Nationwide Pay Raise Watch: Sutherland Asbill & Brennan
The person maintaining this Atlanta List of Shame needs to update it. The starting salary in the Atlanta office of Sutherland Asbill & Brennan is now $145,000 (effective January 1, 2008). The firm has also raised first-year salaries to $160,000 in Houston and Washington, DC (effective September 1, 2007).
For more senior associates, things are a little trickier. The firm will be using a “deferred salary” model, a la Vinson & Elkins.
For details, consult the memo, which appears after the jump.
SUTHERLAND ASBILL & BRENNAN LLP — ASSOCIATE PAY RAISE MEMO
C O N F I D E N T I A L
MEMORANDUM August 17, 2007
TO: Associates
CC: Partners & Counsel
FROM: The Executive Committee
RE: Associate Compensation
Our primary goal as a firm is to provide our clients with the highest quality work and best service possible on a consistent basis. To do that we must hire, retain and develop the best lawyers we can at all levels of experience. We have always believed that there is a great deal more to hiring and retaining our top talent than compensation: interesting work, a collegial environment, early client responsibility and extensive professional development are all aspects of our firm culture that we value greatly, and we strive to attract lawyers who share those values. At the same time, we are very aware of our markets and we periodically review our lawyer compensation to ensure that we remain competitive.
Our latest review has led us to change our compensation structure and to increase our compensation schedules. We are pleased to announce that effective September 1, 2007, starting salaries for first and second year associates in Houston and Washington will be increased to $160,000 and $170,000, respectively. Effective January 1, 2008, starting salaries for first and second year associates in Atlanta will be increased to $145,000 and $150,000, respectively. We will continue to review the market in New York and will adjust our schedule there as appropriate.
The charts below reflect the new first and second year salaries for the Washington, Houston and Atlanta offices, as well as total standard salaries (not including bonuses as discussed below) for third through sixth year associates with 1950 billable hours (including all time spent on matters for paying clients and all time spent working for our pro bono clients) and 2400 total hours (including investment hours spent on training, client and business development, community service, recruiting and other firm related work). For associates in their third year and beyond, a portion of the increased salary will be deferred. The deferred portion of the total standard salary shown in the charts will be earned upon working 1950 billable hours and contributing 2400 total hours in a calendar year. Associates who bill more than 1800 hours, but less than 1950 hours, and contribute 2400 total hours during the calendar year will be paid a portion of the deferred salary amount. This compensation structure will be implemented effective September 1st in Houston and Washington, with a pro rata portion of the deferred amount payable to associates in the relevant classes who meet the hours targets for the calendar year.
Houston (Effective 9/1/07)
Class New Total Salary ($) Base Portion ($) Deferred Portion ($)
1 160,000 160,000 —
2 170,000 170,000 —
3 185,000 170,000 15,000
4 210,000 175,000 35,000
5 230,000 180,000 50,000
6 250,000 185,000 65,000
Washington (Effective 9/1/07)
Class New Total Salary ($) Base Portion ($) Deferred Portion ($)
1 160,000 160,000 —
2 170,000 170,000 —
3 185,000 177,500 7,500
4 210,000 192,500 17,500
5 230,000 212,500 17,500
6 250,000 227,500 22,500
Atlanta (Effective 1/1/08)
Class New Total Salary ($) Base Portion ($) Deferred Portion ($)
1 145,000 145,000 —
2 150,000 150,000 —
3 165,000 152,500 12,500
4 175,000 157,500 17,500
5 185,000 167,500 17,500
6 200,000 177,500 22,500
Consistent with our past practice, associates will generally be lockstep in their first two years following law school, but after that their compensation (both base and deferred portions) may vary from the schedule to account for performance, work effort and other contributions above or below the norm. Associates in classes not reflected on the schedules will continue to be compensated on an individual basis reflecting their overall contribution to the firm.
For bonuses, we will continue to look at all aspects of a lawyer’s contributions to the firm, taking into account the quality of work, overall work effort and firm related efforts. Bonuses will be paid when appropriate in addition to the payment of the earned portion of deferred salary and will be based upon performance during the review year (October 1 through September 30). Although we will have a “rebuttable presumption” that a bonus has been earned by those lawyers who have 1) worked more than 2100 billable hours (including all billable time for paying clients and pro bono clients); and 2) contributed more than 2400 total hours to the firm during the review year, we will not award bonuses based solely upon billable hours. The determination of bonus eligibility will continue to take into account all aspects of a lawyer’s performance and contributions to the firm during the review year.
We believe this new compensation structure and the revised standards will enable us to continue our outstanding service to clients and result in our continued success in 2007 and beyond. If you have any questions about the compensation structure, please feel free to talk with Mark Wasserman, Tom Gick, any member of the Executive Committee or your Practice Group Leader.
Again, thanks to all of you for your many contributions to the firm.
(69) Comments
Comments
First and it don't matter!
what a TTT comp structure...
deferred salary based on 2400 total hours????!
do midlevels actually lateral to atlanta firms? i think i'd rather show up and tell them i'm a first-year.
Interesting that TX biglaw is trying deferred salary in DC. I can't imagine it will help them there. I suppose it's a sop to the masses back in TX.
Workin' late Lat!
Atlanta to 35k!
Here's an inside tip. K&S and A&B are both getting ready to make a surprise bump - they'll DC/NY rates and they'll ease up on the compression. A one-time 25k equalizing bonus will also be doled out to all associates who met hours last year. You heard it here first.
Sutherland Atlanta Associates you are getting hosed BIG TIME!! Enjoy.
Mckenna Long & Aldridge raises starting salaries in DC/CA to $160 and Atlanta to $145 as of Jan. 1st. No decisions yet on the scale after year 1.
I think the deferred comp structure is very fair, especially to the higher billers. A&B and K&S should follow suit. Bottom line is that it's good money for the Atlanta market.
it could be worse. better that troutman or K&S's mystery scale.
i think the 2400 is just bizarre. seems like all they should care about is the 1950...
Do I get this right? Some lower-tier firm pays the same as everyone else, but with this nutty deferred compensation structure, doesn't give you a bonus till 2100, but you have to have spent 300 hours--around 8 weeks--doing other firm related activities?
No thanks. I work biglaw, my bonus comes in at 1950 with no other hour requirement, my compensation is on the 160 scale. And I don't have to live in Atlanta or Houston.
2400 total "contributing" hours for your deferred portion? I'm sorry, but that is just ridiculous -- very few associates will make that.
2400 total "contributing" hours for your deferred portion? I'm sorry, but that is just ridiculous -- very few associates will make that.
2400 total "contributing" hours for your deferred portion? I'm sorry, but that is just ridiculous -- very few associates will make that
And those 300 hours add up to more than an hour a day (not including weekends/holidays.) Can you imagine how much padding goes on for those?
2400 contributing hours for your deferred compensation? That's crazy talk. Very few associates can make that -- even if you contribute 100 hours to recruiting/training, you still have to bill 2300.
Will someone please explain deferred comp to me? Am I correct that they withhold a certain percentage, and then pay it out in a lump sum if you hit your hours? If so, seems like you get hosed twice: once while drawing a lower salary (& waiting a year for the "deferred" portion), and once when you get hit with taxes on it (I assume that it's taxed like a bonus - correct?).
All in all, this sucks major ass.
12:00? Get hosed twice? Try reading the tax code. Here in the United States bonus = salary for tax purposes. On your W-2 there is only one number...
fuck! i cannot wait to go to law school $$$$$$$
12:00 wasn't very clear, but I think he was referring to the higher witholding rate on bonuses vs regular paychecks.
Don't forget to add Seyfarth Shaw's Atlanta office to the list of shame.
MMM raised to $145 last week.
Chances that Deuce Freely (9:06pm) is full of crap?
If there is truth to what you are saying, K&S just became a lot more appealing, irrespective of its sweatshop status. I'd be willing to put up with a lot of shit for 160K in Atlanta.
This deferred structure seems great. A couple of comments.
1) 1950 billable is very reasonable and very achievable. Unless someone is planning to totally slack off, the important number is the total salary.
2) Not only is 1950 reasonable, but it includes 100% of pro bono hours worked.
3) The additional 450 non-billable hours are basically a non-issue. Between retreats, training, recruiting, and community involvement that number takes care of itself. It's actually a positive because it provides recognition of the additional value added by associates beyond billable hours.
4) At least Sutherland stepped up and provided a scale. A&B and K&S should be ashamed.
5) Last but not least, Sutherland fared very well in the latest set of Vault quality of life rankings...quite different that some other Atlanta firms that found themselves at the other end of the list. Seems like a great place to be.
The deferred comp structure plainly is a transparent way for the firm to avoid paying an absurd amount of money to those who aren't stepping up and working a reasonable amount. I don't see anything wrong with that.
9:30 -- HUH? SAB is offering the A&B scale in Atlanta, but only to those who bill 1950. Thus, while A&B screwed associates with a highly compressed scale, SAB is using the highly compressed scale ONLY FOR THOSE WHO BILL AT LEAST 1950. Thus, an A&B associate who -- through not fault of her own and only because her partners can't bring in work -- bills 1940 will make more than a similarly situated SAB associate.
Why do so many otherwise smart people think that bonuses are taxed differently than regular income?
I hear this all the time, and it's wrong.
Check your W-2, folks. There is no difference. It may appear to be "taxed" higher b/c the withholding may be at a higher rate than usual -- but if that happens, it will all come back to you in a refund. You can also adjust your withholdings on your W-4.
9:30: How is an extra 450 hours a positive? I have to bill 2000 hours for a bonus, and that includes all pro bono, recruiting, accountable and whatever else they want me to do. And my firm "recognizes" my contribution by paying me money, which is all I really want anyway. And oh yeah, I don't have to go on retreats with people I spend way too much time with already.
If you can't or aren't willing to bill 1950 you don't belong in biglaw in the first place. I give SAB credit for stepping up to the plate.
The deferred comp makes sense. Let's face it, Atlanta is a second-tier legal market and biglaw is trying very hard to provide a respectable salary for the market.
3/4 of SAB associates are not meeting these targets so it is a non-raise. Nor do SAB partners meet their billable targets. Moderate billers make partner, high billers don't, necessarily. SAB bonuses are horrible and few in number, on the theory that the firm doesn't want to be about the hours. It has been a two way street, and the culture has always downplayed the importance of the billable hour, ie, associates I know all say that hours are hardly ever even mentioned in annual reviews.
This pay scale changes everything.
Actually, compared to the A&B scale, I would much prefer to work under the SAB scale. I know I am going to make my hours requirement, so the deferred compensation part of the scale doesn't bother me.
I do wonder if they still pay bonuses in addition to the deferred compensation for making hours, though.
the more firms give these kinds of raises the more sure i am i'm not moving back to georgia after school
11:12 -- Are you an idiot? The SAB scale and the A&B scale are the same if you hit your hours at SAB. They only differ if you don't. If that is the case, why would anybody with a brain in their head "prefer" the SAB scale? It's not like you make more money at SAB if you hit your hours and get the deferred portion.
Bottom line: SAB (at best) has just continued with the compressed scale that A&B adopted.
11:05, are you saying moderate billers have a better chance of making partner than high billers at SAB? Explain?
Who knows the firm's PPP/RPL?
The SAB scale is not the same as the A&B scale. Check prior posts. A&B tops out at $190K in year seven.
The real question is where the hell is Kilpatrick?
12:48- Way to go calling someone an idiot when they're right and you're completely wrong. The scales depart widely if one meets hours at SAB. See above for SAB's scale (at $200,000 for 6th years, a $20K difference). Here's A&B's scale from Lat's original post on it:
1 $145,000
2 $150,000
3 $155,000
4 $160,000
5 $170,000
6 $180,000
7 $190,000
So a 6th year at SAB makes $ 177,500 minimum, and $200,000 if they hit the hours. The same associate at A&B makes $180,000, max and min. That's a little downside for a lot more upside in SAB's case, and an arrangement plenty of high-billers with a brain in their head would prefer.
A theorhetical someone who choses SAB over A&B is essentially paying $2500 a year from 3rd year on for an option that pays $10K-$20K in the event they meet hours. Like I said, if you're a high biller, such an option would likely end up in-the-money and be well worth it.
That said, I really hope K&S does better than SAB, and avoids deferred salary altogether.
Damn spelling. Guess I'm the idiot now.
-1:21
2400 "contributing" hours just to make deferred salary? Not to mention that it is essentionally a "bonus" as it is only payable if you hit the hours and are still employed at the time they are paid. Even if you bill 2200 hours and contribute 150 hours in recruiting, you won't get the deferred portion? That is just crazy.
SAB's is a better scale but they hashed it by not realizing the memo would find its way to ATL where 2400 would pop out. they don't care about 2400.
if you are just an avg biller, you make the whole salary which is much better than AB.
it's also great for lazy people which is the most important thing.
1:15
Didn't mean to suggest that. Only saying that the firm culture has always stressed quality over quantity, that hours were not important, at least not very.
Anecdotaly, those who bill in the 2200+ range have not fared particularly well in partnership vote (I can't think of a single new partner in the past 4 years who was a super-associate-biller.) My observation is associates-turned-partners billed in the respectable 1900-2100 range. Of course, consistently low billers don't make partner, either.
SAB circulates everyone's hours on a monthly basis so we know who the insanely big billers are, and we know what partner-track associates are billing too.
If "SAB senior assoc." is correct and few associates get bonuses (contrary to what's indicated in the memo), you'd be better off on the A&B scale making bonus than you would be on the SAB scale getting deferred compensation.
-ATLANTA HALL OF SHAME-
(as of 8/18/07)
130k
Kilpatrick Stockton
Arnall Golden
Smith Gambrell
Powell Goldstein
Holland & Knight
Womble Carlyle
Nelson Mullins
Greenberg
Carlton Fields
DLA
Seyfarth Shaw
~ATLANTA MATCH~
160k (already effective)
Dow Lohnes
Schiff Hardin
150k (effective 1/1/08)
Jones Day
145k (effective 1/1/08)
Hunton & Williams
Alston & Bird
King & Spalding
Paul Hastings
Morris Manning Martin
Sutherland Asbill*
McKenna Long Aldridge
* Have potential to earn more than A&B's cheap compressed scale by meeting 1,950 (getting a deferred comp true-up)
-ATLANTA HALL OF SHAME-
(as of 8/18/07)
130k
Kilpatrick Stockton
Arnall Golden
Smith Gambrell
Powell Goldstein
Holland & Knight
Womble Carlyle
Nelson Mullins
Greenberg
Carlton Fields
DLA
Seyfarth Shaw
~ATLANTA MATCH~
160k (already effective)
Dow Lohnes
Schiff Hardin
150k (effective 1/1/08)
Jones Day
145k (effective 1/1/08)
Hunton & Williams
Alston & Bird
King & Spalding
Troutman Sanders
Paul Hastings
Morris Manning Martin
Sutherland Asbill*
McKenna Long Aldridge
* Have potential to earn more than A&B's cheap compressed scale by meeting 1,950 (getting a deferred comp true-up)
-ATLANTA HALL OF SHAME-
(as of 8/18/07)
130k
Kilpatrick Stockton
Arnall Golden
Smith Gambrell
Powell Goldstein
Holland & Knight
Womble Carlyle
Nelson Mullins
Greenberg
Carlton Fields
DLA
Seyfarth Shaw
~ATLANTA MATCH~
160k (already effective)
Dow Lohnes
Schiff Hardin
150k (effective 1/1/08)
Jones Day
145k (already effective)
Hunton & Williams
McGuire Woods
145k (effective 1/1/08)
Alston & Bird
King & Spalding
Troutman Sanders
Paul Hastings
Morris Manning Martin
Sutherland Asbill*
McKenna Long Aldridge
* Have potential to earn more than A&B's cheap compressed scale by meeting 1,950 (getting a deferred comp true-up)
1:15-
Here are links to the profit numbers
http://www.dailyreportonline.com/Editorial/images/DRD2007/CompAllPartners.jpg
http://www.dailyreportonline.com/Editorial/images/DRD2007/ProfPerEquityPartner.jpg
And if you really want to delve into the numbers:
http://www.dailyreportonline.com/Editorial/images/DRD2007/MainChart.jpg
1:15-
Here are links to the profit numbers
http://www.dailyreportonline.com/Editorial/images/DRD2007/CompAllPartners.jpg
http://www.dailyreportonline.com/Editorial/images/DRD2007/ProfPerEquityPartner.jpg
And if you really want to delve into the numbers:
http://www.dailyreportonline.com/Editorial/images/DRD2007/MainChart.jpg
1:15-
Here are links to the profit numbers
http://www.dailyreportonline.com/Editorial/images/DRD2007/CompAllPartners.jpg
http://www.dailyreportonline.com/Editorial/images/DRD2007/ProfPerEquityPartner.jpg
And if you really want to delve into the numbers:
http://www.dailyreportonline.com/Editorial/images/DRD2007/MainChart.jpg
I can confirm that few SAB associates receive a bonus, and when they do it is laughable (think $5,000). You are definitely better off under the A&B scale and hitting your bonus.
When will these firms wake up? Atlanta doesn't have to be TTT. If some firm will take the lead and make a non-compressed scale, the quality of applicants for ATL will rise.
Any word on when Kilstock is going to 145k?
I would still work at A&B over SAB. Much better firm with a national reputation.
8:53 - and that's how SAB wants it. If you're only interested in some unmerited reputation and $, rather than quality of work, actual responsibility and a decent life balance, they're not the shop for you.
Is there any truth to the prior post speculating about a new move by K&S and/or A&B? A $25K "equitizing bonus" sure would regain significant love lost.
9:05 -- put down the Kool Aid. SAB does not have better work or "life balance" than any other BigLaw firm in Atlanta.
2400 "contributing" hours seems awfully high. You could bill 2200 hours and contribute another 150 hours in recruiting and training, and still not make the deferred portion.
11:02? Do you work there?
What about Atlanta-based players like Kilpatrick, PoGo, SGR? Any word from them?
Nationals like Greenberg, H+K, DLA?
Regionals trying to get a foothold, like Womble, Nelson Mullins, and Carlton Fields?
8:53-
A&B is nearly twice as big but has lower PPP..."much better firm"???
http://www.dailyreportonline.com/Editorial/images/DRD2007/CompAllPartners.jpg
Can anyone post the average hours actually billed by associates at your firm?
12:25 -- learn how to read. A&B's PPP is just slightly greater than SAB's PPP. You are citing to comp for all partners, which includes income partners in the denominator. Since A&B makes anyone with a pulse who is still at the firm an income partner, but nobody makes equity, that explains the different rankings.
If you want to look at the equity partner numbers, fine. A&B has the same profits per equity partner as SAB even though the firm is nearly twice as large and more leveraged. Much better firm??? SAB is bringing in more revenue per lawyer and has higher profit margins. Looks like SAB has more solid financials and is doing well nationally in quality of life rankings (see Vault).
The post about the equalizing bonus at K&S is almost surely pure nonsense. Although there had been some talk of such bonuses earlier, A&B's decision to make raises effective 1/1/08, and K&S' decision to follow that, killed any hope.
That some people are lauding SAB's scale just shows how low expectations have fallen here. An extra $22 grand for hitting 2400 total hours? If you're recording those kinds of numbers, you deserve a lot more than $22k. And in fact, SAB is paying its Houston associates a hell of a lot more than that.
Rates in Houston and Atlanta are very similar. IMO, it comes down to this: if two associates are making equal contributions to a firm, they should be compensated similarly. A 6th year in houston and one in Atlanta who each bill 2100 have contributed about the same. But (so long as they add 300 hours worth of nonbillable fluff) the Houston associates gets about $40k more.
1:50 -- "And in fact, SAB is paying its Houston associates a hell of a lot more than that."
Yes, all 7 of the associates.
You all should realize that those profit numbers are highly manipulable and often have little basis in reality. Firms report this stuff. Believe it or not, some firms would rather their clients not realize how much they're actually taking home. Others, apparently, enjoy inflating (or truthfully reporting) the numbers and getting an ego-boost amongst anonymous internet folks and law students. Regardless, I would not put a whole lot of stock in them.
Did Alston DC raise yet?
I think the "raises" are laughable. SAB's managing partner admitted that last year maybe 1/3 of all associates met the 2400 contributing hours mark.
It was made clear at a meeting in DC yesterday that you HAVE to record 2400 total hours to get the deferred portion. So you could theoretically bill 2100 and record only 2350 and not get a cent of the deferred portion. It was made clear that there would be no case-by-case review, it will be purely mechanical. No 2400, no deferred comp (even though billing less that 1950 could give you a portion of the deferred comp, but ONLY if you record 2400).
So you basically have to record 10 hours a day, every day for 48 weeks, to receive what a slacker at any biglaw shop would get. Why don't they just create a new billing number for "Inflated BS Deferred Comp Hours".
what a joke.
What would everyone think if K&S matched the SAB scale, but without the 2400 hour requirement but instead just their normal 2050 hour billing requirement? So, anyone that doesn't make hours gets the base salary which is slightly below what A&B pays. Then everyone that makes the hours requirement gets the base scale plus the deferred compensation plus the fixed bonus for making hours plus the variable bonus for each hour over 2050 up to 2400 hours.
An example would look like this for a typical fourth year that bills 2100 hours:
Base Salary - $157,500
Deferred Salary - $17,500
Fixed Bonus - $10,000
Variable Bonus - $1,500
Total Compensation - $186,500
Anyonr know what Seyfarth will do? I heard morale is pretty low after teh last attempt at meeting market.