Allen & Overy (A&O) is increasing its associate pay bands by between £500 and £1,000, as the firm becomes the first of the magic circle to announce its 2012-13 rates.

The small increases, effective as of 1 May, will see pay for newly-qualified (NQ) lawyers rise by £500, up from £61,000 to £61,500, while trainee rates are being held stable, starting at £38,000 in the first year.

First-year post-qualification (PQE) pay has been increased from £68,000 to £68,500, with second-year PQE pay also up £500 from £74,000 to £74,500. Three-year PQE associates will see the biggest rise, up £1,000 from £85,000 to £86,000.

Salary rates for four years' PQE and above are unchanged, with pay for the firm's most senior associates remaining at £94,000.

Last year, A&O opted to not to increase its associate pay levels, although its lawyers continued to move through the bands as normal. The decision was attributed at the time by the firm to a "flat trading year" in 2010-11.

The increases bring NQ pay at A&O up to the same level as its magic circle rivals, which all last year set NQ salaries at £61,500. Freshfields Bruckhaus Deringer was the best-paying magic circle firm for 1-3 PQE associates in 2010-11, with rates ranging from £69,500 to £88,000.

2012-13 salary announcements at the other magic circle firms are expected in the coming weeks.