The private equity market is perhaps busier than ever. Mergers and acquisitions made by U.S. private equity groups have exploded over the past year, and this boom has led to fierce competition for staff among law firms advising them. U.S. law firms have expanded rapidly in London to attract business from private equity firms their as well, and they are attracting top talent with their near-bottomless purses, far beyond London’s norms.
In light of this, Freshfields Bruckhaus Deringer became the latest international law firm to adjust its traditional pay structure in an attempt to retain its staff. The firm has paid a special bonus—reportedly worth £50,000 (nearly $68,000) for some mid-level lawyers—to its London-based private equity lawyers on top of the standard bonus paid across the firm.
The other magic circle firms have also been working on special bonus systems. Clifford Chance has guaranteed a minimum special bonus if certain criteria, such as hours worked, were met. And Allen & Overy has rewarded leveraged finance associates, an area of dominance for the firm, who billed above 1,950 hours a year. As such, London law firms are moving away from their traditional uniform bonus structures to introduce flexibility and remain competitive in the highest-demand market areas.