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Our view...
A&O has attracted
some hostile press recently, with commentators pointing out that its
profits are lagging behind those of its competitors. But with
average profit per partner in 2006 of £787,000, and 25% of the
equity making more than a million a year, we can't imagine that the
firm is desperately bothered. And from an associate's point of view,
we reckon it's the best place to work in the Magic Circle.
Part of the firm's problem stems from
the last recession. Its rivals - most notably Linklaters - lost no
time in binning associates and de-equitising partners in order to
rack up profits. They're now leaner and more profitable, but A&O can
point to the fact that it continued to retain all its NQs who wanted
to stay, and that pay rises and partnership appointments continued
at their usual level. Inevitably this came at a cost to the partners,
who were warned to expect their drawings to be slashed by 20% in
order to weather the downturn. There aren't many firms out there
who'd rather cut partnership salaries than associates' jobs.
The firm also found itself
on the back foot in summer 2005 when Tony Keal, its then head of
Leveraged Finance, mistakenly sent out an email to his entire
department claiming that his assistants were underpaid by up to 40%.
A&O denied that his claims had any basis, but clearly there was an
element of truth in them. A&O was the most egalitarian firm in the
Magic Circle - assistants were paid the same rate across the firm
depending on their level of qualification, and everyone from a
photocopier operator to the most senior associate got the same
percentage of salary as a bonus. Fine if you're having a quiet time
of it in private client, not so good if you're working 20 hour days
in finance and you've got banks constantly trying to poach you with
offers of twice your salary.
The rest of the Magic Circle woke
up to this a while ago - assistants at Clifford Chance are banded
according to their ability, and can earn a bonus of up to 40% of
salary based on their performance. And A&O has now not only
abandoned its communist principles, it has left everyone else
standing. With effect from November 2006 bands have been introduced
and salaries have rocketed across the board. They've been upped
again from May 2007 to keep the firm's market-leading position.
The figures on the
right left the rest of the City shellshocked. A final seat trainee
will take home a market-beating £40,300 a year. Bonuses, based on a
percentage of equity partner points, can now be paid to all lawyers
over 2PQE. The amount varies according to ability and seniority, but
the most senior assistant can make up to £150,000 by way of basic
salary, with up to two partnership points on top of this as a bonus.
With each point equating to roughly £25,000, that's an all in deal
of £200,000 a year.
The firm has also introduced a whole
new raft of measures designed to improve fee earner management and
provide new career paths. Once you hit 5PQE you should be made a
senior associate (unless you've got no real prospects at all). This
means more cash (a basic salary of £98,000) a potentially larger
bonus and much more responsibility. You'll be given a business
development budget, accountability for financial performance on
transactions and influence the department's strategy. There are new
career management programmes, upgraded career guidance and
appraisals, and the
firm has also introduced a new "counsel" role to provide an
alternative to partnership. It's compatible with working part time
or fixed hours, carries a raft of responsibilities and although the
cash is less than you'd make in equity, not many people will
complain of a basic salary of up to £230,000.
At the more junior end of the scale, the firm's training is widely regarded as the best in
the City. A&O is also making the most of new technology, with an
excellent online precedent system, the "Newchange" online deals room,
automated document drafting and a remote working system that actually works. The
latter enables projects and banking lawyers to work from home one day a week and
there are plans to expand this system to the rest of the firm.
So what are the downsides? Well, you
will put in crippling hours, remote working or not.
"I billed 2,500 hours last year, and am on course for 3,000 this" says
one assistant. "If I leave before 10:00pm that's a bonus."
And it's not just the
hours.
A&O regards itself as the gold standard, and you will be expected to
achieve perfection in your work. As one assistant found out when
told off for a typo in an internal document he prepared at 2:00 in the morning -
there are no excuses.
Partners
may make a fortune, but your chances of joining their ranks are
remote - although the new counsel role and the upgraded appraisals
should go some way to mitigating this. If you do make the letterhead
you'll spend two years on a salary before embarking on a 15 year
climb up the lockstep - the longest ladder in the City. There are Croesan riches at the top of it, but young, star partners impatient
with the wait can easily be tempted elsewhere - the firm has lost a
fair few partners to high-paying American firms.
But many of these
problems are endemic at all the bigger City firms. And we probably get
fewer complaints from lawyers at A&O than from any of its
competitors - it really does seem to be a very decent place to work.
You get outstanding training, some of the best work in the City,
excellent pay and a glittering name on your CV. And the firm has just moved to whizzy new offices in Spitalfields - although they'll
have to be very smart indeed to compensate for working in Tower Hamlets
rather than St Pauls...
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