Addleshaw Goddard, ranked 15th in the UK by earnings, has redirected £1 million earmarked for junior salary rises into a new £19 million bonus fund. Managing partner Andrew Johnston said the decision, made “after careful consideration”, would ensure that “lawyers who have contributed significantly are meaningfully rewarded”.

The firm confirmed that newly qualified lawyers will continue to start on £100,000. By contrast, US rivals in London offer up to £180,000, while the top starting pay at English firms is £150,000.

Mr Johnston acknowledged the pressures caused by rapid increases in junior salaries, which have created “compression” with associates of five or six years’ standing whose pay has stagnated. 

He said by not increasing the salaries of very junior lawyers, the firm could “unwind compression between newly qualified pay and that of more experienced lawyers”.

“Whilst we recognise this is a different position to the one others are taking, we believe that we are doing what is right for our people and business, and aligning with the interests of our clients.”

The cap on junior pay will also allow the firm to maintain trainee numbers. Last month, The Lawyer reported that Addleshaw retained 50 of its 58 trainees – the largest cohort so far this year among City firms.

US firms continue to dominate the City pay tables. Davis Polk & Wardwell, Gibson Dunn and Paul Weiss all pay newly qualified lawyers £180,000, while the top 27 firms for junior salaries are all American. The highest domestic offers come from the magic circle firms – A&O Shearman, Clifford Chance, Freshfields, Linklaters and Slaughter and May – all on £150,000.