Biglaw, Money, Partner Profits, Skaddenfreude

Stop Yer Whining, Senior Associates. You Could Be Making More Than the Partners!

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No, seriously. Despite the perception of Biglaw partners as fat cats, some of them, at least in their early years, take home less than the senior associates who toil under them. From an article in the Legal Times by Nathan Carlile (whose work we’ve always admired, even before he wrote this nice profile of us):

[T]he most recent round of associate pay hikes has edged senior associates ever closer to junior partner pay rates. In fact, in some cases, senior associates can come out ahead of partners — particularly if the firm has a nonequity tier.

Here’s just one example: At Arent Fox, Chairman Marc Fleischaker says senior associates can earn as much as $280,000 in base salary and — if they meet targets for generating business — an additional $100,000 in bonuses. Total: $380,000. First-year nonequity partners start off with a pay rate of $310,000. But they subtract $20,000 to cover their own benefits. Their total: $290,000.

Additional excerpts and discussion, after the jump.


Arent Fox did make an effort to address the situation:

Last year, Arent Fox added $50,000 in stock and at least a $27,000 bonus to help shore up salaries for partners at the low end of the pay scale. New total: $367,000 — still not as much as the highest-earning senior associate, but, certainly, a vast improvement.

Compression. It’s not just a problem for associates in Atlanta:

Salary compression — in other words, the narrowing of the gap between what senior associates and junior partners make — has been an annoyance for junior partners and a problem for big firms for years, consultants and partners say. Ideally, consultants say, the difference between associate and partner compensation should be at least 20 percent. But the most recent pay hikes for associates aren’t helping matters. Suddenly, a senior associate isn’t gaining all that much — at least financially — by moving into a partner role.

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It’s an issue even at super-profitable firms like Wiley Rein, which last year topped the Am Law 100 rankings in profits per partner:

A few firms are putting together bonuses and new pay scales to help remedy matters. “I told my partners last year, the younger partners had to be moved up,” says Richard Wiley, managing partner at Wiley Rein. “Partners have to feel like they’re adequately compensated.” Wiley declined to comment on exact numbers, but partners at the firm placed the new-partner salaries at around $320,000, with senior associates making around $270,000.

One difficulty is that partnership has its burdens as well as benefits:

It’s the extras that partners pay for that can drastically reduce compensation. For equity partners, it’s a capital contribution that can reach six figures. Nonequity partners often pay for their own health care, disability and Social Security expenses (that alone can take away roughly $6,000). The silver lining is that firms put more into a partner’s retirement plan than they do for associates.

These are just excerpts. Nate Carlile’s full article — which is a fascinating read, and has the skinny on what new partners make at such places as WilmerHale and Hogan & Hartson — can be accessed in its entirety by clicking here.
Are Senior Associates Making More Than New Partners? [Legal Times]
David Lat Takes on the Legal World One Post at a Time [Legal Times]

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