Nationwide Pay Raise Watch: Biglaw Raises, Courtesy of Taxpayers?

We’re sorry to report that we haven’t heard serious and credible raise rumors lately. In fact, we’ve heard more gossip about layoffs in recent weeks than about associate pay increases. The rumors of “NYC to 190”, which used to flood our email inbox, have gone the way of Testa Hurwitz.
But here is some reason for optimism. From the National Law Journal:

Nearly two decades ago, [Georgetown law professor] Philip G. Schrag said he saw the need to help law students with crippling law school debt….

Help is finally on the way with the College Cost Reduction and Access Act of 2007. Passed by Congress on Sept. 7, the bill aims to help law students and other graduates with high debt through an income-based loan-repayment plan. The bill also would allow for loan forgiveness for qualifying employees after 10 years of service to government agencies or nonprofit organizations.

Tex Frank explains why this might be good news for some of you, at Overlawyered:

Bush has indicated he’d sign the bill.

The market currently reflects a private-public pay gap reflecting the fact that public jobs are generally considered to have better working conditions and that private-sector law firms need to offer substantially higher pay to encourage attorneys to work there. If the government is providing thousands of dollars of loan subsidies to government and non-profit attorneys, the private sector will need to raise its salaries to continue to compete, some of which will be swallowed by the partners, but most will be swallowed by the clients, who, increasingly facing bet-the-company litigation, have inelastic demand for top law firms. Too, as attorney salaries increase, and loans are subsidized by the government, law schools will be empowered to extract some of that surplus by raising tuition.

Winners: most attorneys, law school employees, and some clients of non-profits. Losers: taxpayers, clients, partners at non-top-tier firms.

Do you concur with Ted Frank’s analysis? And what about graduates of non-top-tier law schools, who are the focus of this week at ATL — how will they be affected by this legislation?
(We’d think that they would be thrilled by anything that might ameliorate crushing loads of educational debt. But if this change could be bad news for non-top-tier firms, it could indirectly be bad news for non-top-tier grads, insofar as non-top-tier firms provide jobs for so many of them.)
Taxpayers to provide additional subsidies for law-school education [Overlawyered]
Law School Loans About to Be Lightened for Some [National Law Journal]
Bush Will Sign Loan-Relief Bill for Public-Interest Lawyers [Daily Journal (subscription)]

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