There is a hot debate going on about whether City firms should slash NQ (newly qualified) salaries to £50,000 (Lawyer2B: 20 March 2013), but I think the point that the recruiters who started the debate were trying to make has been lost in translation somewhat.
I am of the firm opinion that law firms need to pay NQs according to the profitability of the team within which they are going to work. If that means slashing NQ salaries to £40,000 then so be it and equally if the team has very high profit margins then the salaries should be higher.
It makes no sense to pay all NQs the same salary and the quicker that NQs realise this the better. From my experience, most but not all already do. A lot of people seem quite blinkered to the fact that there is no longer a set NQ salary and firms can only pay people based on team profit.
The drastic action referred to in Lawyer2B article, I believe relates more to how firms address this issue.
If you told each NQ at the start of their training contract what the pay rates were for each team, higher in corporate transactional and lower in commoditised litigation, and then asked them to choose what seats they would like to sit in, you might end up with no NQs in less profitable areas of law. Drastic indeed.
However, if you are to make wholesale changes to NQ salaries – not only in London but the regions too – the sooner the better. That way, if you are truly committed to being a defendant PI solicitor the salary you are paid is a secondary consideration because you knew from the start of your training contract what you would be paid and why.
No surprises and more transparency in respect to NQ salaries can only be good things.