Attracting, rewarding, and retaining the right Talent is more important than it has ever been before. Talent wars, competition for clients, charge rate differentials etc etc. Times have been challenging for law firms.
Headroom created by US firms saw the biggest UK-headquartered firms by revenue charging an average of £449 per hour in 2024, compared with £321 in 2019, according to PwC’s 2024 annual law firm survey, with double-digit growth in average rates across the whole of the top 100 UK firms.
The increase in hourly pricing came as the 10 biggest firms notched up more billable hours at every level from trainee to partner, as lawyers benefited from a pick-up in deals and a busy litigation market last year. That resulted in UK fee income for the most recent financial year rising by an average of 11.6 per cent in the top group.
“The UK’s top 10 law firms have successfully increased rates . . . through a combination of increasing specialist services, inflation and the post-pandemic boost to the corporate and deals market,” said Mark Anderson, PwC’s global legal and professional services sector leader. “The influence of US firms building teams in London has also been a key factor.”
The group of UK-based international firms surveyed by PwC has been grappling in recent years with high inflation and a renewed war for talent, driven by the expansion of wealthy US firms in London. That pressure has triggered a sharp rise in salaries, as international firms based in the City try to remain competitive.
Simmons and Simmons is offering bonuses this year of between 25 per cent and 40 per cent of salary for associates who record more than 1,800 billable hours, according to an internal memo seen by the Financial Times. Associates must record a minimum of 2,100 chargeable hours to receive the top amount.
The firm joins a growing number of UK outfits offering performance bonuses to increase discretionary payouts without raising pay levels across the board, after a war for talent pushed up junior lawyer salaries substantially.
Lawyers charge by the hour for client work, but work many more hours than they bill, meaning 2,000 billable hours can equate to regularly working 12-hour days or longer. Simmons already offered a “discretionary” bonus for extra hours billed, but has changed the scheme to quantify the exact amounts junior lawyers can earn from this summer.
Anderson suggested however, that top UK law firms may struggle to achieve charge rate parity with US firms. With Clients resisting further increases unless they can maintain their own margins.
Talent that can bill hours will be even more in demand than ever should this come to pass.
Sources: FT.com, PwC
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