviews. However, Slaughters is not expected to match current percentage increases, having upped its associate rates in December and introduced a flat rate bonus of 15% for associates. The firm currently pays its newly-qualifieds £60,000.

Other major City firms also in the process of reviewing salaries include Herbert Smith and Lovells.

Meanwhile, Freshfields is considering changes to its bonus system in a bid to build in a more flexible cost base in the event of
a busy period or a downturn in the market.

Bonus payments have become more commonplace at top City firms in recent years. At A&O a bonus can currently take a two-year-qualified associate's pay up to £104,500. However, CC moved to play down suggestions that its rises will be overtaken by rivals, with the firm pointing to its bonus pool and work-life balance measures as other factors to take into account.

CC head of human resources Mark Spivey told Legal Week: "We are comfortable that the salary and the bonus are competitive and the focus on headline rates masks what is going on behind the scenes."

Partners have also moved to address associate criticism that salaries have not kept up with other 'high-flying' industries (see Talkback box, below).

Freshfields London corporate head Tim Jones said: "We are all in the market for talent, which is a scarce resource. We must pay well and our total compensation packages have got to be competitive."

CC private equity partner James Baird added: "It is always possible to get paid more elsewhere, whether you are a secretary or a managing partner, and there are always choices to be made. In the context of the job people do, our aim is to pay, if not the top rate, then very close to it, in terms of remunerating people properly."

Talkback from legalweek.com – a disillusioned generation

Mounting criticism of associate salaries has been raised this week on legalweek.com. Below are some of the comments posted on the site:

"Associate pay has not been keeping pace with the cost of London living – nor has it kept pace with increases in partner pay."

Posted by Associate on 13 April.

"I'm at university and many of my colleagues feel the same. Those that are going to become solicitors feel that for the amount of work and training that has to be done, firms pay small salaries compared to other 'high-flying' industries. Several of my friends have said that they intend to use the training they receive as a springboard to other industries – and this is before they've even joined! What is said above, that salaries do not match mortgages, is the most frequently raised concern here."

Posted on 17 April.

"[These rises are] long overdue – but it is still not enough. If talent retention is supposedly
such a crucial issue for elite law firms these days, their associate remuneration packages should reflect this. Even with the proposed rises, it does not. The top UK firms have comfortably justified second-rate salaries on 'market rates' for far too long. Associates at the top firms can do better elsewhere and it is about time City firms realised this. Loyalty is, important but it must work both ways."

Posted by Trainee, magic circle on 16 April.

"The unappealing deal for an assistant: you are a workhorse, aspirations are irrelevant, promotion a gamble, be part of a firm that doesn't know how to act responsibly, learn from greedy self-obsessed partners, lose any normal balance with life outside the office. The current salaries don't seem to stack up."

Posted on 17 April.

Talkback: Has Linklaters established the UK pay ceiling – or will it be trumped by Allen & Overy? Click here to have your say.