{"id":32523,"date":"2025-06-25T05:47:54","date_gmt":"2025-06-25T05:47:54","guid":{"rendered":"https:\/\/financialrush.com\/?p=32523"},"modified":"2025-06-25T05:47:54","modified_gmt":"2025-06-25T05:47:54","slug":"soaring-pay-rates-fuel-the-rise-of-the-superstar-lawyer","status":"publish","type":"post","link":"https:\/\/financialrush.com\/?p=32523","title":{"rendered":"Soaring pay rates fuel the rise of the superstar lawyer"},"content":{"rendered":"<p> \n<\/p>\n<div>\n<p>Unlock the Editor\u2019s Digest for free<\/p>\n<p class=\"article__content-sign-up-topic-description o3-type-body-base\"><span>Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.<\/span><\/p>\n<p><iframe class=\"article__content-sign-up-iframe close\" scrolling=\"no\" id=\"signUpIframe\" data-prev-url=\"\/register\/in-article-sign-up?ft-content-uuid=cb127da7-9654-4ebd-9b31-4cc8ebd0d879\"><\/iframe><\/div>\n<div id=\"article-body\">\n<p>The pay for top US lawyers has skyrocketed so far that even the financial sector\u2019s \u201cmasters of the universe\u201d are raising their eyebrows. <\/p>\n<p>Bidding wars for star corporate attorneys have sent recruitment offers from rivals for the biggest \u201crainmakers\u201d, or profit generators, to more than $25mn a year in some instances. Even hedge funds that specialise in distressed debt are starting to object as bankruptcy law partners are charging more than $2,500 an hour, with even their supporting first-year associates often billing nearly $1,000 an hour.<\/p>\n<p>Survey data compiled by headhunter Major, Lindsey &amp; Africa shows that average pay for US \u201cBig Law\u201d partners has jumped from $700,000 to $1.4mn in the past 10 years.<\/p>\n<p>Industry observers say they do not expect the upward remuneration trends to abate in the foreseeable future, even with the continuing slump in corporate deals in the US. At the top end, lawyers have client rosters that are filled with Fortune 500 companies and private equity firms, worth tens of millions of dollars of revenue annually. <\/p>\n<blockquote class=\"n-content-pullquote o3-editorial-typography-pullquote n-content-pullquote--no-image\" aria-hidden=\"true\">\n<p>For the biggest deals, clients are not willing to save 30 per cent for firms not willing to run 100 miles per hour, 24 hours a day <\/p>\n<footer class=\"o3-editorial-typography-pullquote__author\">Troy Pospisil, Ontra<\/footer>\n<\/blockquote>\n<p>Law firms are willing to make big bets for that kind of productivity. \u201cIf you want to make a lot of money in the practice of law, originating high billings work is the key in this world,\u201d says Karen Andersen, a recruiter at Major, Lindsey &amp; Africa.<\/p>\n<p>The growth of the legacy private equity industry into a sprawling \u201calternative assets\u201d sector that manages several trillion dollars has created demand for new kinds of lawyers well beyond a traditional generation of corporate dealmakers. So-called fund formation specialists, who help financial sponsors raise their capital, can command high fees: a $500mn fundraising can generate as much as $5mn in legal fees.<\/p>\n<aside aria-labelledby=\"aside-label\" class=\"n-content-recommended--single-story n-content-recommended--inset\" data-component=\"recommended\">\n<p class=\"n-content-recommended__title o3-type-body-highlight\">Recommended<\/p>\n<div class=\"o-teaser o-teaser--article o-teaser--small o-teaser--stacked o-teaser--has-image js-teaser\" data-id=\"c6e6fc14-3897-4057-b17d-62ef5e216c82\">\n<div class=\"o-teaser__image-container js-teaser-image-container\"><a href=\"https:\/\/www.ft.com\/content\/c6e6fc14-3897-4057-b17d-62ef5e216c82\" data-trackable=\"image-link\" data-trackable-context-story-link=\"image-link\" tabindex=\"-1\" aria-hidden=\"true\"><\/p>\n<div class=\"o-teaser__image-placeholder\" style=\"aspect-ratio:2215\/1246\"><\/div>\n<p><\/a><\/div>\n<\/div>\n<\/aside>\n<p>Troy Pospisil, co-founder of Ontra, a legal tech start-up backed by Blackstone, says the most demanding clients will continue to pay the rising rates for law firms on their most sensitive matters. \u201cFor the biggest deals, clients are not willing to save 30 per cent for firms not willing to run 100 miles per hour, 24 hours a day to turn in a letter of intent, which is what stands between you winning or not winning the deal,\u201d he says.<\/p>\n<p>To make the maths work, law firms are increasingly willing to do what was once considered sacrilegious: treat lawyers as individual superstars like hedge fund investors or footballers. Almost no top firms have kept a so-called lockstep structure where partners of the same \u201cclass year\u201d or length of service make identical salaries. Moreover, most big firms have created a \u201cnon-equity\u201d partner status to further create differentiation in pay, leaving more resources to channel to the biggest profit generators.<\/p>\n<p>Some lawyers, however, point to the negative effect on culture and morale that such pay differentials are starting to bring. They add that splashy hires often also entail taking on teams of associates, adding to the costs of such external recruitment.<\/p>\n<div class=\"n-content-layout\" data-layout-name=\"card\" data-layout-width=\"inset-left\">\n<div class=\"n-content-layout__container\">\n<h3 id=\"20-years-of-outstanding-individuals\" class=\"n-content-heading-3 o3-editorial-typography-subheading\">20 years of outstanding individuals<\/h3>\n<div class=\"n-content-layout__slot\">\n<p>Read about the 100 individuals across five categories who collectively epitomise how the legal sector has changed since the Innovative Lawyers series began<\/p>\n<p><a href=\"https:\/\/www.ft.com\/content\/350aa638-7b1c-4a10-85ad-f992346c8912\" data-trackable=\"link\">Law firm leaders<\/a><\/p>\n<p><a href=\"https:\/\/www.ft.com\/content\/6be3d4ac-1bac-40a9-a3bf-29e243885d17\" data-trackable=\"link\">Practitioners<\/a><\/p>\n<p><a href=\"https:\/\/www.ft.com\/content\/eb1e0855-0aff-49fc-a95c-1db93a5542ec\" data-trackable=\"link\">Intrapreneurs<\/a><\/p>\n<p><a href=\"https:\/\/www.ft.com\/content\/b4b3c071-d028-412c-a044-8b91c21120e9\" data-trackable=\"link\">Market shapers<\/a><\/p>\n<p><a href=\"https:\/\/www.ft.com\/content\/36aa1589-509b-4fcd-82c8-d9f5d93af27c?edit=true\" data-trackable=\"link\">General counsel<\/a><\/p>\n<\/div>\n<\/div>\n<\/div>\n<p>As for those associates, the opportunities remain lucrative. The \u201cCravath scale\u201d, named for Cravath, Swaine &amp; Moore, which sets a de facto benchmark annually for other leading firms, last year <a href=\"https:\/\/www.biglawinvestor.com\/biglaw-salary-scale\/\" data-trackable=\"link\">offered $225,000<\/a> for first-year associates, with the seventh-year associates on base salaries of $420,000.<\/p>\n<p>In the UK, the \u201cmagic circle\u201d firms have been hit by US rivals \u2014 Kirkland &amp; Ellis, Latham &amp; Watkins and Paul Weiss, among others \u2014 building on their success at home. The UK firms have tried with varying degrees of success to pitch both their partners and associates on their ostensibly better culture and lifestyle in London relative to the US firms, even if pay is somewhat lower.<\/p>\n<p>Some predict emerging technology will put the brake on the escalation in legal expenses. One law firm in the US top 10, measured by revenue, told the FT that management consultants it had hired had envisioned that artificial intelligence-powered automation and workflow tools could eliminate two-thirds of junior litigation associates, whose typical responsibility is manual document review. <\/p>\n<p>While such deep reductions may not pan out, the role of junior lawyers is still set to change.<\/p>\n<p>Some US states are considering following the lead of Arizona in allowing private equity and other \u201cnon-lawyers\u201d to invest further in law firms, encouraged under its local \u201calternative business structure\u201d licences. The hope is that new kinds of professional services firms, with fresh capital and innovative management, can better deliver integrated services \u2014 such as accounting and wealth management \u2014 that collectively are cheaper. <\/p>\n<blockquote class=\"n-content-pullquote o3-editorial-typography-pullquote n-content-pullquote--no-image\" aria-hidden=\"true\">\n<p>It\u2019s never good to be paid more than the clients <\/p>\n<footer class=\"o3-editorial-typography-pullquote__author\">Tim Jeveons, Major, Lindsey &amp; Africa<\/footer>\n<\/blockquote>\n<p>But these new business models are not expected to reach the upper levels of the industry soon. For now, top law firms will keep paying the multimillion-dollar \u201cgolden hello\u201d sign-on guarantees.<\/p>\n<p>At the same time, they are doing more homework to avoid mistakes or making poor signings. Lengthy due diligence includes questionnaires and financial analysis to carefully forecast the client revenue that is to accompany the defecting lawyers, to avoid recruitment deals going sour.<\/p>\n<p>The question remains over the point at which a client in high finance will ultimately reject billing rates that are far outpacing inflation.<\/p>\n<p>\u201cIt\u2019s never good to be paid more than the clients,\u201d says Tim Jeveons, a managing director of partner recruitment at Major, Lindsey &amp; Africa.<\/p>\n<\/div>\n\n<br \/><a href=\"https:\/\/www.ft.com\/content\/cb127da7-9654-4ebd-9b31-4cc8ebd0d879\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Unlock the Editor\u2019s Digest for free Roula Khalaf, Editor of the FT, selects her favourite stories in this&hellip;\n","protected":false},"author":5,"featured_media":32524,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23],"tags":[],"class_list":["post-32523","post","type-post","status-publish","format-standard","has-post-thumbnail","category-us","cs-entry","cs-video-wrap"],"_links":{"self":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts\/32523","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=32523"}],"version-history":[{"count":0,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts\/32523\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/media\/32524"}],"wp:attachment":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=32523"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=32523"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=32523"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}