Allen & Overy (London)

A&O hit the £1billion threshold back in July: turnover rose by 15% to £1.016 billion. And turnover was up yet again six months into the current financial year. So how does a finance firm manage to make quite so much money when all the banks are going under?

For one thing, the firm has managed to retool its finance lawyers into restructuring and insolvency lawyers. Much of the work that the Magic Circle has done over the last few months is cutting edge and can be charged accordingly – how many firms can nationalize a building society over one weekend? There’s the much vaunted “flight to quality”, where clients turn to trusted brands when the going gets tough. And there’s the overseas market - the fastest rate of growth at A&O was outside London, particularly in the emerging markets, Central and Western Europe.

Although known primarily for its banking and finance grip on the legal market, A&O has recently geared up its corporate and commercial force. In October last year, it was A&O and Clifford Chance that led the domestic M&A field with, according to Thomson Financial, a combined total of 197 completed UK deals between them totaling over $267billion. A&O also topped the table on completed European deals.

Firms don’t get to be this successful by sitting on their hands, and A&O hasn’t been afraid to make changes. At the end of 2006 it abandoned its egalitarian pay structure and sparked a salary war within the City. Bands were introduced and salaries rocketed across the board. These were upped again in 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 could 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 more than £25,000, that's an all in deal of over £200,000 a year. Although bear in mind that – uniquely in City firms - you’ll have to wait a year between being awarded your bonus and taking it home: a means of encouraging staff retention that associates brand “ridiculous” and “a joke”. A&O says that bonuses are structured in this way “to reward long term contributions to the firm”. And in 2009, where bonuses are going to be extremely thin on the ground elsewhere, there are likely to be fewer grumbles…

The firm also introduced a whole new raft of measures designed to improve fee earner management and provide new career paths. Associates who hit 5 years PQE should be promoted to senior associate (unless they’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. They’re given a business development budget, accountability for financial performance on transactions and a say in 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. “There’s a pretty good system for working from home”, says one associate, “which can be a good or a bad thing…”

The move from St Pauls to custom-built offices next to Liverpool Street Station has been hugely successful. Granted, there were initially a few snagging issues, but it seems the general consensus is now deep, bordering on smug satisfaction. What is best about the firm? “The roof terrace with views over the City. Fantastic in summer with a glass of Pimms and evening BBQ. Living the dream,” croons one associate.

So what are the downsides? Well, you will put in crippling hours, remote working or not. Cancelling your evening plans can become routine. 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. Work allocation is seen as absurdly inconsistent, and the firm apparently is “overly tolerant of wankers in senior positions as long as they bring the bread in”.

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.
 
And the firm stunned the market when it announced in February 2009 that it was looking to make 200 fee earners, 200 support staff and 47 partners redundant. It also froze salaries and jettisoned its private client team. The management blamed the worsening economic situation - but A&O had just posted its strongest results ever, and it came as a huge shock within the firm.

How these recent developments will impact on the culture of the firm remains to be seen. But for now we get fewer complaints from lawyers at A&O than from any of its competitors - it really does seem to be a decent place to work. Its lawyers have rated it as the pick of the Magic Circle for the last three years running in our Firm of the Year survey. Overall, it’s a no brainer: outstanding training, some of the best work in the City, excellent pay and a glittering name on your CV.

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