Biglaw, Money, Skaddenfreude

California Law Firms Still In Lockstep: For Now

recession california associate pay raises.jpgThe top 25 California law firms are staying in lockstep with regard to associate pay: $160K for first years, $210K for fourth years, $265K for seventh years.
According to The Recorder (via Law.com), only Sedgwick, Detert, Moran & Arnold paid below the market rate. They pay $130K to first years and only go to $197K for seventh years.
For the most part, firms have to play “follow the salary leader” in order to draw top talent. But in these times, some firms are desperate to cut back on associate compensation any way they can.
The idea floating around is to abandon lockstep salary progression based on year, and move to performance-based pay raises. Manatt, Phelps & Phillips has already abandoned automatic pay raises:

“I actually think the system in practice is very fair because it allows for those people who are overachievers to really be valued at what their skills are worth,” said Diana Iketani, the firm’s chief recruiting officer. On the other hand, she said, it reduces pressure on associates who would rather pace themselves or have different priorities.

Some firms that are not following suit, after the jump.


Of course, messing with salary expectations is a sure way to piss off associates, and some firms are leery of upsetting the proletariat:

Heller Ehrman has thought about it on occasion, most recently two years ago, but ditched the idea, said Chief Human Resources Officer David Sanders. The perception is that the lockstep model is more predictable and objective, he said. It’s not that associates were cynical about variable bonuses and salaries — “they just couldn’t put their hand on it, so there’s not a value.”

But this is the kind of issue that could catch on if it a few big firms lead the way. Orrick, Herrington & Sutcliffe is considering it.
Of course, most associates in California and elsewhere are more worried about keeping their jobs just at the moment.

The turbulent economy and resulting associate layoffs — both reported and rumored — have caused a lot of anxiety among associates and shifted the focus away from the compensation race and toward concerns such as having a job at all and being happier in that job.
“With the economic news, they’re not talking about salaries — they’re talking about, ‘Oh my God, what’s going on there with [layoffs at] other law firms,'” said Brad Seiling, a Manatt Phelps partner and chairman of his firm’s associates committee.

You think?
But remain vigilant. This is exactly the kind of climate where firms might try to pull a fast one and switch up their compensation structure. Decoupling pay from seniority is a repercussion that would last long after the economy turns around.
Keep your head on swivel.
The Reality of Associate Salaries [The Recorder via Law.com]

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