Pay gap closes for in-house UK lawyers

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Pay in the UK legal sector remains buoyant despite low UK economic growth, according to professional services firm Towers Watson's legal salary report.

The report also shows the legal sector is increasingly adopting a performance-based approach to pay rather than the traditional post-qualification experience (PQE) model that rewards employees for the number of years served since qualifying.

The report found the traditional gap between private practice and in-house pay is closing. Base pay within private law firms is still significantly higher, but more generous bonus and employee benefits are found in the wider corporate environment, resulting in total rewards often being more competitive for in-house lawyers.

The traditional gap between in-house and private practice starting salaries remains for newly qualified lawyers and trainees.

Median pay for newly qualified in-house lawyers ranges from £44,000 to £47,500, with limited additional bonus and benefits. Private practice firms also restrict bonus and benefit packages for junior lawyers, but salaries average £60,000, more than a third higher for newly qualified lawyers.

Lawyers with several years' experience quickly become more valuable across the market especially within in-house legal departments, which are willing to compete with, and even exceed, salaries offered in private practice.

A typical lawyer at a mid-sized London law firm, having qualified in 2007, could expect a base salary of around £86,000, with total compensation including bonus increasing to £88,000. The equivalent in-house lawyer at a financial services company could expect base pay of £83,500 with total compensation reaching £97,500, nearly 11% higher.

Phillip Hough, senior consultant in Tower's Watson's data services team said: "Starting salaries for newly qualified lawyers have remained strong in recent years and are now regularly hitting £60,000 at medium and small-sized London law firms.

"Outside of London the rates are much lower. Affordability and cost control are still frequently used terms among the law firms so we do not expect these rates to increase in the short term."

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