Golden handcuffs: dealmaking lawyers weigh up their own Faustian bargains

Golden handcuffs: dealmaking lawyers weigh up their own Faustian bargains

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Sympathy for lawyers on a starting salary of $200,000 straight out of law school is scant at the best of times. And these are not the best of times.

US firms’ cash-fuelled hunt for more bodies to throw into the front line of the late-pandemic deals boom is not just a talking point for Wall Street elites, however, or a lightning rod for equality campaigners’ indignation. It has implications for London’s “Magic Circle” law firms, and for the quality of the transactions and the quality of life of people doing them.

In June, Milbank, one elite US firm, set a new $200,000 salary benchmark for first-year associates. Rival Davis Polk & Wardwell immediately topped that and Milbank and other firms then matched the higher figure. Some firms are paying sign-on, referral, and retention bonuses, which can reach up to $250,000 for mid-career lawyers.

Bruce MacEwen of Adam Smith Esq, a boutique management consultancy for law firms, likens the bonuses to “combat pay”. As a proportion of revenue produced, or divided by the many hours firms expect new recruits to work, the payments are neither irrational nor particularly obscene,