As we’ve been trying to tell people, paying associates less than a $160K starting salary is just not something that Biglaw firms should be doing. Everybody got very excited in 2009 when they thought that there was an opportunity to keep profits high by squeezing entry level associates, but it turns out that pay cuts were a short-sighted move. The vast majority of the Am Law 100 firms never left the $160K scale. The few who did are slowly coming back to the light.

Such is the case with Sheppard Mullin. A couple of weeks ago, we reported that Sheppard was still mucking around in the non-competitive $145K range. Today we’ve received word that Sheppard is doing the right thing by its junior associates and restoring the $160,000 starting salary…

Apparently, it’s good news day here on Above the Law. Here’s the memo from Sheppard Mullin:

We are pleased to report the reinstatement of the following schedule of base salaries for associates on partnership track at Sheppard Mullin:

* Associate 1: $160,000
* Associate 2: $170,000
* Associate 3: $185,000
* Managing Associate 1: $210,000
* Managing Associate 2: $230,000
* Managing Associate 3: $250,000
* Counsel 1: $265,000
* Counsel 2: $280,000

That’s great news. But Sheppard Mullin associates will still have to hit hours targets in order to receive the salaries listed above. The memo continues:

The effects of the global recession are still being felt, but with less severity than during 2009. While most of our attorneys are quite busy, we still have pockets of underutilization in some of our Practice Groups. Accordingly, to again reduce pressure to lay off underutilized associates, the base salaries shown above will be paid to associates on partnership track whose billed and credited non-billable hours annualize to 1750 or more. Associates whose hours annualize below 1750 will be paid base salaries at the next lower level of base salary. Adjustments will continue to be made quarterly, in the same manner as has been applied in connection with our previous salary structure. This revised two-tier structure will be in effect for the balance of the current measuring period, and will remain in place until we are confident of full and lasting recovery from the recession. We hope this will be in the next twelve months.

So when can Sheppard Mullin associates expect to see the money?

The change in base salary structure will be effective as of July 1. Associates will receive a lump sum payment in their August 20 paychecks/auto deposits to adjust pay back to July 1. The “true-up” that will be performed following the end of the measuring period, on September 30, will adjust salary to reflect three quarters at the previous salary structure and one quarter at the new structure.

It sounds like Sheppard is still trying to fudge the salary numbers slightly. Maybe the firm needs to make sure that its partners can show a PPP increase before it fully restores market salary to its associates?

Still, the message seems to be clear: you’re not going to attract the best new associates if you aren’t willing to start them at $160K. That probably never changed even during the recession… and now firms are once again remembering the rules.

Are there any other salary stragglers out there? Let us know.

Earlier: WilmerHale Brings Clarity to its Merit-Based Compensation Program


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