Latest news with #magiccircle
Times
22-07-2025
- Business
- Times
Macfarlanes partners crack £3m pay barrier to beat ‘magic circle'
Partners at an elite City law firm that caters to the super-wealthy have broken through the £3 million barrier for average pay, outstripping its larger 'magic circle' rivals. Macfarlanes revealed on Tuesday that average pay for full-equity partners at the firm had risen by 8 per cent to £3.1 million each. That took average partner pay at the renowned 'private client' practice roughly £1 million ahead of that at the four international City firms that make up the so-called magic circle. The announcement from Macfarlanes came just hours before Linklaters was the first of that group of four to publish its annual financial figures, which showed that average partner pay at the firm leapt by 15 per cent to £2.2 million. Based on last year's figures, that rise had Linklaters level pegging with average partner pay at A&O Shearman. Freshfields is standing on an average partner pay figure of £2.1 million, with Clifford Chance on £2 million. A&O and Clifford Chance are expected to report earnings and profit within the next few weeks. However, Freshfields said last year that it would no longer actively publicise its figures, although as a limited liability partnership the practice remains obliged to file an annual report with Companies House. Slaughter and May, the fifth member of the magic circle, has remained a traditional partnership and is therefore not required to reveal financial figures. But partners at the firm are still thought to be the highest earners in the Square Mile, with average pay estimated to range between £3.5 and £4 million. Tuesday's figures from Macfarlanes and Linklaters will fuel speculation that partner pay at the rest of the magic circle and across other prominent City practices will rise well above inflation, which in the UK unexpectedly jumped last week to 3.6 per cent. It could also cast a harsh light on City partner fees. In February, a senior costs lawyer lambasted the 'greed' of City lawyers for charging up to £1,600 an hour and allowing fees to spiral 'totally out of control'. Rocketing pay for junior lawyers has also fallen into clients' crosshairs in the past few years. Newly qualified solicitors at the City offices of US firms can start on as much as £180,000. Starting pay at Linklaters and Macfarlanes trails slightly behind at £150,000 and £140,000, respectively. Macfarlanes reported that its overall turnover for 2024-25 rose by more than 10 per cent to £371.4 million, which generated an operating profit of £206.5 million. Sebastian Prichard Jones, the firm's senior partner, hinted that concern over the incoming Labour government's fiscal plans had 'underpinned a standout performance from our private client and tax practices'. Meanwhile, revenue at Linklaters for that period exceeded £2.3 billion, an 11 per cent increase. The firm said that translated to a pre-tax profit of £1.08 billion, an even bigger 14 per cent increase to eclipse £1 billion for the first time in the firm's nearly two-century history. Linklaters said its best-performing international region was the US, a market that City firms have struggled to crack. Growth in the American market rose by 57 per cent, the firm said, and this year, partners in its New York office advised General Motors in a deal with TWG Motorsports to form the Cadillac Formula 1 Team, which will join the championship grid next March. Asia at 13 per cent growth was Linklaters' next highest performing region, with the UK domestic market at 8 per cent and Europe lagging at 3 per cent.
The Guardian
15-07-2025
- Business
- The Guardian
Rachel Reeves should end national insurance loophole for law firms
The chancellor and prime minister are wringing their hands at the painful choices they must make to balance the country's finances now they're quite rightly unable to make the most vulnerable disabled people shoulder the burden (How to balance the UK books: six options open to Rachel Reeves, 4 July). Perhaps it is time to resurrect an idea circulating before last autumn's budget: change the rules on national insurance (NI) contribution rates for LLP (limited liability partnership) partners to bring them into line with company employees. As reported in the Law Society Gazette in November last year, closing this NI 'loophole' could have raised £4bn from just the four 'magic circle' LLP law firms. This would seem compatible with Labour's manifesto pledge not to raise tax or NI on workers, but maybe this would upset too many of Keir Starmer's rich lawyer cronies? The change seems to have been widely expected last year, but quietly dropped without trace. Unless there's a very good reason why this shouldn't be implemented (in which case, let's hear it), I would strongly urge Starmer and Rachel Reeves to reconsider this decision. This strikes at the heart of economic justice. The current system favours the wealthy and well-advised – including former colleagues of Starmer in elite legal firms – while ordinary working people are asked to carry more of the burden. If Labour's economic credibility hinges on fairness and responsibility, then this is exactly where Reeves should be looking – not at further cuts at the expense of the majority of taxpayers and those in most ReedTaunton, Somerset
