London lawyers already have 180,000 reasons to plump for a job at a U.S. giant in the city, provided they’re prepared to sacrifice their personal lives, get used to three hours of sleep a night, and await the inevitable burnout.
However, a host of U.S. law firms are sweetening the deal further by offering fresh-faced millennials the opportunity to bring their friends into the struggle for hefty financial rewards.
After bumping starting salaries to upwards of £180,000 ($236,000) for newly qualified junior lawyers, U.S. groups, including Kirkland & Ellis and Paul Weiss, are extending referral bonus schemes that will bag junior staff a £38,000 ($50,000) bonus for referring a future colleague. The incentives come as law firms scramble for an increasingly slim talent pool after a rebound in dealmaking activity this year.
U.S. firms had already upped their starting salaries for newly qualified lawyers earlier this year, with Quinn Emmanual and Gibson Dunn offering a £180,000 salary to junior lawyers in May.
The U.K.-based “magic circle” law firms have struggled to keep up. Almost all, including Clifford Chance, have upped their starting salaries to £150,000 ($197,000) to keep up with their U.S. peers in London, creating a competitive race for higher wages.
Referral bonuses offer employees the chance to boost their overall pay packet. It can also be a win for the firm, saving on the exorbitant fees demanded by top recruitment companies.
Etiquette tends to dictate that a pair of employees who engage in the scheme will split the bonus between them, giving each a $25,000 payday if the application proves successful.
Grueling life
While the hefty pay packets coming in this year will have young, hungry lawyers seeing dollar signs, they should proceed cautiously.
Major law firms have a famously grueling work schedule lined up for their new starts as soon as they walk through the door, taking on thousands of billable hours as they push through major financial deals.
Indeed, workers who recruit their friends into this hectic environment might not be friends worth having.
“I think among people who are in law, most wouldn’t recommend it to their own children or friends and family,” a senior counsel who previously worked at “magic circle” and U.S. law firms told Fortune. However, those already working in the industry probably know what they’re getting themselves into.
“What people are paying for is the lack of control over your own life. I think that’s why there’s higher salaries and these referral bonuses,” she said.
“I remember doing multiple all-nighters, being in the office pretty much all the time.
“You basically have no control over your own life and your social life, and knowing when you can get to the gym, when you can get out to see friends.
“I would say that you would be hard-pressed to find any lawyers in any city firm that has not felt burnout. And if they haven’t felt it yet, they will feel it sometime in the next six to 12 months.”
Lawyers at the big firms tend to get sick of the grind after a couple of years, she says, but the pressure to have several more years of experience and the promise of seven-figure pay deals can keep them in place much longer.
Referral bonuses are one way of keeping current staff on board longer as they wait out their friend’s notice period at their old firm and their ensuing probationary phase.
She worries that soaring salaries aren’t good for the broader legal ecosystem.
“People are throwing silly amounts of money at the problem,” she says, which could lead to an increase in the fees charged to firms ready to pay for their services.
