UK & US law firms - the pros and cons
When recruiting for US law firms in the London market, we regularly come across associates at all levels who have lots of questions and some misconceptions about the differences between working for UK and US law firms. In this article our consultant Elliot Jackson, who has worked as a lawyer in both UK and US law firms, presents the pros and cons of choosing a US law firm over a UK one.
There is no definitive answer to what the differences are 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 does not automatically follow that you will be expected to work harder and have less support but earn more money at every US law firm. The London legal market is home to a huge variety of over 100 US firms, all with their own unique work and culture. These firms include elite New York headquartered firms, mid-Atlantic firms with recognised international brands, much smaller less well-known outfits headquartered in cities such as Philadelphia and Texas as well as a number of west coast firms. All of these have their own unique working environment but there are general differences that associates should understand when considering whether to make a move from one to the other.
US law firms – the advantages
(a) Higher Income: Associates in US firms have historically been paid much more than their peers working in UK firms and, despite recent efforts by the Magic Circle firms to try and 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 to increase its first year associate base salary from $160,000 to $180,000 has been a game changer. Within two weeks of Cravath making this announcement, more than 50 global firms in the US and the UK had opted to match the new pay scale in New York and elsewhere, with other firms following suit by increasing their associate salaries at various levels along this ‘Cravath’ scale (as it has now become known in the market). NQs at top US firms in London are now generally being paid between £100,000 and £138,000 at the top of the scale, which is higher than junior partners at some mid-tier UK firms.
There are several reasons why US firms pay so much higher than their UK counterparts. Teams are often smaller than those in UK firms, which means that associates may have to work longer and harder to get transactions or cases over the line. There is, more often than not, less of a support network at US firms, which can mean associates having to do everything from trainee tasks all the way up to work that a senior associate or junior partner is doing at a UK firm (see point (b) below about responsibility). Expectations are higher at most US firms in London and with this comes extra pressure; however, if you thrive in this type of environment then there is no question that you can earn very good money by making a move to a US law firm. Another thing to consider is that on a purely ‘billing hour’ basis, many associates in top UK law firms are recording very similar (and sometimes more) hours to their US counterparts. We speak to a lot of Magic and Silver Circle associates who tell of a working / hours’ culture that is not dissimilar to what life is like in a US firm. The difference in annual pay, however, can be up to £60,000.
(b) More Responsibility: Generally, US firms will expect associates to be performing tasks that may be slightly above what UK firms expect at their post qualification experience (‘PQE’) level. 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 lawyers on the other side. At most US law firms the mantra is very much ‘if you are good enough, you are old enough’ and it is not unknown 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 in US firms in London get given as part of their training contract. As long as you are in a team with supportive partners and senior associates, this type of early responsibility can be invaluable and an excellent catalyst for progressing your legal career. Ultimately, due to the smaller sizes of the teams in US law firms there are often 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 advantage of moving to a US firm.
(c) Progression: US firms can be a good bet for those that want to progress to partnership quickly. Fewer associates means less competition and many US firms have relatively good records in making associates up to partners compared to UK firms. For example, Jones Day have promoted between 40 and 45 associates each year since 2012, with between 3 and 6 from London each time and Kirkland & Ellis promote high calibre associates to salaried partner after only 6 PQE. In reality, partnership is hard at every firm and alongside ability, progression most often depends on a lawyer's practice area and the partner for whom they have done the most work for.
(d) Performance of the US economy: The US economy is recovering more rapidly than many other parts of the world. Under-priced assets in the depressed markets of Europe have led to US corporates and private equity houses exploring investments there and London is traditionally a popular city from which to establish a springboard into Europe.
European banks have remained far more risk averse than US investment banks as the world has emerged from the global financial crisis. US capital markets have also recovered faster than Europe’s, and cash-strapped European corporates are turning to both of these as sources of funding. This has obviously been to the advantage of the US law firms, which have entrenched relationships with the US institutions involved.
Finally, the US dollar has performed well over the past few years against the sterling and even more so against the Euro. The aftermath of Brexit has compounded this even further. UK law firms have generally more exposure to the Euro than US firms, so the profitability divide between them has widened.
(e) Access to the US Market: New York is the largest financial and legal centre in the world and all significant US firms are either headquartered or have major offices there. This means that even the UK Magic Circle firms struggle to compete with the US firms in that market and the value and profile of work that top US firms are able to attract across the pond surpasses what the Magic Circle firms are doing in London and, especially, elsewhere in Europe. It is not uncommon for associates in the London office of US firms to be asked to help out on these stellar deals and cases when extra resources or European legal input is required.
(f) International opportunities: Another potential advantage of joining US firms is that it can be the best route to a permanent or temporary move over to the States, not to mention there being continuous office secondment opportunities on offer. The majority of US firms will also sponsor associates that make these moves, which means covering the costs of taking the US bar exam (this can cost up to £10,000), on the job training as well as healthy relocation packages.
UK law firms – the advantages
(a) Associate Support and Development: It is widely thought that when you move to a US firm you will have less support. It is 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 be argued that because there are often more partners in many UK firms than US firms, they are able to spend more time on associates. This can be true but it very much depends on the firm, the team and the partner. Some corporate, private equity and finance teams in US firms have as many if not more partners than those in top UK firms.
UK firms are ahead of most US firms when it comes to training and development and have been putting an emphasis on this side of associate development for decades. As many US firms have been in London for a relatively short period of time, they have 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 are allowed to 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.
(b) Variety of Practice Areas: If you want to work in a relatively niche area such as employment or intellectual property then UK firms may be your most likely destination. Many US firms focus more on corporate or finance and are less of a fully service law firm. However, it is becoming more common for a US law firms in London to have employment and IP offerings but those teams may be small and more of a support function to the corporate and finance teams. However, for those employment and IP lawyers who have 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.
(c) Culture: If having a beer with your colleagues every Friday and going on team bonding ski trips is important to you then you are more likely to find this type of culture at UK firms. A big reason for this is that there are simply more associates for you to socialise with. However, some of the larger and more established US firms in London can have up to 30 associates in some of their flagship teams so the social aspect of being an associate is still very much part of their culture.
(d) Office priority: Associates should bear in mind that when joining a US firm in London you will not be joining the headquarters office and with that can bring some administrative issues as well as challenges with time differences. For example, major office decisions often have to go through the US headquarters and can take far longer to action than those same decisions that are made by management in a London HQ. However, in the last 5 years there has been a big drive by US firms to really invest time and money into expanding and marketing their London offices and, for some, it has become the main focus of their five year strategy leading into 2020.
As mentioned at the start of this article, any attempt to bracket firms into distinct groups carries the risk of making broad generalisations and every firm is different. The choice of firm must ultimately come down to its individual culture, expertise and people, and associates should conduct their own research into what it’s like at a particular firm before making an application. 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 or whatever else is important to you when looking to change jobs.
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. UK firms will also continue to demand long hours and US firms are therefore increasingly strong rivals when it comes to attracting the very best lawyers. This has been seen not just at the junior level but also at partner level. Numerous high profile partner moves from UK to US firms have occurred in London over the last five years, sometimes with whole teams moving across; rarely however 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 consider what is important for your long term career and what you want out of your day-to-day work, but you should also ask questions about specific firms that may be of interest, as each one is different. For more information about the move from a UK to a US firm, or vice versa, or to discuss specific opportunities, please contact Elliot Jackson at [email protected].