Big Money Big Law Pay Scale Moves

In a groundbreaking move in the law pay scale, London law firm Pogust Goodhead is poised to reshape the compensation landscape for junior lawyers in the City, offering the potential for earnings of up to £2 million each over a three-year period.

The unprecedented move reflects the escalating pay scale moves within the legal sector, positioning legal professionals on par with the lucrative pay structures prevalent in hedge funds and investment banks.

The moves follow the range war raging over London pay rates, driven largely by major US law firms who have pushed pay rates up dramatically over recent years.

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We recently reported here that salaries for lawyers with one year of post-qualified experience (PQE) in London have increased by 7.5 percent, from £147.5k to £158.5k, and for 2 PQE lawyers by 6.9 percent, from £160k to £171k.

Tom Goodhead, the CEO of Pogust Goodhead, a firm with over 100 lawyers and 500 staff, stated that the initiative aims to align the compensation for lawyers with the financial rewards seen in other high-profile financial sectors.

This step is expected to set new standards for attracting and retaining top legal talent within the Square Mile, challenging the traditional norms of compensation within the legal industry.

The move comes amid growing pressure from some US law firms, which already offer starting salaries of up to £180,000. This trend has placed considerable strain on the so-called ‘magic circle’ law firms in the UK, as they strive to remain competitive in the global legal market.

The big law pay scale update published on LawFuel indicates how the large law firms are handling the current economic climate so far as their pay rates are concerned with substantial NQ and associate pay increases.

Gramercy Investment in Pogust Goodhead

Pogust Goodhead’s decision to enhance compensation structures follows a significant £450 million investment received in October from US fund manager Gramercy.

The infusion of funds is intended to bolster the firm’s endeavors in pursuing class actions on behalf of individuals against corporate giants such as mining behemoth BHP and luxury car manufacturer Mercedes.

To facilitate these ambitious compensation plans, the firm is establishing a £200 million bonus pool, employing a unique ‘synthetic equity’ model.

This model closely resembles a shares-based bonus scheme and is designed to reward legal professionals based on their contributions and success in high-stakes litigation.

CEO Tom Goodhead emphasized the substantial financial incentives that come with handling such impactful legal work, surpassing what traditional ‘magic-circle’ law firms can offer. This move is poised to not only attract top-tier legal talent but also to disrupt established market norms.

In an interview with The Lawyer, Goodhead revealed that partners at Pogust Goodhead could potentially earn between £10 million and £20 million, underlining the firm’s commitment to recognizing and rewarding excellence.

Even newly qualified lawyers, according to Goodhead, stand to receive impressive compensation ranging from £1 million to £2 million, setting a new benchmark for entry-level legal professionals.