{"id":19395,"date":"2022-07-04T12:09:06","date_gmt":"2022-07-04T11:09:06","guid":{"rendered":"https:\/\/taxfix.com\/en-uk\/?p=19395"},"modified":"2025-09-04T18:05:52","modified_gmt":"2025-09-04T17:05:52","slug":"pay-wars-magic-circle-salaries-and-what-it-means-for-tax","status":"publish","type":"post","link":"https:\/\/taxfix.com\/en-uk\/blog\/pay-wars-magic-circle-salaries-and-what-it-means-for-tax\/","title":{"rendered":"Pay wars – magic circle salaries and what it means for tax"},"content":{"rendered":"\n

If someone told you that you could get a job post-graduation that\u2019d give you a \u00a3100k+ a year salary<\/a>, you\u2019d probably think they were either: <\/p>\n\n\n\n

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  1. Joking<\/li>\n\n\n\n
  2. Trying to scam you <\/li>\n<\/ol>\n\n\n\n

    Well if you\u2019re planning on becoming a lawyer at one of the UK\u2019s famous magic circle law firms, \u00a3107,500 is the minimum you can expect to earn once you\u2019re newly qualified. It sounds crazy doesn\u2019t it, almost too good to be true?\u00a0<\/p>\n\n\n\n

    Yes it does\u2026 \ud83e\udd11<\/h2>\n\n\n\n

    The reality is that starting salaries like this are the new norm for many newly qualified (NQ) graduates on the hunt for their first job within the magic circle. But what has caused this prestigious group of law firms to bump up the pay packets of some of the most junior members of their teams? <\/p>\n\n\n\n

    And with all this money, what does this mean for the tax obligations of the NQ lawyers?<\/p>\n\n\n\n

    We\u2019ll answer all in the blog below\u2026<\/p>\n\n\n\n

    So what\u2019s happening with magic circle starting salaries?<\/h2>\n\n\n\n

    Lawyers are now some of the best-paid graduates in the country. Why? Well, it\u2019s mostly down to a type of \u2018pay war\u2019. It’s taking place among some of the top law firms in the world. <\/p>\n\n\n\n

    The legal industry has found itself caught up in an intense hunt for new talent . This is thanks to a huge industry boom following the Covid-19 pandemic and Brexit. To put it simply, there\u2019s too much work, and not enough lawyers to do it. Combined with the fact that many senior associates at magic circle law firms have left, this has led to a surge in the number of junior lawyers being recruited to help with additional support.<\/p>\n\n\n\n

    Why the boom?<\/h2>\n\n\n\n

    Of course, we all know that being a lawyer is a tough job. But the problem is that the industry is seeing increased workloads and hours, which is resulting in burnout among lawyers. Law firms, like those in the magic circle, have responded by offering double-digit pay rises and office perks in an effort to retain their employees. <\/p>\n\n\n\n

    Flashy offices, onsite doctors and dentists, as well as post-work meals cooked by chefs, are also being used to \u2018reward\u2019 the junior lawyers for their gruelling work. This  can involve working 12 hours, 7 days a week (yikes!). But in doing so, these law firms have sparked a pay war amongst the rival firms. <\/p>\n\n\n\n

    Pay wars<\/h2>\n\n\n\n

    For example, Allen & Overy<\/a> last year announced that they were matching magic circle rival Linklaters by offering their NQ lawyers a \u00a3107.5k starting salary. Not to mention that they also increased their trainee salaries to \u00a350,000 in year one and \u00a355,000 in year two, from \u200b\u200b\u00a347,500 and \u00a353,000, respectively.<\/p>\n\n\n\n

    The average starting salaries for NQ Lawyers in the magic circle<\/h3>\n\n\n\n
    Law Firm<\/strong><\/td>First-Year Trainee<\/strong><\/td>Second-Year Trainee<\/strong><\/td>Newly Qualified\/Junior Lawyer<\/strong><\/td><\/tr>
    Allen & Overy<\/td>\u00a350,000<\/td>\u00a355,000<\/td>\u00a3107,500<\/td><\/tr>
    Clifford Chance<\/a><\/td>\u00a350,000<\/td>\u00a355,000<\/td>\u00a3125,000<\/td><\/tr>
    Freshfields<\/a><\/td>\u00a350,000<\/td>\u00a355,000<\/td>\u00a3125,000<\/td><\/tr>
    Linklaters<\/a><\/td>\u00a350,000<\/td>\u00a355,000<\/td>\u00a3107,500<\/td><\/tr>
    Slaughter and May<\/a><\/td>\u00a350,000<\/td>\u00a350,000<\/td>\u00a3115,000<\/td><\/tr><\/tbody><\/table>
    At the time of writing, 2022<\/figcaption><\/figure>\n\n\n\n

    What does this mean for tax?<\/h2>\n\n\n\n

    At a first glance these huge wages sound great to newly qualified lawyers. But what many of them often forget about is tax. With a higher salary, comes higher taxes, and more obligations to keep track of. <\/p>\n\n\n\n

    If you\u2019re a NQ lawyer with a hectic schedule, you might be struggling to wrap your head around (or simply forget) the tax you owe. If you work at a magic circle firm, then the most important thing to remember is that the amount of tax you\u2019ll pay will change once you go from being a first\/second-year trainee to newly qualified. <\/p>\n\n\n\n

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