Associate Salaries, Biglaw, Canada, Money

The View From Up North: Why Are Toronto First-Year Salaries Stagnant?

Did you know that Canadian Biglaw firms haven't raised starting salaries substantially since 2008?

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Canada View From Up North A huge tremor rumbled through the grand glass prisons of Manhattan on June 6th when U.S. legal juggernaut Cravath announced it was raising first-year associate salaries to U.S. $180,000.

That, of course, raises the question: on that fateful day, how many times did equity partners at Cravath’s competitors say, “Thanks a lot, Cravath” (probably in much dirtier language)?

My guess? A lot.

Many aftershocks followed as other major U.S. firms tried to look progressive by announcing their own salary increases.

Meanwhile, back in Toronto… crickets. I’m not surprised, but none of the Canadian Biglaw firms jumped in with raises of their own. Why should they? New York’s New York and Toronto’s Toronto.

Did you know, however, that Canadian Biglaw firms haven’t raised starting salaries substantially since 2008?

Let me trace a bit of the Toronto salary history. I commenced my lawyerly journey at Biglaw firm Goodman & Carr in 2003. As I recall, my starting salary was $78,000. That was about industry standard back in those days.

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The Toronto legal market was white-hot from 2005 to 2008. By 2008, first-year salaries at most major firms had jumped to between $95,000 and $100,000.

Fast forward another eight years to present day. Here is the current salary scale for one of the Seven Sisters, provided to me by an intrepid associate who wanted me to share this information with his colleagues everywhere. I’m not going to reveal the firm name to protect my source, but it’s not Davies, which my source says pays slightly better.

1st: 100k

2nd: 110k

3rd: 130k

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4th: 150k

Up 20k each year after that. Bonus at 2000 hours (25% of base).

Between 2003 and 2008, salaries jumped about $20k. Between 2008 and today, nearly a decade hence, salaries have increased by essentially nothing.

Zip, zilch, nada.

Since 2003, the cost of living has increased about 1.77% year over year. Since 2003, Toronto first-year salaries have increased about 1.93% per annum—barely better than the inflation rate. Actually, first-year salaries have lost ground against inflation since 2008.

What up with that?

That’s a multi-faceted question, but I will focus on what I think are the most important factors:

A. One hundred grand ain’t too shabby in relative terms. Where else can a twenty-six-year-old make a hundred grand during her first year in a position? Thus, while $100,000 may not represent a fair split of pie, or be as much as the firms might pay if pushed by competitive forces, none of the lawyers I talked to think they need to join a union to fight for higher wages. Young lawyers are still going to run to Bay Street because it’s the home to the sexiest and most prestigious work. And, they’re going to do that whether they start at $100k or $150k.

B. I love America, but I would characterize its philosophy as thus: “if you can get it, get it.”

Canadian culture is more like, “shut up and work—be glad you’re getting what you get.” As a result, Canadian lawyers are culturally less inclined to push for salary increases. Feel free, of course, to agree or disagree with that.

C. U.S. lawyers are much more gossipy. They are willing to share salary information. Additionally, U.S. firms publicly share all kinds of information a Canadian firm would never release. Try to find information on Stikeman Elliott’s profit per partner or Blakes’ total revenue—you’ll never get anything “official.” Yet, the American Lawyer publishes this information every year for major U.S. firms, some of it coming from the firms themselves.

Information is power. It gives people a basis upon which to take action. It creates buzz. It creates momentum.

What if, for example, Canadian firms published their profits per partner every year? What if we could see the profits per partner going up every year? Do you think the firms could justify no increase to first-year salaries in that scenario?

Of course not.

But, Canadian firm don’t share profits per partner and, by keeping information close to the vest, they control that power.

I have made this request before, and I’ll make it again now. I’m here to help. If you want to reach out to me anonymously with salary information, please do so: steve@stevendykstralaw.ca.

I would love to get a public conversation going about Canadian salaries. I would love to see the firms bump salaries for the first time since Obama took office. But, that’ll only happen if associates everywhere want it to happen.

IMHO, sharing information is a key to increasing salaries.

Let’s ask the question together: “Hey, Biglaw, why haven’t you raised salaries in nearly a decade?”

That’s the View From Up North. Have a great week.

Steve Dykstra is a Canadian-trained lawyer and legal recruiter. He is the President of Steven Dykstra Law Professional Corporation, a boutique corporate/commercial law firm located in the greater Toronto area. You can contact Steve at steve@stevendykstralaw.ca. You can also read his blog at stevendykstra.wordpress.com, follow him on Twitter (@Law_Think), or connect on LinkedIn (ca.linkedin.com/in/stevedykstra/).

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