Image Credit: 401(K) 2012
In contemporary society, where young people are drawn to the prospect of an Instagram-worthy lifestyle, many of the country’s students are beginning to cast an eye to the bright lights of the city in hopes of securing a well-paying job to source an income to fund such an image. More often than not, these jobs are found in banking and law, which are areas responsible for some of the most fierce competition for employment.
Law firms and banks continue to evolve into multi-service businesses to better serve the ever-expanding number of clients in their field. Their efforts to recruit the brightest sparks at universities across the country has meant their biggest bait available has taken a sharp increase in order to draw in floods of graduates. Following Covid-19 pay cuts, both law firms and banks have heavily boosted salaries in what has been branded an ‘associate pay war’.
However, it is worth investigating what graduates are required to do in order to compete for their coveted first pay-cheque. Between the rigorous recruitment process and difficult work-life balance, it begs the question, is it worth it?
Firstly, there is value in exploring why banks and law firms are looking to recruit more in the first place. After the pandemic, both sectors have seen large increases in revenue, as they return to pre-Covid levels of operation. All of the top ten global law firms headquartered in the UK and 78 percent of the top 11-25- saw increases in profits in the last financial year, with investment banks and trading revenues also reaching their highest levels since 2010.
With these economic increases – where some profits are being allocated to the ever-present desire to expand – firms and banks are also allocating sizable amounts to competition for employees. After being given a taste of remote-working, there is now an onus on these industries to provide another incentive for junior workers to join their teams.
American law firms in the city are offering outrageous salaries £153,000 to newly qualified solicitors, and a tidy £110,000 to first year investment bank associates for their efforts. As expected, these pay packets are serving as an incredible incentive for graduates, who are seeing more competition amongst themselves to land these positions, resulting in a tougher selection process by the firms and banks overall. However, there are many hurdles to overcome on that journey.
Graduates in search of these salaries can no longer rely solely on a CV and cover letter to get them through the office door. The average law recruitment path to a city position now entails a question-based application stage, a competency test (often the Watson Glaser), an interview with the partners of the firm, and an assessment centre. This is all before being given a yes or no for the position. This process can take months at a time which, when balanced with the stress of university life, can prove to be taxing.
On top of this, both sectors are also keen to see whether candidates have displayed the necessary experience and interest in the industry. This is most regularly evidenced by an internship, which is difficult to attain. The ever-elusive ‘spring week’ in the banking industry will cause shivers for many reading, yet it feels almost imperative to have one in your back pocket when approaching these mega-firms and banks. In addition to this, the need for extra-curricular brilliance further displays how high the bar is for graduates.
With this rigid process considered, it begs the question of whether the competition is actually worth the sacrifice. Despite the attractiveness of a six-figure salary before the age of 30, many would actually consider it not as great a lifestyle as it is advertised. Looking past the amenities and bonuses inevitably offered by law firms and investment banks alike, the arguably poor working conditions suffered by juniors in both sectors are certainly cause for concern.
Junior bankers at Goldman Sachs reported inhumane conditions, with severe impact on their mental health. They reported this was a result of feeling seen by their superiors purely as replaceable cogs to keep their vehicle moving. Claims of ‘100-hour weeks’ are incredibly worrying, leaving us to wonder whether many of the junior lawyers and bankers entering the industry know what they are getting into.
All in all, it is hard to deny that salaries and bonuses for junior professionals in the law and banking industries are more lucrative than ever. This, to some extent, gives reason for the huge amount of competition between graduates. However, with the path to big city money presenting dangerous obstacles along the way, we should probably ask- is the competition really worth it?