Never heard of Duval & Stachenfeld?Well, that’s about to change, thanks to the firm’s innovative approach to associate compensation, which is getting some media mentions. From an article by Kellie Schmitt in The Recorder:
The 50-lawyer firm, based in New York but with a small L.A. office, starts first-year associates at $60,000 — or $100,000 below the starting salary at many Am Law 100 firms.
Mid-year and senior associates, however, are promised the same total pay — or more — that they’d earn at Latham & Watkins or Skadden, Arps, Slate, Meagher & Flom.
For third-years on up, the firm says it checks what top New York firms like Cravath, Swaine & Moore are paying in base salary and bonuses, and matches that. Last year, the firm added a $10,000 sweetener.
So what exactly is the point of this unusual system?
More discussion, after the jump.
Still from Schmitt’s article:
The idea is that it will attract first-years from second-tier schools or less-competitive students at the top schools. Within two years, about half of those junior associates will prove themselves and hop on the gravy train of the top scale. Meanwhile, the hefty pay for mid-level and senior associates makes Duval & Stachenfeld an attractive option for unsatisfied laterals from top firms.
“There’s a growing client distaste for the fact that junior lawyers cost a fortune, and are billing higher even if they’re not that useful,” said founding partner Bruce Stachenfeld. “We thought, ‘Gee does it make sense to pay that much?’”
It was difficult to compete with the Skaddens and the Lathams of the legal world for top law school hires, anyway, he said. But the battle they could win was for disgruntled third-, fourth- and fifth-year associates facing a long and uncertain slog to partnership at a megafirm.
Fair enough — although maybe not as radical as it might look. Many boutique and midsize firms pay starting associates below market (although maybe not THAT much below market), but make up for it by offering a better chance at making partner (even if partnership at such a firm isn’t the pot of gold that it is at Skadden or Latham). It’s a familiar trade-off.
How does this system work in practice?
For first-years starting at $60,000, pay goes up each quarter, maxing out about $100,000 by the end of the second year. By then, those junior associates are either promoted to the higher scale — or not. About half are weeded out in the process, Stachenfeld said. But those that make it that far are happy — only one of them has left.
“Since we’re not paying as much, we can hire more associates — some turn out to be astonishingly good, and sometimes people aren’t that good,” Stachenfeld said.
Fifth-year associate Joseph Galvano, who started at the firm straight out of Hofstra University School of Law, said he was attracted to the opportunity to work on “cool deals” and decided to suck up the downside of a lower salary.
“Initially you’re making a sacrifice but getting really good experience,” he said. “And, before you know it, if you’re doing great, you get promoted. Now I’m making above what people my year are making. There’s a reward at the end.”
We actually don’t think this is a bad idea. Many law school graduates who don’t have amazing academic records turn out to be amazing lawyers (and many law school graduates with amazing academic records turn out to be mediocre lawyers). So why not let the law school grads with non-top-tier credentials prove themselves in the field?
As for those who might attack the alleged cheapness of a firm paying law school graduates $60K, especially a firm that’s not a lifestyle firm (2000+ hours a year), keep in mind the bleak job prospects for graduates of non-elite law schools who aren’t at the top of their class. Isn’t a job paying $60,000, with the possibility of a Cravath-level salary a few years down the road, preferable to the grim fate of “reviewing documents for as little as $20 an hour”?
P.S. We see that the WSJ Law Blog just covered this (attributing the story to the Texas Lawyer, when it actually came from The Recorder).
We won’t let wounded pride get in the way of bringing you a story that lies within the core of our beat. See here. We write about what we want to write about, and if someone has beaten us to the punch, then so be it.
In Salary Twist, Firm Pays More — and Less [The Recorder]
Law Blog Associate Compensation Story of the Day [WSJ Law Blog]
Earlier: Loyola 2L Hits the Big Time (Even If Not the Big Law)