Associate Salaries, Salary Freeze

Salary Thaw Structure: A Chart!

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As firms start to unfreeze salaries, all in different ways, we at Above the Law have started to notice a lot of confusion about what these unfrozen salary structures look like. We’ve been seeing a lot of comments and emails like this one:

wtf is a true up vs. a thaw…dude…not everyone reads this blog 24/7…these are critical details that you are leaving up to assumption that the reader knows wtf nerd language you are talking about…

Good point.
To help clarify things, we have put together a little chart. To make things easier, we have looked at the salary of a fictitious soon-to-be third year from the incoming class of 2007. It seems appropriate to look at this class of people; since they are about to enter their third full year of work, they’ve experienced the recession in all of its glorious forms. And looking at one class’ salary over the years is less confusing than looking at everybody’s salary at every level.
To refresh your memory, here’s what our class of 2007 associate has been paid at a top tier firm that didn’t freeze, year-by-year. A person working at Davis Polk, for instance:
FIRM THAT NEVER FROZE
’07 (stub-first year) = $160K
’08 (full first year) = $160K
’09 (second year) = $170K
’10 (third year) = $185K
But not everybody can work at Davis Polk (or someplace similar). How the other half lives after the jump.


As you know, many firms froze 2009 salaries at 2008 levels. Some of those firms are now unfreezing salaries (a salary thaw), but they are not bumping people up to the level they would have been at had the firm not frozen in the first place. At a firm like that (for instance, what appears to be happening at K&L Gates), here’s what the salary looks like for a class of 2007 associate each year:
FIRM THAT FROZE, THEN UNFROZE (ONLY ONE CLASS YEAR)
’07 (stub-first year) = $160K
’08 (full first year) = $160K
’09 (second year) = $160K
’10 (third year) = $170K
Note, if you are working at a firm that is only having a thaw of one class year, you are no longer getting paid at the top of the salary scale.
To get back to where you should be, your firm has to do what Latham is doing. That is what we are calling a “true up” salary raise:
FIRM THAT FROZE, THEN UNFROZE (“DOUBLE BUMP” OR “TRUE UP”)
’07 (stub-first year) = $160K
’08 (full first year) = $160K
’09 (second year) = $160K
’10 (third year) = $185K
A true up raise doesn’t make up for the salary you lost while you were frozen in place in 2009. That’s why Latham is adding it back into the bonus, and it requires us to make up another term:
FIRM THAT FROZE, THEN UNFROZE (TRUE UP) WITH MAKE WHOLE BONUS
’07 (stub-first year) = $160K
’08 (full first year) = $160K
’09 (second year) = $160K + $10K make whole bonus + Cravath bonus
’10 (third year) = $185K
And then, sadly, there are the firms that are keeping the salary freeze in place for a second year in a row. We don’t know any firms that have done this in New York, but Patton Boggs has done it in D.C. In any event, if a top New York firm freezes for a second year in a row, the salary of our fictitious class of 2007 associate would look like this:
FIRM THAT FROZE TWICE
’07 (stub-first year) = $160K
’08 (full first year) = $160K
’09 (second year) = $160K
’10 (third year) = $160K
We haven’t heard of firms that froze salaries, then cut them, then froze them again. That would just look plain ugly:
FIRM THAT FROZE TWICE AND CUT SALARIES
’07 (stub-first year) = $160K
’08 (full first year) = $160K
’09 (second year) = $145K
’10 (third year) = $145K
We hope this is helpful. This is all very basic of course. Some firms are getting very creative, and of course some firms are moving away from lockstep entirely. But we try to not let all of the terminology obscure the cold hard numbers.
Earlier: Latham & Watkins: We Have Good News
Associate Bonus Watch: Patton Boggs and the D.C. Market
K&L Gates Salary Cut Follow Up

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