How the City law firm model unravelled and why the future looks complicated
As competition intensifies, firms are taking different approaches to structure, growth and how they reward partners.
Contents
Law firms are moving away from traditional partnership models as competition, specialisation and scale reshape the market.
From the decline of lockstep to growing interest in external investment, firms are rethinking how they structure pay, governance and ownership.
At the top end of the legal market, partner pay has surged to levels that would have been unthinkable a decade ago. Behind that growth, law firm models are fragmenting in strategy, structure and how they reward their partners.
“The complete transformation of what the top of the market for pay looks like in London is astronomically different,” said Greg Jackson, founder of law firm advisory Oakwood Strategy.
Partnership and institutional loyalty now look far more fluid, with firms operating in a market that is less driven by tenure and more by individual performance, positioning and growth.
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US firms changed the game
One of the most visible changes has been a move away from traditional full-service breadth towards more targeted, specialised practices.
That shift has been particularly evident in London, where US firms such as Kirkland and Paul Weiss have expanded by concentrating on specific high-value areas rather than replicating broad full-service platforms.
“US firms have disrupted London by focusing narrowly and deeply in particular areas,” said Jackson.
As US firms have scaled in the UK market, that has also shifted rates.
As US firms have grown in scale, they’ve brought a different mentality...
“As US firms have grown in scale, they’ve brought a different mentality around what it means to pay lawyers,” he said.
“If you think back to the 2010 to 2018 period, driving significant rate growth in London was more challenging,” said Jackson.
At the same time, this has created opportunities for other firms operating around those ecosystems.
“Quite a few mid-size firms are making very good money from the ecosystem surrounding US firms in London. Some deals are too small for US firms to realistically take on,” he said.
Pure locksteps are out
Changes in market positioning are also being reflected internally, particularly in how firms define and manage partnership. Traditional lockstep systems, once a defining feature of many firms, are now far less dominant than they once were.
“We’ve seen a huge shift away from those pure lockstep type arrangements,” said Corinne Staves, a partner at CM Murray who advises on partnerships and LLPs.
“A lockstep arrangement is like moving up the escalator. It’s very loyalty based, driven by collective success, which encourages that longevity and value of partnership,” she said.
There is an acknowledgement that there needs to be a stepping stone to equity.
However, the model has inherent downsides. “Locksteps need to be rigorously performance managed because if you have someone on an escalator and they’re not contributing, it can cause resentments,” said Staves.
In their place, firms are adopting a range of models that combine elements of seniority, performance and equity.
“Fundamentally, the role of partners is to generate work and build profits so the pie gets bigger,” she said.
At the same time, the growth of non-equity roles has introduced additional layers within partnerships.
“There is an acknowledgement that there needs to be a stepping stone to equity,” she said.
Law Firm | Trainee First Year | Trainee Second Year | Newly Qualified (NQ) |
|---|---|---|---|
| Addleshaw Goddard | £52,000 | £56,000 | £100,000 |
| Akin | £60,000 | £65,000 | £174,418 |
| A&O Shearman | £56,000 | £61,000 | £150,000 |
| Ashurst | £57,000 | £62,000 | £140,000 |
| Baker McKenzie | £56,000 | £61,000 | £145,000 |
| Bird & Bird | £48,500 | £53,500 | £102,000 |
| Bristows | £48,000 | £52,000 | £95,000 |
| Bryan Cave Leighton Paisner | £55,000 | £58,000 | £125,000 |
| Burges Salmon | £49,500 | £51,500 | £76,000 |
| Charles Russell Speechlys | £52,000 | £55,000 | £93,000 |
| Cleary Gottlieb | £62,500 | £67,500 | £164,500 |
| Clifford Chance | £56,000 | £61,000 | £150,000 |
| Clyde & Co | £48,500 | £51,000 | £85,000 |
| CMS | £50,000 | £55,000 | £120,000 |
| Cooley | £55,000 | £60,000 | £157,000 |
| Davis Polk | £65,000 | £70,000 | £180,000 |
| Debevoise | £55,000 | £60,000 | £173,000 |
| Dechert | £55,000 | £61,000 | £165,000 |
| Dentons | £52,000 | £56,000 | £104,000 |
| DLA Piper | £52,000 | £57,000 | £130,000 |
| Eversheds Sutherland | £50,000 | £55,000 | £110,000 |
| Farrer & Co | £48,500 | £51,000 | £89,000 |
| Fieldfisher | £48,500 | £52,000 | £100,000 |
| Freshfields | £56,000 | £61,000 | £150,000 |
| Fried Frank | £55,000 | £60,000 | £175,000 |
| Gibson Dunn | £60,000 | £65,000 | £180,000 |
| Goodwin Procter | £55,000 | £60,000 | £175,000 |
| Gowling WLG | £48,500 | £53,500 | £105,000 |
| Herbert Smith Freehills Kramer | £56,000 | £61,000 | £145,000 |
| HFW | £52,000 | £56,000 | £103,500 |
| Hill Dickinson | £44,000 | £45,000 | £80,000 |
| Hogan Lovells | £56,000 | £61,000 | £140,000 |
| Irwin Mitchell | £43,500 | £45,500 | £78,000 |
| Jones Day | £60,000 | £68,000 | £165,000 |
| K&L Gates | £50,000 | £55,000 | £115,000 |
| Kennedys | £43,000 | £46,000 | £85,000 |
| King & Spalding | £62,000 | £67,000 | £175,000 |
| Kirkland & Ellis | £60,000 | £65,000 | £174,418 |
| Latham & Watkins | £60,000 | £65,000 | £174,418 |
| Linklaters | £56,000 | £61,000 | £150,000 |
| Macfarlanes | £56,000 | £61,000 | £140,000 |
| Mayer Brown | £55,000 | £60,000 | £150,000 |
| McDermott Will & Schulte | £65,000 | £70,000 | £174,418 |
| Milbank | £65,000 | £70,000 | £174,418 |
| Mills & Reeve | £46,800 | £47,000 | £84,000 |
| Mishcon de Reya | £50,000 | £55,000 | £100,000 |
| Norton Rose Fulbright | £56,000 | £61,000 | £135,000 |
| Orrick | £60,000 | £65,000 | £160,000 |
| Osborne Clarke | £55,500 | £57,500 | £97,000 |
| Paul Hastings | £60,000 | £68,000 | £173,000 |
| Paul Weiss | £60,000 | £65,000 | £180,000 |
| Penningtons Manches Cooper | £48,000 | £50,000 | £83,000 |
| Pinsent Masons | £52,000 | £57,000 | £105,000 |
| Quinn Emanuel | n/a | n/a | £180,000 |
| Reed Smith | £53,000 | £58,000 | £125,000 |
| Ropes & Gray | £62,000 | £67,000 | £170,000 |
| RPC | £48,000 | £52,000 | £95,000 |
| Shoosmiths | £45,000 | £47,000 | £105,000 |
| Sidley Austin | £60,000 | £65,000 | £175,000 |
| Simmons & Simmons | £54,000 | £59,000 | £120,000 |
| Simpson Thacher | n/a | n/a | £178,000 |
| Skadden | £58,000 | £63,000 | £177,000 |
| Slaughter and May | £56,000 | £61,000 | £150,000 |
| Squire Patton Boggs | £50,000 | £55,000 | £110,000 |
| Stephenson Harwood | £50,000 | £55,000 | £105,000 |
| Sullivan & Cromwell | £65,000 | £70,000 | £174,418 |
| Taylor Wessing | £52,000 | £57,000 | £115,000 |
| TLT | £44,000 | £47,500 | £85,000 |
| Travers Smith | £55,000 | £60,000 | £130,000 |
| Trowers & Hamlins | £47,000 | £51,000 | £85,000 |
| Vinson & Elkins | £60,000 | £65,000 | £173,077 |
| Watson Farley & Williams | £51,500 | £56,000 | £107,000 |
| Weightmans | £36,000 | £38,000 | £70,000 |
| Weil | £60,000 | £65,000 | £170,000 |
| White & Case | £62,000 | £67,000 | £175,000 |
| Willkie Farr & Gallagher | £60,000 | £65,000 | £180,000 |
| Withers | £47,000 | £52,000 | £95,000 |
| Womble Bond Dickinson | £43,000 | £45,000 | £83,000 |
Rank | Law Firm | Revenue | Profit per Equity Partner (PEP) |
|---|---|---|---|
| 1 | DLA Piper* | £3,130,000,000 | £2,500,000 |
| 2 | A&O Shearman | £2,900,000,000 | £2,000,000 |
| 3 | Clifford Chance | £2,400,000,000 | £2,100,000 |
| 4 | Hogan Lovells | £2,320,000,000 | £2,400,000 |
| 5 | Linklaters | £2,320,000,000 | £2,200,000 |
| 6 | Freshfields | £2,250,000,000 | Not disclosed |
| 7 | CMS** | £1,800,000,000 | Not disclosed |
| 8 | Norton Rose Fulbright* | £1,800,000,000 | Not disclosed |
| 9 | HSF Kramer | £1,360,000,000 | £1,400,000 |
| 10 | Ashurst | £1,030,000,000 | £1,390,000 |
| 11 | Clyde & Co | £854,000,000 | Not disclosed |
| 12 | Eversheds Sutherland | £769,000,000 | £1,400,000 |
| 13 | Pinsent Masons | £680,000,000 | £790,000 |
| 14 | Slaughter and May*** | £650,000,000 | Not disclosed |
| 15 | BCLP* | £640,000,000 | £790,000 |
| 16 | Simmons & Simmons | £615,000,000 | £1,120,000 |
| 17 | Bird & Bird** | £580,000,000 | £720,000 |
| 18 | Addleshaw Goddard | £550,000,000 | £1,000,000 |
| 19 | Taylor Wessing | £526,000,000 | £1,100,000 |
| 20 | Osborne Clarke** | £476,000,000 | £800,000 |
| 21 | DWF | £466,000,000 | Not disclosed |
| 22 | Womble Bond Dickinson | £450,000,000 | Not disclosed |
| 23 | Kennedys | £428,000,000 | Not disclosed |
| 24 | Fieldfisher | £385,000,000 | £1,000,000 |
| 25 | Macfarlanes | £371,000,000 | £3,100,000 |
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The rise of the hybrid
In place of lockstep, firms are converging around hybrid models that attempt to reconcile competing economic pressures. These systems aim to reward individual performance while preserving some degree of shared enterprise and institutional cohesion.
The US model, with its overtly performance-driven approach, continues to exert a strong gravitational pull internationally. However, UK firms have generally stopped short of fully embracing that more individualistic structure.
“We’re much more hybrid in our compensation systems…closer to ‘eat what you kill’, but with remnants of lockstep,” Staves said.
As compensation structures become more bespoke, transparency has emerged as a critical and sometimes divisive issue within firms.
...closer to ‘eat what you kill’, but with remnants of lockstep.
“I think that transparency is both helpful and unhelpful,” she said.
The challenge is not simply whether information is disclosed, but how it is interpreted internally by partners.
“If someone finds out one of the partners is earning more than them and they think they’re not as good as them, that person is upset even if they’re earning a lot of money,” said Staves.
“There is some opacity, deliberately. There’s a lot of competition for good people and they might be negotiating individual deals or golden handcuffs to stay at a firm,” she said.
“Firms will keep it a bit quieter because they can’t do deals with everyone,” she said.
Voting gets complicated
Those structures can also have implications beyond remuneration, particularly where firms are managing large groups of partners with different rights and expectations.
As those non-equity tiers expand, questions of governance and control can become harder to manage in practice.
“In two tier systems, voting structures can become challenging over time if they are not thought through carefully,” said Jackson.
In many UK firms, partners may still retain voting rights or influence over key decisions.
That can create a mismatch between economic ownership and control, particularly as firms scale and partnership structures become more layered.
Considering external investment
Interest from private equity has added another dimension to how firms think about growth and structure. While few have fully taken the plunge, some firms are exploring options behind closed doors.
“I think that the interest that private equity has in legal services is going to kill mergers for a while, other than massive transatlantic mergers,” said Staves.
The idea of becoming an employee and having a salary...
Where investment does happen, it often brings a major shift in how partners are compensated and incentivised over time. Traditional profit-sharing models may give way to structures based on salary, bonus and equity-style participation mechanisms.
“The idea of becoming an employee and having a salary is quite difficult for a law firm partner to adjust to,” she said.
| Firm | London office since | Known for in London |
|---|---|---|
| Akin | 1997 | Restructuring, funds |
| Baker McKenzie | 1961 | Finance, capital markets, TMT |
| Davis Polk | 1972 | Leveraged finance, corporate/M&A |
| Gibson Dunn | 1979 | Private equity, arbitration, energy, resources and infrastructure |
| Goodwin | 2008 | Private equity, funds, life sciences |
| Kirkland & Ellis | 1994 | Private equity, funds, restructuring |
| Latham & Watkins | 1990 | Finance, private equity, capital markets |
| McDermott Will & Schulte | 1998 | Finance, funds, healthcare |
| Milbank | 1979 | Finance, capital markets, energy, resources and infrastructure |
| Paul Hastings | 1997 | Leveraged finance, structured finance, infrastructure |
| Paul Weiss | 2001 | Private equity, leveraged finance |
| Quinn Emanuel | 2008 | Litigation |
| Sidley Austin | 1974 | Leveraged finance, capital markets, corporate/M&A |
| Simpson Thacher | 1978 | Leveraged finance, private equity, funds |
| Skadden | 1988 | Finance, corporate/M&A, arbitration |
| Sullivan & Cromwell | 1972 | Corporate/M&A, restructuring, capital markets |
| Weil | 1996 | Restructuring, private equity, leverage finance |
| White & Case | 1971 | Capital markets, arbitration, energy, resources and infrastructure |
| Law firm | Type | First-year salary |
|---|---|---|
| White & Case | US firm | £32,000 |
| Stephenson Harwood | International | £30,000 |
| A&O Shearman | Magic Circle | £28,000 |
| Charles Russell Speechlys | International | £28,000 |
| Freshfields | Magic Circle | £28,000 |
| Herbert Smith Freehills | Silver Circle | £28,000 |
| Hogan Lovells | International | £28,000 |
| Linklaters | Magic Circle | £28,000 |
| Mishcon de Reya | International | £28,000 |
| Norton Rose Fulbright | International | £28,000 |
A different business model
Jackson said he has “maintained a healthy level of scepticism,” about external investment pointing to differences between law firms and other professional services businesses, which often draw close comparisons from the market.
“Investors often compare law firms to the accounting sector, but it’s a very different type of business, with much less recurring revenue and a more reactive model. Companies always need audit and tax work, but you can’t easily market to a specific client on a potential product liability issue,” he said.
He also highlights the role of partnership culture, where decision-making and profit distribution are closely tied to individual partners rather than centralised management.
“So much of it comes down to the feeling of partnership: I have a say, I have a vote, I have a democratised system,” he said.
Law Firm | Trainee First Year | Trainee Second Year | Newly Qualified (NQ) |
|---|---|---|---|
| A&O Shearman | £56,000 | £61,000 | £150,000 |
| Clifford Chance | £56,000 | £61,000 | £150,000 |
| Freshfields Bruckhaus Deringer | £56,000 | £61,000 | £150,000 |
| Linklaters | £56,000 | £61,000 | £150,000 |
| Slaughter and May | £56,000 | £61,000 | £150,000 |
Law Firm | Trainee First Year | Trainee Second Year | Newly Qualified (NQ) |
|---|---|---|---|
| A&O Shearman | £56,000 | £61,000 | £150,000 |
| Clifford Chance | £56,000 | £61,000 | £150,000 |
| Freshfields Bruckhaus Deringer | £56,000 | £61,000 | £150,000 |
| Linklaters | £56,000 | £61,000 | £150,000 |
| Slaughter and May | £56,000 | £61,000 | £150,000 |
Law Firm | Trainee First Year | Trainee Second Year | Newly Qualified (NQ) |
|---|---|---|---|
| Ashurst | £57,000 | £62,000 | £140,000 |
| Bryan Cave Leighton Paisner | £55,000 | £58,000 | £125,000 |
| Herbert Smith Freehills | £56,000 | £61,000 | £145,000 |
| Macfarlanes | £56,000 | £61,000 | £140,000 |
| Travers Smith | £55,000 | £60,000 | £130,000 |
| Firm | Merger year | Known for in London |
|---|---|---|
| BCLP | 2018 | Real estate, corporate/M&A, litigation |
| DLA Piper | 2005 | Corporate/M&A, real estate, energy, resources and infrastructure |
| Eversheds Sutherland | 2017 | Corporate/M&A, finance |
| Hogan Lovells | 2011 | Litigation, regulation, finance |
| Mayer Brown | 2002 | Finance, capital markets, real estate |
| Norton Rose Fulbright | 2013 | Energy, resources and infrastructure, insurance, finance |
| Reed Smith | 2007 | Shipping, finance, TMT |
| Squire Patton Boggs | 2011 | Corporate/M&A, pensions, TMT |
Law Firm | Trainee First Year | Trainee Second Year | Newly Qualified (NQ) |
|---|---|---|---|
| Ashurst | £57,000 | £62,000 | £140,000 |
| Bryan Cave Leighton Paisner | £55,000 | £58,000 | £125,000 |
| Herbert Smith Freehills Kramer | £56,000 | £61,000 | £145,000 |
| Macfarlanes | £56,000 | £61,000 | £140,000 |
| Travers Smith | £55,000 | £60,000 | £130,000 |
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