Associate Salaries, Biglaw, Bonuses, Partner Profits, Skaddenfreude

Skaddenfreude: An Amendment

100 dollar bill Above the Law Above the Law law firm salary legal blog legal tabloid Above the Law.JPGIn light of the recent debut of Skaddenfreude, ATL’s column chronicling attorney compensation, it’s a neat coincidence that the New York Times has an entire article discussing compensation for first-year associates at major law firms.

We’ll get to that article in just a second. First, though, a brief amendment to our prior Skaddenfreude request. We received this thoughtful email from a reader:

is it too late to add a line for hours billed? that would add more of an element of schadenfreude too, don’t you think? this is more like freudenskadden — feeling sick about how much more money they make.

Good point. We stand corrected! So yes, in your Skaddenfreude submissions — we’ve received a bunch already, thanks, keep ’em coming — please include your annual billable hours (either an estimate of this year’s or last year’s actual).

If you’re not a law firm attorney, feel free to include an estimate of how many hours you work in a year. If you’re a legal academic, throw in some bragging about how you make six-figures, or close to it, for only nine months of work.

Okay, that’s the Skaddenfreude amendment. Now, on to discussion of the Times piece — after the jump.

Truth be told, the piece isn’t terribly exciting. The Times is a little behind the times on this one; associate salaries went up a while ago. But it’s an important cultural landmark when the Times writes about something — it’s a sign that the phenomenon has “jumped the shark” (just like the phrase “jump the shark,” which was dissected in the Gray Lady’s pages four years ago).

(Another example: When the Times started running extensive coverage of thing called “blogging,” we knew that the fad was past its peak. That’s why we pay our bar dues and keep up with our CLE requirements. Someday we might have to get a real job again!)

Anyway, on to the article. It begins by chronicling the history of the latest pay raise (which most of you are probably familiar with):

The recent round of pay increases began last year, when Quinn Emanuel Urquhart Oliver & Hedges, a litigation firm based in California with offices in New York, decided to increase the base pay for first-year associates to $135,000, which at the time exceeded even the $125,000 starting salary common at many New York firms. A partner, A. William Urquhart, said his firm “hoped bigger firms wouldn’t follow so we could separate ourselves, but they did.”

A few months later, Sullivan & Cromwell, a large law firm with headquarters in New York, raised the base salary for new lawyers by $20,000, to $145,000.

Leave it to the Californians to lead the way in compensation terms. The last sizable jump in associate salaries was also West Coast driven, during the late 1990s and into 2000, before the (first) internet bubble burst. California firms were flush with tech company cash, and they were happy to throw it at first-year associates — forcing East Coast firms to follow suit. Some of those California firms went belly up — remember Brobeck Phleger & Harrision? (If not, check out their website.) But those of us who worked at East Coast firms are grateful for the extra money they caused to flow into our pockets.

“It’s a funny phenomenon that it’s all very public,’’ said Steven J. Steinman, a partner at Fried, Frank, Harris, Shriver & Jacobson. “It’s an unusual facet of practicing law that if you’re an associate your salary is very well known. I don’t know of any other industry where you can find out with specificity what people make.”

This is true — but only in part. We don’t know what more senior people make; and that’s why Skaddenfreude is here. While average profits-per-partner are published in the American Lawyer each year, we don’t know how that pie is divvied up. What’s the partnership draw of, say, a newly-minted equity partner at Kirkland & Ellis, or a midlevel partner at Simpson Thacher? Enquiring minds want to know.

William V. Fogg, one of the partners responsible for recruiting and hiring at Cravath, Swaine & Moore, said that “law firms are getting bigger at a faster rate than law schools,” creating a growing demand for lawyers and commensurate salary increases.

This is also true — but only part of the story. The problem is that attrition among law firm associates remains high — and, at least based on our “anecdata,” gleaned through cocktail party conversation, it may be increasing. If law firms could find ways to increase associate satisfaction in ways not involving pay raises, like providing them with more interesting work and greater responsibility, they might not have to go through the ritual of bribing them not to leave.

(Yeah, we know, easier said than done. But we’re not the managing partner of a law firm, so we’ll let them worry about that.)

Finally, the article talks about a phenomenon that associates around the country look forward to each year: bonus season.

Despite the sharing of information, one area remains murky. Year-end bonuses — as well as those sometimes given before associates arrive — may vary by thousands of dollars and the public information is frequently “less transparent,” said Gail S. Berney, the head of professional development at Proskauer Rose.

Of course, here at ATL we will be all over breaking news on the bonus front. So check back in to find out what’s going on; we promise to keep you abreast of the latest developments.

(Sure, you could go to Greedy Associates or Infirmation to find out this news too. But that would require you to wade through the moronic musings of many to find what you’re looking for. So just come here instead — and wade through the moronic musings of the few.)

For New Lawyers, the Going Rate Has Gone Up [New York Times]

Earlier: Skaddenfreude: Totally Gauche Ogling of Other Lawyers’ Incomes

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