The salaries may be eye-popping and the addition to their CVs prestigious, but for midnight-oil burning junior lawyers working at Biglaw firms the deal is largely a ‘Faustian pact’, as lawyers continue to leave elite law firms despite the money and prestige . . but the deals and work continues to flow.
UK legal services group Leopard Solutions has reported that the number of associates leaving elite law firms was increasing year-on-year by 50 per cent, prompting the firms to ask whether the big money and bigger hours and stress was sustainable.
Reports on the stress levels for biglaw associates in most jurisdictions shows the same burnout and the ongoing issues faced by those who work the massive hours but often pay the cost in different ways.
The Financial Times reported recently on one associate at a major firm working in London who was granted a reduced hours offer following the death of her father, but with no reduction in the work she was to do.
“It was a backhanded compliment, that I was good enough to do it all . . but I’m sleeping two hours a night. I go to bed after midnight, wide awake with my heart racing,” she told the FT.
Biglaw Deal Boom
The problem has been boom times for biglaw as well as a booming M&A and deal market globally – particularly for the elite firms in the US and UK. The pandemic and central bank crisis measures have helped created a surge in cheap debt, helping propel major deals in a frenzy of activity that has created boom times for law firms, but also created the massive pressure on their legal talent.
The boom in deals during 2021 saw $5.6tn worth of deals signed globally, eclipsing the previous record of $4.55tn set in 2007 just before the onset of the 2008-09 financial crisis, according to research from data provider Dealogic.
Hanging on to legal talent has become a major issue for the law firms, hence the rise in bonus payments to ensure they are ‘appropriately’ compensated for the hours worked – and fees generated.
We have reported on the associate bonus levels. In the UK Ashurst has been the latest of the major London firms to boost salaries for newly qualified lawyers, upping base pay to £105,000.
The top US law firms in London, who helped set off the major play for legal talent with sign-on payments and large bonus payments, are paying new qualified lawyers in excess of £140,000, with Vinson & Elkins leading the way on £153,400.
“The movement on salaries is continuing, it is not stopping,” legal recruiter Fox Rodney’s head of associate recruitment Hugo Chambers said.
“I know of one or two firms looking to break the £100,000 NQ barrier because they are losing talent. They are trying to compete with the Magic Circle and the better-paying mid-tier firms,” he told FInancial News.
Deal Frenzy . . Stress Level Frenzy
The deal frenzy has seen the surge in capital creating major opportunities for investment groups, hedge funds and others working out of the US, UK, China and the Middle East. Some firms, such as Simpson Thacher, are forging links with major investment banking groups and firms like Kirkland & Ellis, the world’s highest-grossing law firm that is now nudging $5bn turnover, have profited massively by riding the private equity investment wave and the takeover activity it promoted.
For biglaw associates, the billing requirements range from 1900 – 2200 hours a year as the work is distributed by the firm partners handling the deals and the hours continue to mount. Kirkland & Ellis lawyers in London were clocking off at close to 11.30pm according to a recent survey on hours worked.
Law Society groups in all jurisdictions have worked to ensure there is appropriate attention paid to mental wellbeing, leave, worklife balance and related issues, but sometimes the sheer weight of money-from-deals is enough to leave the associates to live with their Faustian pact – or leave their firms.