O'Melveny & Myers, LeBoeuf Lamb Greene & MacRae and Hogan & Hartson have set their London associate salary rates, with the firms holding fast against the increases announced at Weil Gotshal & Manges last week.

All three have remained in line with the mid-Atlantic newly-qualified rates set by White & Case (£76,000) and Shearman & Sterling (£75,000) earlier this year.

LeBoeuf has set its starting rate at £75,000, with Hogan increasing its pay by 11% from £63,000 to £70,000.

O'Melveny, meanwhile, has set its newly-qualified salaries around 20% higher than the magic circle rate of around £64,000 to about £80,000, up from £70,000. The figure places it above both White & Case and Shearman but well short of Weil Gotshal's rise to £90,000 (see full story, page 10).

O'Melveny has also overhauled its pay structure for London associates, bringing in fixed salaries for lawyers of up to three years' experience, with a more merit-based system from four years onwards. It previously negotiated each of its individual salaries. One-year qualified solicitors will receive £86,000, two-year qualifieds £96,000 and three-year qualifieds £106,000.

Paul Loynes, the O'Melveny partner in charge of deciding UK salaries, told Legal Week: "We saw both US firms and magic circle firms increasing their rates and we wanted to make sure we were competitive. At the same time, we wanted to be consistent and transparent."

The decision by the firms to not react to the Weil Gotshal rises means US salaries in London are becoming increasingly divergent.

Some firms, such as Skadden Arps Slate Meagher & Flom, are paying rates benchmarked to New York.

Others are paying their UK lawyers more than those in the US. These firms include Latham & Watkins and Cleary Gottlieb Steen & Hamilton, where starting pay is respectively £96,000 and £92,000.

One partner at a firm paying mid-Atlantic rates said: "The market is fragmenting dramatically. There is a convergence between the magic circle and sensible mid-Atlantic firms and then you have these other firms that are remunerating their English solicitors at rates higher than those in New York. It does not seem to be justified by the economic circumstances."

This year Farrers made up four new partners, bringing the firm to 64 partners in total.

Where does Weil Gotshal's dramatic move leave the City pay market? And what does it say about the New York firm? Have your say with the Legal Week Wiki 2007 pay-round special.