Biglaw, Media and Journalism, Money, Skaddenfreude

Nationwide Pay Raise Watch: Is New York Worth It?

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This question gets debated endlessly in the comments here at ATL. Readers argue about real estate prices, billable hour requirements, and the cost of a round of drinks in different cities. Sadly, there’s often a lack of hard data in these disputes.
Well, now we have some real information, courtesy of the National Law Journal:

It may be a stretch to argue that beginning lawyers at big law firms need more money, but those practicing in New York could make a strong case for a raise….

Several big law firms in the last few weeks have boosted salaries for first-year associates in large cities in the West to match the $160,000 that their New York beginners receive.

A “nationalization” of their practices is the reason many firms give for paying the same amounts in different locations. But a look at the cost-of-living differentials shows that the copycat compensation is creating some significant pay disparities among associate ranks.

Discussion continues after the jump.


The article, by Leigh Jones for the NLJ, describes recent associate salary developments:

Orrick’s West Coast raises last month set off a rash of salary increases in California that is still spreading. Several firms in Chicago have raised pay to $160,000, including McDermott, Will & Emery; Kirkland & Ellis; and Sidley Austin. Firms in Boston, including Foley Hoag, Goodwin Procter and Ropes & Gray also have followed suit.

On one hand, firms say that their decisions to boost salaries in Los Angeles, San Francisco and Chicago are necessary to stay competitive in recruiting. Firms want to avoid the embarrassment of becoming pegged as a holdout for upping salaries.

Hmm… How does that “embarrassment” get perpetuated? (Cough cough.)

On the other hand, they say that as their specific practice areas have broadened to include attorneys from both coasts and cities in between, it is inequitable to pay an attorney in Los Angeles one amount and an attorney in New York another.

“If it were cost-of-living driven, we’d pay less in Walnut Creek,” said Morrison & Foerster Chairman Keith Wetmore, referring to one of its California offices.

But maybe it should. Cost-of-living differences are huge among major U.S. cities. According to the Council for Community and Economic Research (CCER), the equivalent of a $160,000 annual salary in New York is $205,631 in Los Angeles.

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Here are some data points. According to the CCER, salary of $160K in New York translates into the following amounts in other cities (listed in ascending order):

San Francisco: $190,789

Los Angeles: $205,631

Boston: $241,397

Chicago: $278,573

More from the article:

Whether the recent raises on the West Coast and in Chicago will spark a brush fire in New York before the year’s end is uncertain. Just last week, one popular legal industry blog reported whispers of increases in New York to $190,000 for first-year associates. Some large New York firms contacted for this story said that they were not considering increases at this time.

Why doesn’t the article mention the “popular legal industry blog” by name? We’re not gonna lie; we’re peeved. We also wouldn’t have minded if the reporter, Leigh Jones, had called us for comment.
Despite these omissions, it’s an excellent article. It provides helpful historical context about associate salary wars, as well as thoughts about what the future might bring.
We’ve discussed just a few excerpts. You can read the whole thing by clicking here. Enjoy!
Does it pay to make NY pay? Big Apple takes a bigger bite of pay [National Law Journal]

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