The new $50K perk for junior lawyers

One accounting timeout to start: PwC China has told clients it expects Chinese authorities to hit it with a six-month business ban that will start as early as September, as part of punishment over its audit of collapsed property developer Evergrande.

In today’s newsletter:

• Junior lawyer bonuses reach new highs

• Walmart sells stake in Chinese ecommerce titan

• Non-compete ban gets blocked by US court

Junior lawyers’ $50,000 referral bonuses

Want to buy a new Tesla? Or charter a boat off the Amalfi Coast?

If you’re a junior lawyer at one of the top US law firms, all you have to do is refer an associate to the group. The prize: $50,000.

With the talent war between law firms reaching new heights, groups are offering their junior lawyers as much as $50,000 to refer other young lawyers they know for jobs, the FT’s Suzi Ring and DD’s James Fontanella-Khan report.

Part of the bonus frenzy can be attributed to dealmaking’s return after high interest rates cooled the market. (Mars struck a deal last week to buy Kellanova for $36bn.)

Kirkland & Ellis upped its existing referral bonus from $25,000 to $50,000 last October, and recently renewed the programme until January 2025.

A&O Shearman followed suit, introducing the same bonus for US associate referrals in May (when the UK “magic circle” firm Allen & Overy and New York’s Shearman & Sterling officially merged). Goodwin and Paul Weiss also offer the same hefty sum.

As a concept, referral bonuses aren’t new. But in recent years, $50,000 had been considered an outlier, said Katherine Loanzon, managing director at legal headhunter Kinney Recruiting in New York. Now they’re practically the norm.

The size of these payments has swelled since 2021 and are just one sign of the greater talent war embroiling law firms, with junior pay, sign-on bonuses and retention bonuses all growing. 

In London, the UK’s “magic circle” firms are trying to defend their territory by bumping up salaries for newly qualified lawyers to £150,000 as their US rivals push into the market.

But when it comes to referral bonuses, the UK is still lagging its counterparts across the pond.

One magic circle firm in the UK pays associates £15,000 for the successful placement of referrals, while lower-tier firms can pay closer to £5,000, according to people with knowledge of individual firm offerings.

With bonuses in that range, instead of a Tesla or a chartered boat, maybe you could fetch a nice holiday.

Walmart shifts its China strategy

Walmart is saying goodbye to JD.com.

The world’s largest retailer has sold off the entirety of its stake in the Chinese ecommerce titan to focus on growing its own brands in the country.

In a filing to the US Securities and Exchange Commission, Walmart revealed it had offloaded its nearly 10 per cent stake in JD.com, worth $3.6bn. JD.com scooped up $390mn worth of the share sale but still saw its stock price plummet.

News that another big foreign investor was cashing out of Chinese tech knocked 2 per cent off the Hang Seng Tech index.

Walmart’s journey with JD.com began in 2016 when it swapped its Chinese ecommerce site, Yihaodian, for a starter stake in the group. It paid more than a billion dollars to double its holding later that year.

While Walmart bought in to learn about Chinese retail from locals, it’s now doing well on its own.

Chinese shoppers are flocking to its Sam’s Club member stores for high- quality and safe products at great prices, and the club’s pink-uniformed delivery riders are a frequent sight on Beijing city streets.

JD.com, on the other hand, is struggling to differentiate itself from China’s growing number of ecommerce platforms. That has left founder Richard Liu plotting an overseas expansion from a mansion in central London.

Non-compete ban blocked by US court

The US Federal Trade Commission made waves in April when it unveiled a ban on non-compete agreements — the rigid contracts that limit employees from jumping ship to rival companies.

But on Tuesday, the ban suffered a major blow, with US District Judge Ada Brown in the Northern District of Texas blocking the rule. She said the regulator lacked authority to stop the agreements.

The rule “is arbitrary and capricious because it is unreasonably overbroad without a reasonable explanation”, Brown said in the decision.

But the FTC, headed by Lina Khan, isn’t likely to give up yet.

“We are seriously considering a potential appeal, and [Tuesday’s] decision does not prevent the FTC from addressing non-competes through case-by-case enforcement actions,” FTC spokesperson Victoria Graham said in a statement.

The rule was set to take effect in September, and would have invalidated contract clauses that prevent employees from working for one of their employers’ competitors or from launching a competing business for a certain period of time in particular regions.

Non-compete agreements have long been a hallmark on Wall Street: big banks, brokers, asset managers and hedge funds all use them. 

Sometimes these companies even require non-compete contracts and confidentiality agreements, compounding restrictions on workers. 

The rule was expected to undermine longtime fixtures on Wall Street, like groups’ ability to impose paid “gardening leave” or to withhold deferred bonuses when an employee leaves for a competitor.

As the ban hangs in limbo, Wall Street’s biggest businesses are undoubtedly drawing up contingency plans for either outcome.

Job moves

• Walt Disney has named James Gorman as chair of its succession planning committee. The former Morgan Stanley chief executive joined the board earlier this year, and oversaw the recent succession plan at the bank.

• Western Asset Management’s longtime co-chief investment officer Ken Leech has taken a leave of absence amid a government probe. Michael Buchanan, who was previously co-chief investment officer alongside Leech, will take over the role effective immediately. 

• Paul Weiss has hired Asda co-owner TDR Capital’s top lawyer David Holdsworth as the law firm continues to expand in London.

Smart reads

Coal moment For years, coal producers in the US have been mired by bankruptcies and ESG concerns. Now, they’re a huge cash generator for shareholders, Lex writes.

Schwab’s revival Charles Schwab makes a lot of its money from banking. It’s now trying to overhaul the business — and investors are sceptical, The Wall Street Journal reports.

Flying cars The notion of flying cars has long been a figment of dreams or science fiction. But Boeing and upstarts like Ehang and Joby are betting on the multibillion-dollar possibility, Bloomberg reveals.

News round-up

BlackRock’s support for ESG measures falls to new low (FT)

Five bodies found on Mike Lynch’s superyacht (FT)

Oaktree is near deal to buy majority stake in two B Riley units (Bloomberg)

Target hails ‘remarkable’ consumer resilience as sales turn positive (FT)

UK needs Europe-style private funding for transport projects, review says (FT)

CrowdStrike hits out at rivals’ ‘shady’ attacks after global IT outage (FT)

Ford cancels electric SUV and warns of $1.9bn writedown (FT)