Job Survey, Money, Small Law Firms

Size Matters: Salary Survey Results

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I know that all of you have been anxiously awaiting the results of the salary survey. I had envisioned the results post to be equal in excitement to the results shows for American Idol or Dancing With The Stars. Indeed, in anticipation of this monumental post, I commissioned a group of MIT grad students to perform a regression analysis, do a double-blind sampling, and make colorful pie charts. Unfortunately, that dream cannot be realized today. I take partial responsibility for the survey design, but going forward please include salary information if you chose to participate in a salary survey and designate your location with specificity (e.g. not “the South” or “California” or “an NFL market”).

It is not all bad news for you. I have some good news.

The good news:
• A few trends emerged;
• The majority of respondents were unhappy with their compensation (maybe not good, but consistent);
• I can tell you with high accuracy the salary information for a few third year associates in various cities; and
• I learned a few new curse words.

Now that I have successfully managed expectations, let’s look at the results after the jump.

Who took the salary survey?

The majority of survey respondents were
• junior associates (years 1-3)
• in firms 20 attorneys or less
• who had been at the firm for less than two years.

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How is salary determined?

78.7% of responders work in small firms where compensation is not lock-step. Interestingly, many did not know what factors were considered in determining compensation but assumed that hours billed, client development, skill and the perception that an attorney will leave were considered. There is a firm in New Jersey that, according to an of-counsel who took the survey, considers “sex appeal” in the compensation determination. If I find out the name, I will be sure to tell you all in case some small-firm hotties want to move to Jersey and make bank.

How much do small-firm attorneys make?

Not enough people in a given geographic location responded for a statistically significant analysis. Here, however, are some general conclusions based on the results:

• Attorneys in Pennsylvania reported base salaries between $77,000 and $130,000. The salaries do not necessarily correspond to class year. For example, a first year and a seventh year in Philadelphia earned $100,000.
• The highest reported salaries for small-firm attorneys came from D.C. The majority of responders reported base salaries between $150,000 and $200,000. The highest salary, $250,000, was earned by an of-counsel who billed 1800 hours.
• Not surprisingly, the small-firm attorneys in New York City reported the highest billable hours.
• The majority of junior associates in Chicago earned less than $100,000. There might be a light at the end of the tunnel for Chicago juniors, however. A fifth year reported a salary of $200,000 for billing 1500 hours. Please e-mail me and let me know where you work (and whether there is need for another mid-level).
• Associates in Los Angeles (years 1-5) reported salaries of $125,000 and under. Some were quite a bit under – a first year reported a salary of $40,000 and a fourth year of $25,000 (note: get out!).
• Of the ten San Franciscans who responded to the survey, eight make $100,000 or higher.

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There are a few lucky small-firm associates (and partner):

• A sixth year in Boston earned $200,000 billing 1350 hours virtually;
• A third year in San Jose earned $210,000 billing 1836;
• A Manhattan of counsel billed 1100 hours and earned $350,000;
• A Phoenix solo billed 550 hours for the year and earned $100,000. I like your work life balance my friend.

There were also some unlucky small-firm associates:

• A first year in Minneapolis earned $50,000 base salary and $100 dollar bonus in a firm of less than ten attorneys with revenues exceeding $3 million;
• A first year in Illinois earned $34,000 because his “boss wanted to take a vacation;” and
• A Manhattan fourth year billed 2300 and earned $131,000.

How much do small-firm associates work?

• It varies, of course, but about half of those surveyed said that their firms do have a minimum billable requirement.
• Of the associates who have billable requirements, the requirement is between 1800 and 2000 hours.
• Associates reported billing hours between 1000 and 3050 per year. The average hours billed was 1836.

None of these results seemed shocking. Associates at smaller firms make less than those in Biglaw. What was surprising, however, was the variation among associates at different small firms. For instance, of the fifth year associates in Manhattan (in firms of roughtly the same size) the salaries were $70,000, $125,000, $130,000, $135,000, $200,000 and $215,000. Why?

My hypothesis for the discrepancy in compensation among small firms is this: 66.7% of associates do not know what other associates make within their firm and 91% do not know the revenue of the firm. Several of you said that your firms have a policy prohibiting the sharing of compensation information (shh this is between us) and one said that sharing such information results in termination. I guess some small firms are modeled after Fight Club.

If there are any take-aways from this survey, they are as follows:

• We need to improve our survey skills;
• Many small-firm associates work hours similar to Biglaw; and
• Small firms need to be more transparent when it comes to compensation and financial information. After all, aren’t small firms supposed to be like families? Functional families are not supposed to keep secrets.

When not writing about small law firms for Above the Law, Valerie Katz (not her real name) works at a small firm in Chicago. You can reach her by email at Valerie.L.Katz@gmail.com and follow her on Twitter at @ValerieLKatz.

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