When recruiting for US law firms in the London market, we regularly come across Associates at all levels with questions and misconceptions about the differences between UK and US law firms. Director and Head of Legal at Dartmouth, Elliot Jackson discusses the pros and cons of choosing a US law firm over a UK one.
There is no definitive answer to the differences between UK and US firms. Each firm, whether UK or US, has its own culture and way of working, and these can vary widely from one firm to the next. It doesn’t automatically follow that you’ll be expected to work harder and have less support but earn more money at every US firm. The London legal market is home to over 100 US firms, these firms include elite New York headquartered firms and mid-Atlantic firms with recognised international brands, as well as smaller less well-known outfits headquartered in cities such as Philadelphia and Texas, and the west coast. All of these have their own specific environment but typically, there are some general differences that you should consider before making a move.
US law firms – the advantages
Typically, Associates in US firms are better paid than their peers in UK firms and despite recent efforts by Magic Circle firms to close the pay gap, the recent US Associate salary hike, which has been widely reported in the legal press, has widened this gap even further. Make no mistake, the decision by New York-based Cravath, Swaine & Moore in 2016 to increase its first-year associate base salary from $160,000 to $180,000 (current ‘year one’ salary is now $190,000) was a game changer. Within two weeks of Cravath making this announcement, more than 50 global firms in the US and UK opted to match the new pay scale, with other firms later following suit by also increasing Associate salaries at various levels along this ‘Cravath’ scale.
NQs at top US firms in London are currently being paid between £120,000 to just shy of £150,000 at the top of the scale, which is higher than Junior Partners at many mid-tier UK firms. Many US, Cravath-paying, law firms also pay their Associates lock step bonuses on top of these salaries which range from $12,000 to $65,000 depending on seniority. Recently, several law firms have also paid their Associates ‘Covid bonuses’ as a thank you for their hard work during what has been a difficult and surprisingly busy period. Most UK law firms were paying these out at 5% of base salary compared to between £20,000 and £30,000 at most US firms.
There are several reasons why US firms pay higher than their UK counterparts:
- Teams are often smaller than those in UK firms, which means Associates may have to work longer and harder to get transactions or cases over the line
- There is often less of a support network at US firms, which means Associates must do everything from trainee tasks all the way up to work of a Senior Associates/Junior Partners.
However, it’s important to note that over the last five years, many US law firms in London have drastically improved their Associate ‘infrastructure’. This includes improvements to learning and development programmes, paralegal and trainee support, precedent banks, dedicated knowledge lawyers, and wellness programmes.
Expectations for Associates to ‘hit the ground running’ are generally higher at US firms in London and with this comes extra pressure; however, if you thrive in this environment then there’s no question you will earn very good money by making the move to a US firm. Another consideration is on a purely ‘billing hour’ basis, many Associates in top UK firms are recording similar (and sometimes more) hours comparatively to their US counterparts. Speaking to a Magic and Silver Circle Associates, they state that working/hours’ culture is not dissimilar to what life is like in a US firm. Although the difference in annual pay can be anything up to £60,000.
Associates at US firms can find themselves more exposed to key workstreams on matters than their UK counterparts. For example, a corporate/M&A lawyer at a top tier UK firm may have to wait until at least 3-4 PQE until being afforded the responsibility of drafting the first version of main transaction documents and leading on points of negotiations with the opposing lawyers. At most US law firms, the mantra is ‘if you are good enough, you are old enough’ and it’s not unheard of for excellent 1-2 PQE Associates to be allocated the aforementioned tasks by partners, whilst many junior Associates in UK firms can still be performing tasks that trainees at US firms in London are assigned as part of their training contract. If you are in a team with supportive Partners and Senior Associates, this type of early responsibility can be invaluable and a catalyst for progressing your career. Due to the smaller teams in US law firms, there are fewer Associates to compete against for access to top quality work and if you are a confident self-starter who is not afraid of early responsibility, then this can be a major benefit of moving to a US firm.
US firms are a safe bet for those looking to progress to partnership quickly. Fewer Associates mean less competition and many US firms have strong records in promoting Associates to Partner compared to UK firms. For example, Kirkland & Ellis promote high-calibre Associates to salaried Partner after only 6.5 PQE and Weil Gotshal have a similar policy that kicks in from 8 PQE. Whilst this ‘up or out’ approach can be daunting and seem a little cut-throat, its transparency is viewed favourably by many Associates as it provides the opportunity to plan, contingently, as a mid-level Associate. In reality, partnership is difficult at every firm and alongside ability, progression depends on a lawyer’s practice area and ‘buy-in’ from key decision makers.
Performance of the US economy
We are in some of the most uncertain economic times for a generation and reports of China surpassing the US as the world’s leading economy as early as 2028 are not easing. However, as it stands the US still leads the way, especially within financial services. Under-priced assets in depressed markets of Europe have led to US corporates and private equity houses exploring investments there and London is a popular city to use as a springboard into Europe.
European banks remain more risk averse than US investment banks as they have felt the ‘hangover’ from the 2008 financial crisis and the long-standing European sovereign debt crisis more severely. US capital markets have also recovered faster than Europe’s and cash-strapped European corporates are turning to both as sources of funding. This has been to the advantage of US law firms, which have entrenched relationships with the US institutions involved.
Finally, the US dollar has outperformed the sterling and euro, which was further impacted by the effects of Brexit. Although US firms are cautiously expanding into Brussels, UK firms generally have more exposure to the euro than US firms, so the profitability divide continues to widen.
Access to the US market
New York is the largest financial and legal centre in the world with all significant US firms either headquartered or with major offices there. This means that even the UK Magic Circle firms struggle to compete with the US firms in this market and the value and profile of work that top US firms can attract across the pond surpasses what the Magic Circle firms are doing in London and elsewhere in Europe. Next to the increase in their remuneration, many Partners who have left UK firms for US competitors cite this as the most important ‘pull factor’ when considering the move.
US firms can provide the best route to a permanent or temporary move over to the States, not to mention there being continuous office secondment opportunities on offer. Majority of US firms will also sponsor Associates that make the move, which means covering the costs of taking the US bar exam (cost up to £10,000), on the job training, as well as healthy relocation packages.
UK law firms – the advantages
Associate support and development
UK firms are ahead of most of their US counterparts when it comes to training and development and have been investing in this element of Associate development for decades. As many US firms have been in London for a relatively brief period, they’ve had to focus on fee earning and building a practice instead. However, from recent conversations with Associates at US law firms it seems that the more established ones in the London market are looking at bridging this development gap. For example, Associates at Latham & Watkins can sit on decision making committees, which include the training and development committee which is thought to hone their management skills as they progress up the associate ladder towards partnership.
It’s thought that when you move to a US firm, you’ll have less support. It’s true that some teams in US firms are smaller, which means fewer trainees, little or no precedent bank, and fewer professional support lawyers. It could also be argued that because there are more Partners at UK firms than US firms, they’re able to spend more time developing Associates; this very much depends on the firm, the team, and the Partner. Some teams in US firms have as many if not more Partners than those in top UK firms.
Variety of practice areas
If you want to work in a niche area such as employment or intellectual property, then a UK firm may be your best bet. Most US firms focus on corporate or finance rather than being a full-service law firm. It’s becoming more common for US law firms in London to have employment and IP offerings, but those teams can be small and more of a support function to the corporate and finance teams. However, if you’re an employment or IP lawyer with a desire to work on multi-million or billion dollar/pound deals, US firms can provide this exposure where many larger UK based IP and employment teams cannot.
If having a beer with your colleagues after work and going on team bonding trips is important to you then you’re more likely to find this culture at UK firms due to a larger intake of Associates. That isn’t to say you can’t find this at a US firm. Some of the more established US firms in London can have up to 30 Associates in their flagship teams which can mirror the social culture of UK firms.
Associates should bear in mind when joining a US firm in London, you won’t be joining the office headquarters and with that can bring some administrative issues as well as challenges with time differences. For example, major office decisions must go through the US headquarters which can impact deliverability comparatively to those same decisions that are made by management in a London HQ. However, in the last five years there has been a drive by US firms to invest time and money into expanding and marketing their London offices and for some, it has become the focus of their global strategy.
As mentioned at the start of this article, any attempt to bracket firms into distinct groups carries the risk of making broad generalisations as every firm is different. The choice of firm ultimately comes down to its individual culture, expertise, and people. Associates should conduct their own research into the suitability of a firm before applying. There is no substitute for speaking to people ‘in the know’, whether a direct contact in the firm or a recruiter, and asking the questions about type of work, pay, culture, hours, and whatever else is important to you when considering a career change.
For all the different nuances of each firm in the London market, there has been one common theme over the last 10-15 years which is that high-paying US firms continue to build their brands in the UK. When it comes to firms at the top of the UK and US markets, the difference in how hard you are expected to work and the quality of work is negligible, therefore US firms are becoming increasingly strong rivals when it comes to attracting the best lawyers. This has been seen not just at junior level but also at partner level. Numerous high-profile Partner moves from UK to US firms have occurred in London over the last ten years, sometimes with whole teams following. However, rarely does a move in the opposite direction take place.
So, is a move to a US firm for you? To answer this question, you need to weigh up your long-term career aspirations and what you want out of your day-to-day working environment. From there, you can better understand how the nuances at different firms might affect your career plan.
For more information about moving between UK and US firms, or to discuss specific opportunities, please reach out to me via email Elliot.email@example.com or contact me on +447967833673 – I’m here to help.