The legal landscape in the UK is undergoing a significant shift. At Peerpoint, we are hearing frequently about how the rising salaries in private practice are creating challenges for in-house legal teams seeking to recruit and retain early career to mid-level lawyers. This escalating competition for talent has intensified in recent years, leaving in-house teams grappling with a shrinking pool of candidates and a growing disparity in compensation packages. In this article, we examine the factors driving this trend, the implications and challenges for in-house legal departments, and the strategies they can adopt to address the challenge.
The salary surge in private practice
Fuelled by a competitive market for top talent, private practice salaries have skyrocketed. This is particularly noticeable in areas such as corporate law, finance, and technology, where firms are vying to attract and retain associates with lucrative offers, including substantial signing bonuses and accelerated promotion tracks.
Recent surveys by recruitment agencies show that the average salary for a newly qualified solicitor working in private practice in London rose from £80,000 in 2020 to £90,000 in 2024 (see the salary trends chart further below). This figure can go up to £150,000 or more for those working in U.S. law firms or in high-demand sectors.
The survey also found that 40% of private practice lawyers received a salary increase of more than 10% in 2020, compared to only 16% of in-house lawyers. In 2023, 45% of private practice lawyers saw similar increases, while only 18% of in-house lawyers did. In 2024, these figures were 50% and 20%, respectively.
The in-house squeeze
In contrast, in-house legal departments often operate within more constrained budgetary parameters. While some in-house roles attract talent by offering work-life balance (compared to roles in private practice), and the opportunity to be closer to the business, they often struggle to match the financial incentives of private practice. This disparity is particularly pronounced for junior to mid-level lawyers who are at the early stages of their careers and may be more susceptible to the allure of higher salaries.
The average salary for a newly qualified solicitor in an in-house role in London was £58,000 in 2020, reaching £62,000 in 2024. The gap widened further for lawyers with three to five years of experience, with in-house salaries averaging £70,000, compared to £100,000 in private practice. By 2023, in-house salaries for this group averaged £72,000, while private practice salaries reached £105,000. In 2024, these figures were £74,000 and £110,000, respectively.
The Millennial and Gen Z factor
Adding another layer of complexity to this challenge is the generational shift in the workforce. Millennials and Gen Z, now constituting a significant portion of the early career to mid-level lawyer pool, bring with them a different set of priorities and expectations. While financial compensation remains important, they also place a high value on purpose-driven work, flexible work arrangements, and opportunities for professional development and advancement. In-house teams, traditionally perceived as less hierarchical and more collaborative, may hold an advantage in these areas.
However, if the salary gap becomes too wide, these non-monetary benefits may not be enough to offset the financial appeal of private practice.
A recent study found that 74% of Millennial lawyers in the UK said they would consider moving to an in-house role, citing work-life balance, variety of work, and alignment with the business as the main reasons. However, it also found that 64% of Millennial lawyers said they would not accept a pay cut of more than 10% to move in-house, and 23% said they would not accept any pay cut at all.
Similarly, a report by the Law Society of England and Wales found that Gen Z lawyers, who are entering the profession now, are more likely to seek work that aligns with their personal values, interests, and passions, and are more open to alternative career paths and modes of working. However, the report also noted that Gen Z lawyers are facing unprecedented levels of debt, uncertainty, and competition, and may therefore be more sensitive to financial pressures and incentives.
Implications and challenges
The implications of the recruitment squeeze are significant. In-house teams facing talent shortages may experience increased workloads, delays in project completion, and difficulty in providing adequate support to their businesses. This can ultimately affect the company's bottom line and its ability to compete effectively.
Moreover, in-house teams may also face challenges in building and maintaining a diverse and inclusive workforce, as they may have less access to a wide range of candidates from different backgrounds, experiences, and perspectives. This can affect their ability to foster innovation, creativity, and collaboration within their teams and across the organization.
Addressing the challenge
To navigate this challenging landscape, in-house legal teams could benefit from adopting a multi-faceted approach, as outlined below.
- Creative compensation: Explore alternative compensation structures, such as performance-related bonuses, enhanced benefits packages, and equity options. These can help to narrow the salary gap and align the interests of in-house lawyers with the company's goals and performance. In-house teams could also consider offering benefits that directly address their financial anxieties, such as free financial advice, employee savings and investment schemes, and debt-management resources.
- Emphasis on culture and values: Cultivate a strong workplace culture that emphasizes work-life balance, collaboration, and employee well-being. These can help to create a sense of belonging, engagement, and satisfaction among in-house lawyers, and differentiate the in-house experience from the private practice one. Moreover, in-house teams can showcase their contribution to the company's social and environmental impact and align their culture and values with those of the Millennial and Gen Z generations.
- Development opportunities: Provide clear pathways for professional development, mentorship programs, and opportunities for cross-functional projects. These can help to enhance the skills, knowledge, and career prospects of in-house lawyers, and demonstrate the company's commitment to their growth and success. Furthermore, in-house teams can leverage their proximity to the business and exposure to different functions and sectors to offer a variety of work and learning experiences that can appeal to the diverse interests and passions of early career lawyers.
- Employer branding: Showcase the unique advantages of in-house legal careers, such as the opportunity to be closer to the business, contribute to strategic decision-making, and have a broader impact on the organization. These can help to attract and retain talent that is looking for more than just a salary at the end of the month, and who want to make a difference in their work. Additionally, in-house teams can leverage their networks, social media, and industry events to raise their profile and reputation as employers of choice for legal professionals.
The competition for legal talent is intense, and in-house legal teams need to be proactive and innovative in their recruitment strategies when looking to attract top talent to their businesses. By understanding the motivations of early career lawyers and adapting their approach to talent acquisition and retention, they can position themselves to attract and retain the best and brightest in the legal profession.
To find out more, get in touch with our team here.
Sources:
Robert Walters salary survey
MLA in-house counsel compensation survey