Excessive pay out of line with market conditions but limited support for job cuts. Suzanna Ring reports

The majority of partners believe commercial lawyers are overpaid at all levels, according to new research which suggests advisers should hand clients considerable further ground on costs.

Fifty-four percent of respondents to Legal Week's latest Big Question survey think associates are overpaid at the junior, mid and senior levels. In comparison, 40% of responding partners think junior associates are paid 'about right' and 38% think higher level associates are also paid the correct amount. No respondents think associates at any level are significantly underpaid.

Meanwhile, two thirds of survey participants believe equity partners are paid too much, compared with 28% who said they are paid the right amount and 5% who think they should earn more.

The poll of partners at commercial law firms comes after a number of leading firms including Freshfields Bruckhaus Deringer, Linklaters and Slaughter and May have in recent weeks unveiled their pay bands for UK associates, with most firms freezing salaries or announcing modest rises. Pay for newly-qualified lawyers at most top City firms currently stands at £61,500.

Slaughters executive partner Graham White commented: "Associate salaries have in fact dropped back from the high water mark of 2007.  If you compare associate salaries with the salaries of junior investment bankers, they are materially less.

"Although we have no current plans to do so, I expect to see an increasing number of firms moving towards more merit-based pay for junior lawyers over the next few years."

Berwin Leighton Paisner corporate head John Bennett commented: "The market takes you in different directions and the heady times meant that junior associate salaries rose disproportionately, but then obviously it finds equilibrium over time. One of the key issues for firms at the moment is to remain competitively successful, but with US firms also having been in the mix for talent, there may be more pressure on associates in some firms to pay their way."

The subdued market for legal services since the recession of 2009 has provoked many predictions that law firms will have to further tighten their belts to accommodate client demand for better value – an argument backed by the poll.

Questioned as to what extent clients were justified in asking law firms to find and pass on cost savings in the current market, 60% of respondents said 'to a considerable extent', with a further 9% believing that law firms should substantially cut rates. An additional 20% think clients should get some modest concessions on savings, with only 12% rejecting pressure to cut rates, arguing 'clients want a quality service too cheaply as it is'.

Macfarlanes senior partner Charles Martin said: "We operate in a highly competitive market. The pressure is on to give clients value for money. At the same time, we need to keep the top talent those clients want. The market puts a high value on those people whether they are partners or assistants. Being lean, tightly-run and efficient is an essential part of making that equation balance."

Despite a number of law firms announcing job cuts in recent weeks – including Herbert Smith and Shoosmiths – the research found limited appetite to cut fee earners in response to the turbulent commercial environment. Asked about redundancies in the next six months, 59% of partners said that it was either 'unlikely' or 'very unlikely', with 21% citing it as a possibility and 20% believing such a move was likely.

Twenty-six percent think there are likely to be back-office job cuts over the next six months. A further 25% said such cuts were possible, while 50% think them unlikely.

However, respondents were divided over the impact of job cuts on a law firm's reputation. One in three partners think that redundancies have 'no negative impact' with 31% citing 'mixed feelings' and 35% believing it to be damaging. Only 1% agreed with the statement: 'it's very damaging – these are very profitable firms'.

Partners on law firm costs

• 88% of respondents believe clients are justified in expecting cost savings from advisers
• 67% believe equity partner remuneration is too much, given market conditions
• 54% believe associates are overpaid
• 20% believe it is 'likely' that there will be fee earner job cuts at their firm in the next six months