City law firm to “shake up” market with £2 million bonus for junior lawyers

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Pogust Goodhead sparks new movement in the salary war among City law firms, following an agreement with a US fund manager that could see the firm’s junior lawyers earn up to £2 million each over three years.

The deal, which is worth $552 million, was agreed in October. It’ll create a £200 million bonus pool over the three-year investment deal with Gramercy, an investment management company based in Connecticut.

The ‘synthetic equity programme’, as coined by the firm’s senior partners, could see Pogust Goodhead’s junior lawyers earn between £1 million and £2 million each from the bonus pool across the three-year investment, according to the firm’s Chief Executive Tom Goodhead. Meanwhile, partners at the firm could earn as much as £20 million.

Speaking to The Times, Goodhead explained that lawyers at the firm were involved in “more socially valuable work than lawyers at other law firms” before adding that the “potential of doing this type of work means that the incentives will be much higher than they can be in the magic circle law firms and it’s something we’re doing to shake up the market”.

With the starting salaries at US firms as high as £180,000, Pogust Goodhead’s bonus pool could mount pressure on UK law firms to continue to boost their junior lawyer pay.

However, despite these moves, the question remains: does pay outweigh values on junior lawyers’ list of priorities? At the end of last year, LawCareers.Net reported that around 75% of junior lawyers revealed they wouldn’t join a firm “whose values didn’t match their own, even if they were offering more money”, according to findings from a survey published by Obelisk Support.

The question Dana Denis-Smith, founder and CEO of Obelisk Support, asks is: “Will law firms rise to the challenge?”