Associate Salaries, Biglaw, Money, New York Times, Salary Cuts

Don't Be So Quick to Lump Biglaw in with Corporate Salary Slashers

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The New York Times has a nice survey piece about all the salary cuts imposed upon American workers. It’s a story that anybody holding down a job through this recession is probably aware of:

Local and state governments, as well as some companies, are squeezing their employees to work the same amount for less money in cost-saving measures that are often described as a last-ditch effort to avoid layoffs.

Yeah, we know, things are crappy.

But in its zeal to show that things are difficult for almost all workers, the Times seems to lump Biglaw in with the group of companies that are trying to cut costs by slashing salaries. As regular readers of Above the Law know, that might have been true in 2009. But in 2010, most Biglaw firms are not cutting associate salaries….

Here’s the NYT’s glancing reference to Biglaw:

While most of the pay cuts seem to hit unionized workers, David Lewin, a professor of management at the University of California, Los Angeles, who has written extensively on employee compensation, says some cuts are also quietly taking place among nonunion employers.

Reed Smith, a firm with 1,500 lawyers, has cut salaries for first-year associates in major cities to $130,000 from $160,000. Warren Hospital, a nonunionized facility in Phillipsburg, N.J., ordered pay cuts of 2 to 4 percent because lower Medicaid reimbursements had squeezed the hospital’s finances.

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Whoa there, hang on a minute. First of all, why is the NYT calling out Reed Smith? I mean, if you’re looking for a standard-bearer for Biglaw salary cuts, you’re really going to go with Reed Smith?

And the Reed Smith blurb isn’t even entirely accurate. Granted, Reed Smith doesn’t do itself any favors by being ridiculously secretive and confusing with regard to associate salaries. But, as we reported back in March, Reed Smith rolled back the salary cuts for many of its associates earlier this year. Salaries are individualized and vary greatly by market — but Reed Smith is no longer paying a $130,000 starting salary across the board.

More importantly, the apparent intent of including any Biglaw firm in the Times article is to point out that even non-unionized professionals like lawyers and doctors are dealing with the salary cutting spree. Now, we can’t speak for doctors. But, as we’ve been reporting for weeks, lawyers at major law firms are seeing their salaries restored — restored, not cut. We know that you never want to let facts get in the way of a good story, but the reality is that Biglaw as an industry is no longer responding to the recession by cutting associate salaries. At least, not anymore.

On the other hand, the Times piece perhaps does illustrate the potential long-term damage from the 2009 salary cuts to the relative minority of firms that went in that direction. People notice salary cuts more than they notice the quiet return to salary normalcy. Firms that never cut salaries — Kirkland & Ellis, just off the top of my head — maybe gained a little more reputational separation from firms like Reed Smith that did slash salaries during the worst of the recession.

For the most part, Biglaw has explored the studio space with salary cuts, and the market has forced firms back to $160K in major markets. Really, the next question is: when will New York be going to $190K?

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More Workers Face Pay Cuts, Not Furloughs [New York Times]

Earlier: Reed Smith Announces Salary and Bonus News

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