Morning Coffee: The latest $225k job that’s worse than banking. Bankers are all leaving the ESG club

“Lawyers are the new bankers”, apparently. That doesn’t mean that they’re the new career that graduates want to go for, or that they’re the subject of a quality TV drama, or even that they’re fashion icons. But according to legal recruiters, particularly in London, competition for talent is heating up to the point that compensation might be driven to banker-like levels. One law firm has started paying £180k (US$225k) to its junior lawyers. Are bankers in the wrong job?

Not necessarily. There are multiple issues of comparability; “junior lawyers” in this sense refers to newly qualified staff who might have three or four years’ experience. It ought to be compared to the Associate ranks of investment banks rather than the Analyst program which hires people straight out of undergraduate courses. And the fact that lawyers still regard bonuses of $90,000 for fifth year employees (the bottom end of Vice-President rank) as “big” gives an indication that the upside isn’t necessarily quite so great.

But more importantly, the job of a low-ranking associate in Big Law is legendarily horrible. The reason that compensation is rising in London is that American firms have been gaining market share (Paul, Weiss has added 200 lawyers to its UK office since hiring Neel Sachdev). And with American-style money comes American-style expectations, particularly with respect to billable hours targets. Lawyers are staffed on the same deals as bankers and have many of the same demanding private equity clients, but they are handling the minutiae of contracts rather than PowerPoint slides and financial projections. So it’s similar hours to being a banker, but you have to spend all of them checking important documents line by line, rather than sitting around gossiping while waiting for a “pls fix”.

It’s better if you can stick with it, admittedly. Being a partner at a big law firm has always compared pretty well with all but the most stellar Managing Director roles. Equity partners were taking home five or six million pounds (US$ 6.25m-7.5m) in 2024 across the industry. That would get you on the “material risk takers” list at any bank, you would even be in the top few dozen at Goldman Sachs’ London office.

But even then, it’s not quite like for like – partnership profits can be quite a bit more volatile than investment banking bonuses. And in order to get them, you have to become a partner. Depending on the firm, this can be a considerably more political and arduous process than making MD at an investment bank, for the simple reason that it’s a zero sum game in which all the people deciding on your promotion are aware that they’ll be worse off unless you contribute more revenue to the pot than you’re taking out.

Basically, banking is a better job, for those who are suited to it. Originating transactions is more fun, less work and better paid than executing them. Although the ebb and flow of pay rises will be driven by differing conditions in the labour market, this is going to be true for the foreseeable future.

Elsewhere, the Net Zero Banking Alliance seems to be losing members at a rate. Morgan Stanley is the latest bank to leave it, with Citi and Bank of America also leaving this week and Goldman Sachs already having done so.

It might partly be the spirit of the times – when these things were being set up a few years ago, ESG was one of the hottest new sectors for finance (and recruitment), and making pledges to bring yourself into alignment with the Paris climate accords felt like a good thing to do.

Nowadays, not only are those pledges looking significantly more inconvenient to achieve than they did at the time, but ESG itself isn’t as popular as it was. With a new government in the USA and “anti-woke” litigation beginning to become a risk of its own, it’s not so surprising that bulge bracket banks feel like they have enough targets painted on them already.

Morgan Stanley (and all the other banks which have left the alliance) has said that it remains committed to its net zero goals, and to help reducing client emissions. It’s just that the industry feels like it might be time to do good by stealth for a few years.

Meanwhile…

It is always a bit of a tightrope to walk, being one of the sensible crypto bros who wants a regulated industry with all the frauds and scams removed. The “mainstream” cryptocurrency industry is, broadly speaking, still delighted at the policy of the Trump administration, but seems to be aware that it’s not going to be an easy ride. (FT)

Reading one or two sell-side “Outlook for 2025” publications might be a bit of a waste of time, but reading 700 of them has a sort of grandeur to it. There is apparently “a significant degree of consensus”, which is usually a sign that something big is about to change. (Bloomberg)

“Stress is getting a really bad name”, according to Dr. Jonathan Leary, who thinks that moderate exposure to everyday stressors can improve your memory and performance. Perhaps PowerPoint will be rebranded as a wellness app. (NY Post)

Some bankers who have been waiting around too long for a succession plan to be activated might be interested in a new proposal from Turkey to set a 10 year limit on bank CEO terms. As well as helping careers progress, they hope it will prevent any more Ponzi scams from being developed. (Bloomberg)

Not quite as remunerative a career as banking, but you can apparently make $1,500 profit in a 48 hour trip by bringing treats (including rooster testicles) from home to Guatemalans living in the USA. (WSJ)

Frontier market enthusiasts will be heading for Addis Ababa this month, to see the bell ring for the opening of the first stock market in the country since the days of Emperor Hailie Selassie. (FT)

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